US based vendors want an additional £10k owing to Brexit!

US based vendors want an additional £10k owing to Brexit!

Author
Discussion

Tallow

1,624 posts

160 months

Thursday 30th June 2016
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Lucas Ayde said:
Why do you need to immediately transfer all your funds to USD? Just transfer what you need to cover immediate expenses and hold the rest in a sterling bank account until such time as you feel is right to change them. You can set up a non-resident sterling account if you are going to be resident somewhere else (the US) - just find a suitable international bank, HSBC are pretty good for this sort of thing.
Well it's unrelated to this, but basically it will form part of the funding for the investor visa that I am getting. The money will essentially be held in escrow during the processing, and the processing can't start until the funds are transferred.

Still on the plus side at least I'm escaping being somewhere where there's an increasingly acrimonious debate about immigration going on. Oh... Wait...

Lucas Ayde

3,541 posts

167 months

Thursday 30th June 2016
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Tallow said:
Well it's unrelated to this, but basically it will form part of the funding for the investor visa that I am getting. The money will essentially be held in escrow during the processing, and the processing can't start until the funds are transferred.

Still on the plus side at least I'm escaping being somewhere where there's an increasingly acrimonious debate about immigration going on. Oh... Wait...
Bummer - don't suppose they'd let you hold the funds in a foreign currency - Sterling - account operated by a US Bank (Citi maybe)?

I was in a situation where I'd worked outside the UK for a number of years and almost fell into the trap of converting my savings to Sterling when I moved back but luckily took a look at how exchange rates compared historically and came to the conclusion that I'd be better off holding on to them until rates improved. Worked out extremely well over the following years.


Tallow

1,624 posts

160 months

Thursday 30th June 2016
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Lucas Ayde said:
Bummer - don't suppose they'd let you hold the funds in a foreign currency - Sterling - account operated by a US Bank (Citi maybe)?

I was in a situation where I'd worked outside the UK for a number of years and almost fell into the trap of converting my savings to Sterling when I moved back but luckily took a look at how exchange rates compared historically and came to the conclusion that I'd be better off holding on to them until rates improved. Worked out extremely well over the following years.
Possibly, it'll be another couple of months until completion, so I'm just going to wait and see what happens in that time. I'll speak to my lawyer and bankers once I get to that stage and hopefully find a solution.

The way I see it, it is largely out of my control so I will try to avoid worrying about it for now. Going back to the original point of the OP, I would think the vendors of this house would be well advised to behave similarly.

walm

10,609 posts

201 months

Thursday 30th June 2016
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Lucas Ayde said:
Tallow said:
Well it's unrelated to this, but basically it will form part of the funding for the investor visa that I am getting. The money will essentially be held in escrow during the processing, and the processing can't start until the funds are transferred.

Still on the plus side at least I'm escaping being somewhere where there's an increasingly acrimonious debate about immigration going on. Oh... Wait...
Bummer - don't suppose they'd let you hold the funds in a foreign currency - Sterling - account operated by a US Bank (Citi maybe)?

I was in a situation where I'd worked outside the UK for a number of years and almost fell into the trap of converting my savings to Sterling when I moved back but luckily took a look at how exchange rates compared historically and came to the conclusion that I'd be better off holding on to them until rates improved. Worked out extremely well over the following years.
Tallow.
This is essentially bad advice.

Lucas has explained that he took a massive FX punt and won.
This is frankly crazy.

He is essentially suggesting that as a complete novice, he somehow has greater insight into the FX markets than the legions of professionals who are making multi-trillion dollar bets every day.
That's absurd.
And for what it is worth (not much) the suggestion that the GBP is going to significantly "recover" vs. the USD over the short-medium term is very much hope over reality.

The SENSIBLE thing to do is to match your future expense currencies with your savings currency.
That is the best natural hedge.


