Buyer drops offer by £27k

beer_tins

snoopy78 wrote: »

My description was not very good but meant the same thing, forwards basically agreement between two (or more) parties so can be customised, where as futures have standardised amounts and valid time periods before they close out.

Yes, sorry that was a bit pedantic, just wanted to clarify. The customisation is exactly what prevents there being a significant amount of activity (let alone trading) in property derivatives. When you have to write up individual contracts, it makes in much more of a hassle than simply calling up your broker to invest in "x" (pre defined tradeable contract).

Badger_Lady

Hi OP!

It seems to me that the buyer is looking to adjust their offer in light of the property doom, and has erred on the cheeky side as an opening bid.

I would simply work out a price at which you're willing to sell (bearing in mind the reduced hassle it might bring, if you're not living in the property) and negotiate a compromise from there.

If your flat could now be valued at £185k, as a previous poster suggested, then this might be a reasonable price to now sell at to the existing buyers... I'd be tempted to offer them something around £190k to start with.

Just a personal opinion!

Of course, then you need to think about what happens if they won't meet you in the middle - what would be the benefits of a (comparatively) quick and easy sell now, weighed against the loss of only getting £170k for it?

keeprenting

chucky wrote: »

it's such a poor article that people like Snoopy actually believe 100% of the information in it - just shows the ignorance and lack of understanding of the bigger picture.

Wait a minute, Chucky. Earlier on this thread, you said there was no such thing as a UK property derivatives market. Maybe you should be a bit more cautious about describing articles as "ignorant."

keeprenting

chucky wrote: »

and which property derivatives market is this!?!? please tell...

hahaha - let's just make things up and exaggerate

This is what your original post said. In fact, I wasn't making anything up, or exaggerating.

leeshowes

Hi Thanks for all your input.

The derivatives markets stuff makes no sense to me i am not really up on this financial lingo.

With regards to the property i have not yet let it. I would need to re-mortgage and probably furnish it. The current mortgage is for £98k so i have plenty of equity in it to get a buy to let. When i bought the property it was a Right to Buy from the Local Authority it has only recently been transfered to the Housing Association for management. I previously had consent from the Local Authority to let it and there are several other properties in the area some within my building that are already let so i doubt that would be a problem. A neighbour has advised me that they are currently paying £210 pw for their flat through a private landlord so i think the maths add up quite nicely if i were to hold on to it. Just looks like my luxury holiday is on hold for a few years lol. Thanks again for you advice it is appreciated.

Mr_Stew

keeprenting wrote: »

Maybe this link will help:

http://www.guardian.co.uk/business/2008/jun/09/housingmarket.houseprices

Good to see the Guardian getting it right again... oh hang on, what's this I've found.

http://www.guardian.co.uk/business/2006/jul/17/housingmarket.houseprices

Californication

beinerts wrote: »

Yes, sorry that was a bit pedantic, just wanted to clarify. The customisation is exactly what prevents there being a significant amount of activity (let alone trading) in property derivatives. When you have to write up individual contracts, it makes in much more of a hassle than simply calling up your broker to invest in "x" (pre defined tradeable contract).

Sorry, but this misses the point. Liquid markets are not about calling your broker to buy a few contracts. The OTC (over the counter) markets are enormous. Think about bonds, interest derivs, FX. The contracts on FX/IR derivs are typically on amounts of $10/100 million. A liquid market (like interest rates/FX derivs) is where someone can take out hundreds of millions of dollars in trades without moving the prices around. You can't do this in exchange traded equities for instance.

HTH

Edit:

Not to suggest that property deriv markets are large or liquid.

I'm also not convinced by a previous poster who claimed that mortgage brokers are big users of property derivs. Was there any evidence of this?

Rssr_2

Here's a piece on UK property derivatives. OK it's a sponsored statement, but it's still quite interesting:

http://db.riskwaters.com/data/risknet/pdf/2007/124-125_Risk_0907.pdf

beer_tins

Mr_Stew wrote: »

Good to see the Guardian getting it right again... oh hang on, what's this I've found.

http://www.guardian.co.uk/business/2006/jul/17/housingmarket.houseprices

Exactly, take with a large pinch of salt.

beer_tins

Californication wrote: »

Sorry, but this misses the point. Liquid markets are not about calling your broker to buy a few contracts. The OTC (over the counter) markets are enormous. Think about bonds, interest derivs, FX. The contracts on FX/IR derivs are typically on amounts of $10/100 million. A liquid market (like interest rates/FX derivs) is where someone can take out hundreds of millions of dollars in trades without moving the prices around. You can't do this in exchange traded equities for instance.

HTH

Edit:

Not to suggest that property deriv markets are large or liquid.

I'm also not convinced by a previous poster who claimed that mortgage brokers are big users of property derivs. Was there any evidence of this?

I take your point. My point was largely that until these markets are large and liquid, they are not a significant indicator of the underlying asset like e.g. commodities markets are.

I realise that liquidity isn't "calling your broker to buy a few contracts", but making contracts tradeable through standardisation would massively increase liquidity by opening it up to so many more people.

Also, as the argument about properties derivatives "markets" continues, I'd like to point out:
1) There is no "market" in the sense of a town food market or equity, bond, derivatives market.
2) There is a "market" in the sense a housing market or a market in football players (there contracts are seen as tradeable). These markets are different, you are never buying like-for-like and what you are trading is not easy to compare or standardise. Some people won't see this as a "market".
An earlier post hinted at a "stock exchange" style transparent market in property derivatives, when in fact this is far from reality.

Property is one of those areas where it's hard to tell what the market is doing, you only have "average" prices to go by, but unless you sell e.g. 'x' amount of 3 bedroom houses and 'y' amount of 2 bedroom flats in every area every month, the stats are merely an indication. Most people have seen drops in their area, but you can only really get a good idea of how much by looking at what price similar properties have sold at over a given time period. Even then it's tricky because even though a group of flats may have been built identically, they will all be in different condition.

Got to say I'm enjoying the debate, even though it has gone wildly off topic (should have opened a new thread really!).