At the initial instruction stage, we are often asked if the Level 3 Survey can be used as a renegotiation tool.
The simple answer is yes. The purpose of this type of survey is to highlight a lot of issues with the property, and that then allows the findings to be used as a tool to renegotiate.
After receiving the results of a Level 3 survey (building survey), you can renegotiate the price of a property, especially if the survey uncovers significant issues or defects that may require costly repairs or reduce the property’s value. This is a common practice and a legitimate step in the property-buying process.
Although we are often asked to provide a Level 2 Survey, these surveys don’t allow the information to renegotiate, and it is widely considered that when having a Level 3 Survey, the estate agent expects you to renegotiate on your original offer. It may seem like a cost-saving to obtain a Level 2 Survey instead of a Level 3 Survey, but the actual cost saving isn’t the £200/£300 or even £500 survey fee differences; it’s the saving that’s possible on the offer you originally submitted due to the different quality of the report two reports. So what should you do if you do obtain the Level 3 Survey? Read on for more information and tips.
Steps to Renegotiate After a Level 3 Survey:
1. Review the Survey Findings:
- Identify major issues highlighted in the survey, such as structural problems, damp, subsidence, roof repairs, or outdated systems (e.g., wiring or plumbing).
- Note the estimated repair or maintenance costs, which are often provided in the survey.
2. Get Repair Estimates (if needed):
- Obtain quotes from contractors to understand the actual cost of addressing the defects. Even if the surveyor has added their costs, these can only be guidance costs. A contractor will have more accurate costs.
- This strengthens your negotiation position by presenting factual evidence of the financial burden.
3. Decide on Your Approach:
- Renegotiate the Price: Request a reduction in the purchase price equivalent to the estimated repair costs.
- Request Repairs: Ask the seller to fix the issues before the sale is completed.
- Walk Away: If the issues are too severe or the seller is unwilling to negotiate, you have the right to withdraw from the purchase.
4. Present Your Case to the Seller:
- Provide a clear explanation in a letter or in a written format rather than a verbal conversation, of the survey findings and how the issues impact the property’s value.
- Back your request with evidence, such as the survey report and repair cost estimates.
- Be professional and reasonable in your request to maintain good relations with the seller.
5. Adjust Your Offer:
- Decide on a revised offer that reflects the repair costs or risks involved.
- For example, if the survey reveals £10,000 worth of roof repairs, you might ask for a £10,000 reduction or adjust for part of that amount. You may not get the whole £10,000 reduction, but a large proportion of this is possible.
Considerations When Renegotiating:
- Seller’s Circumstances:
- If the seller is in a hurry to sell or has struggled to find buyers, they may be more open to negotiation.
- Conversely, a seller with multiple offers may be less inclined to reduce the price.
- Market Conditions (Supply and Demand):
- In a buyer’s market (where there are more properties than buyers), you may have more leverage.
- In a seller’s market, the seller may be less willing to negotiate.
- Your Flexibility:
- Decide in advance how much you’re willing to compromise. If the seller won’t budge, assess whether you’re still willing to proceed. Do you like the property that much? Are you going to be staying at the property for at least five or ten years that it won’t matter that much about the price differences now.
Is Renegotiation Common?
Yes, it is very common for buyers to renegotiate after a survey. Sellers are often aware that a comprehensive survey might reveal issues, and they may have already factored this into their initial asking price. However, if major defects are uncovered that the seller was unaware of or you were unaware of when you first made your original offer, renegotiation is a reasonable and accepted practice and is encouraged. Everyone likes a bargain; and by asking, you have nothing to lose and everything to gain.
Example of Renegotiation:
If the survey reveals a damp issue costing £10,000 to repair, you can:
- Request a £1,000 price reduction.
- Ask the seller to cover the cost of the repairs before completion.
- Split the cost of repairs with the seller (e.g., a £5,000 reduction in price).
Final Tip:
If renegotiation feels daunting, enlist the help of your estate agent solicitor or a friend who is more experienced or confident in negotiating. There also specialists available that can help in this process. They can communicate with the seller on your behalf and help you secure a fair outcome.