Think of it this way.
If I had come up to you and said...
"Hello, you know absolutely nothing about exchange rate volatility and trading, would you like to bet several hundred thousand pounds that the GBP will go UP against the USD from here...?"
You should have told me to eff right off. Of course you don't want to start random FX speculation as a hobby.

So why on earth would you start doing that just because you happen to have a bunch of savings.
The very LAST thing you should be doing is gambling with it and trust me that is EXACTLY what it is: gambling.

Oh and again it is bad advice but the vast majority of the banks have a negative outlook on sterling.
If the BoE drops interest rates then it will tank vs. both the EUR and USD.
And given the ridiculous clusterfk going on with people trying to run the country let alone the Brexit risk... betting against what is a pretty rock solid economy (US) right now is a little crazy, IMHO.

Just MATCH your future outgoings with those savings.

walm

10,609 posts

201 months

Thursday 30th June 2016
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As a follow up...
I am specifically talking about USD or EUR vs. GBP.
If you are in a high inflation, high interest rate economy then the direction of travel for the FX is easier, certainly according to PPP which adjusts for high vs. low inflation through interest rates...

i.e. if you are moving to Zimbabwe it's probably sensible to keep your savings in GBP!

Tallow

1,624 posts

160 months

Thursday 30th June 2016
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Thanks for the additional comments walm, appreciated.

My explanation of the situation was perhaps a little abridged in order to give a succinct response to the OP's situation. You make a good point, although the real issue for me is that until I liquidise my assets I have little choice but to wait and see what the exchange rate does.

I've already lost a good amount due to the current situation and this could get worse or it could get (marginally) better. I agree that it's highly unlikely we will see a full recovery. Until the cash is in my bank it is not even a choice that is possible to make so I would prefer not to ruminate too much and focus on other logistical matters to avoid getting too wound up about it.

Again, to take this back to the OP's first post, I would suggest that the American vendors are in a similar situation: They would be much better off looking to close as soon as they can so they have something liquid to work with. If it was me I would remind them that if the deal goes south or there is protracted negotiation, they have the most to lose. They would be well advised to push for completion as fast as possible - both because of this and because of potential uncertainty in the property market over the longer term.

g3org3y

Original Poster:

20,606 posts

190 months

Thursday 30th June 2016
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walm said:
As a follow up...
i.e. if you are moving to Zimbabwe it's probably sensible to keep your savings in GBP!
Keeping this as my back up option for the time being. biggrin

Tallow said:

Again, to take this back to the OP's first post, I would suggest that the American vendors are in a similar situation: They would be much better off looking to close as soon as they can so they have something liquid to work with. If it was me I would remind them that if the deal goes south or there is protracted negotiation, they have the most to lose. They would be well advised to push for completion as fast as possible - both because of this and because of potential uncertainty in the property market over the longer term.
I'll be speaking to the estate agent tomorrow. I think it's better to do that than send an email.

I'd be half tempted to threaten a reduced offer in view of the roof situation but tbh, I just want things to proceed and am not interested in rocking the boat.

I'll let you guys know how I get on.

DonkeyApple

54,920 posts

168 months

Friday 1st July 2016
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Ozzie Osmond said:
It's a negotiation. The other side have pointed out quite reasonably that the background to the transaction has changed and they want to renegotiate. Whether or not OP agrees he needs to deal with the situation. At the end of the day these late stage rengotiations are far from uncommon and it's just a matter of working through it.

Realistically OP has three options, because just saying "no" is a high risk strategy,
a) Find a strong counter-argument to support the original deal, put that argument to the other side and see if the deal can stick, or
b) Show understanding and agree to meet them half way, or
c) Just suck it up - if the pain of having to start again would be too great.
Not realistic in this case. The vendors aren't going to get a sale by pulling out and upping the price to cover their fx diff. As a deal all they have achieved is showing their hand and the U.K. buyer has been given the upper hand in reality. They are sellers, they are overseas, they will be being scared by their domestic media. You can just tell them to deal now and lock in their risk (that they should have hedged) or carry on holding and risk incurring even greater risk.

The real problem for the buyer is the fact that as it is a home then natural emotion will be a stumbling block to playing the game. But you'd never concede ground on a deal that is in your favour like this. Better to walk away.

g3org3y

Original Poster:

20,606 posts

190 months

Friday 1st July 2016
quotequote all
I've spoken to the estate agent this morning. He was understanding (and a little annoyed by the entire situation truth be told). I explained to him about the roof and stated that as a gesture of goodwill we would be happy to honour our original offer.

Apparently they'll let me know how the vendors want to proceed by the end of the day.

I'll be more annoyed if they want to proceed as it suggests to me they are chancers. If they do pull out it suggests either genuine concerns on their part. I'll lose the money for the survey but not a massive amount in the scheme of things.

Will keep you chaps updated. Thanks again for all those who have contributed to the thread. smile

Hoofy

76,253 posts

281 months

Friday 1st July 2016
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Piersman2 said:
Go back and politely tell them that due to the Brexit vote and market uncertainties etc... the house is worth £10K less than when your offer went in, and that all things considered you're prepared to keep to the existing offer to facilitate a quick sale for them. If they hang around though, you may not be able to proceed at this price in the near future.

Twunts!!!
thumbup

essayer

9,008 posts

193 months

Friday 1st July 2016
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I'd try and get some deadline in place for a decision. This whole 'get in touch by the end of the day' thing just creates uncertainty.
Put your conveyancer, surveys etc on hold and tell the agent you need a decision within 24 hours.
Start enquiring about other properties they have, or if they are a chain, properties at other branches nearby.

Cudd Wudd

1,084 posts

124 months

Friday 1st July 2016
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Best of luck OP.

Assuming the vendors knew you had a survey but hadn't been told the results, it was perhaps premature for them to make the move they did. They should have found out the results and then tried to use their argument to not let the roof point decrease the price.

You have been very reasonable and it sounds like whichever way it goes in will be the best for you. Good luck.

Fastpedeller

3,847 posts

145 months

Friday 1st July 2016
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essayer said:
I'd try and get some deadline in place for a decision. This whole 'get in touch by the end of the day' thing just creates uncertainty.
You are correct IMHO. Many years ago I realised the best way in these dealings is to say "it has to be done by 12th Sept" rather than "It has to be done in 6 weeks", because the "6 weeks" just drift along as a moving target. A date is err... definite cool

g3org3y

Original Poster:

20,606 posts

190 months

Friday 1st July 2016
quotequote all
Update:

Estate agent has been in touch and reportedly the vendor has replied that they genuinely don't think they can afford to sell it at the current asking price. Here is the email from the estate agent and the vendor that has been forwarded to me:

estate agent said:
> As per your discussion with my colleague, please see the email below which we have received from the vendor.
>
> I can confirm the vendor has, this afternoon, made contact with our Lettings Department in regards to listing the property for rent if required.
>
> I understand your reluctance to offer a further £10,000, however, if you could outline your final stance on this matter to enable us to take this to the vendor and move things forward swiftly. If there is any further flexibility on your offer, please do let me know.
>
> Kind regards
vendor said:
I understand their position - it's highly regrettable that the pound has fallen so sharply and with the announcement by the Bank of England that interest rates will be cut to stabilize the economy, there is no chance of short term recovery.
As we are US tax payers, and the IRS has a punitive approach to fx 'gains', we are uniquely disadvantaged by the surprise fall. It's effectively wiped thousands from our equity (and we'd already factored in a big tax bill at the 1.46 rate - now at 1.33). We'd also factored the roof into our asking price.

I feel for the buyers, as they, like us have been affected by circumstances outside their control. I understand their reluctance to up the price, but we wanted to give them an opportunity to proceed nonetheless.

Please share the contents of this email with my apologies.

We'll be putting it into the rental market straightaway.
Oh well. *shrug*

I'll email them on Monday to confirm 100% that we won't be paying more.

You win some, you lose some.

essayer

9,008 posts

193 months

Friday 1st July 2016
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I think you're being played, or they aren't serious. I'd pull out and look for another property. Tell them tonight so they know for the weekend.




Edited by essayer on Friday 1st July 19:17

mikefacel

610 posts

187 months

Friday 1st July 2016
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g3org3y said:
Oh well. *shrug*

I'll email them on Monday to confirm 100% that we won't be paying more.

You win some, you lose some.
I often find in situations like this it's best to just go quiet for a bit. It lets you think about things more and lets them stew/get nervous not knowing what you're up to. Also, I presume they've given their tenants notice and so will be losing rent after a certain point? Just tell the EA you're way for a few days and out of contact.

Remember, there's always more than one perfect house. Same goes for wives.

red_slr

17,122 posts

188 months

Friday 1st July 2016
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Personally I would just go quiet until they contact you again.

Find something else.

Its nice being able to listen to them play bull sh*t bingo for half an hour on the phone and then say.. err well sorry we already had an offer accepted on another place. Bye. Click.

NRS

22,078 posts

200 months

Friday 1st July 2016
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essayer said:
I think you're being played, or they aren't serious. I'd pull out and look for another property. Tell them tonight so they know for the weekend.




Edited by essayer on Friday 1st July 19:17
To me it sounds more like they were happy continuing to rent, like the OP said earlier. They had planned to sell before, but not with too big a loss. It could be that they're "normal" people and don't know that realising a (small?) loss now could be better in the long term if things collapse and push them into a big loss. Or it could be they have no need for the money now, and so previously the profit was enough to tempt them into selling, but with the loss of a lot of the profit they may have decided to wait however many years until it becomes worth it to sell again. Depending on what the rental income is doing it may not be affected by the currency conversion if it is paying the mortgage in the UK , or sitting in a UK bank account. So they could wait until it improves (could be a long time)!

I wouldn't waste theirs or your time ignoring them. Just say you're 100% not interesting in paying more now.

Good luck with the hunt. It may well work out in your favour with the indications that seem to be coming out about house prices, although it's too early to know yet.

Ozzie Osmond

21,189 posts

245 months

Friday 1st July 2016
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Ozzie Osmond said:
Realistically OP has three options, because just saying "no" is a high risk strategy,
b) Show understanding and agree to meet them half way
PH keyboard warriors like to say "take a tough stance". However, if you want the place it's IMO time to negotiate with a view to reaching a compromise. I'd offer 3,000 and see what happens - maybe willing to settle the difference 50:50 if necessary.

Maybe I'm a pussy but I've got a long track record of getting deals done. At the end of the day if both parties are unhappy with a deal it's probably about right.

But if you don't really want the place at all you might as well save yourself the trouble and just walk away.

jacethemutt

75 posts

103 months

Saturday 2nd July 2016
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Ozzie Osmond said:
PH keyboard warriors like to say "take a tough stance". However, if you want the place it's IMO time to negotiate with a view to reaching a compromise. I'd offer 3,000 and see what happens - maybe willing to settle the difference 50:50 if necessary.

Maybe I'm a pussy but I've got a long track record of getting deals done. At the end of the day if both parties are unhappy with a deal it's probably about right.

But if you don't really want the place at all you might as well save yourself the trouble and just walk away.
It's a risky time to increase an offer, if it was business as usual, I would maybe come round to your way of thinking if if was my forever home. But just after such a potentially massive change it is a massive risk to take, generally most people think downturn. If we are talking London though you might see more foreigners trying to buy and pick up a bargain due to the exchange rate, but anywhere else I can't see a good enough reasons for a rise in house prices to cover extra cost.

Just something to think about, if you are buying in a heavily funded EU area just be aware that Brexit may not see that money replaced. This could cause reasonable downturns in those areas specifically. If this is relevant to the OP might be worth pointing that out to vendors to scare them a little more as they may lose more money if they hold the property longer to rent it and later try to sell