FTB! What offer to make on 125k house?

Beckymarshall07

Hi all

Advice very much needed please. Me and my husband are interested in making an offer on the house next door to ours. We are currently renting at the moment in Mansfield and the house that is for sale is on the market for 125k as the elderley lady has gone into residential care.

The house itself is reasonably priced but needs money spending on it as it is very dated. The estate agent says there have been a few viewings for buy to let investors but I get impresion there has not been much activity. The house has been on the market for about 3 months.

We are FTB and have a 10% deposit and are continuing to save. We dont have a mortgage sorted. Would like to know what offer to make on it? I know 10% below asking price is not unreasonable but am tempted to put in asking price of 110k. What do you think? Higher or lower? There have been 3 properties on our small street up for sale for alot longer. The semi detatched next door sold for 147k in 2004 and the house we are interested in was bought at 90k in 2002.

Thanks in anticipation

Bf109

The semi detatched next door sold for 147k in 2004 and the house we are interested in was bought at 90k in 2002.

Sold prices or asking prices?

In my opinion.
Start low.
Very low.

You can bargain upwards as a buyer, but bargaining downwards is impossible.

Offer £80k tops - and see what the response is.

lynzpower

First of all, dont make an offer if you dont have the mortgage finance offer in place. Head along to a All of market broker ( such as charcol or similar) and ask what is the best mortgage you can get at the mo, and do you like/ can live with the rates?

I would personally go in lower than 110 in any case, but dont make ANY offers until you have your AIP in the bag.

SquatNow

Beckymarshall07 wrote: »

Hi all

Advice very much needed please. Me and my husband are interested in making an offer on the house next door to ours. We are currently renting at the moment in Mansfield and the house that is for sale is on the market for 125k as the elderley lady has gone into residential care.

The house itself is reasonably priced but needs money spending on it as it is very dated. The estate agent says there have been a few viewings for buy to let investors but I get impresion there has not been much activity. The house has been on the market for about 3 months.

It' a house in Mansfield that needs major work and there has been little interest at the current price. So it's overpriced.

Beckymarshall07 wrote: »

We are FTB and have a 10% deposit and are continuing to save. We dont have a mortgage sorted. Would like to know what offer to make on it?

How do you know how big a deposit you have until you know the price.

If you have say £12k deposit, then it's 10% of a 120k house or 20% of a 55k house. Ignoring the fact that most of your £12k would be eaten up by the costs/fees and you'll struggle to get a mortgage with only 10% deposit now, especially on the sort of money you'll be on working in Mansfield.


As it stands, my advice is to stay where you are and keep saving. Prices are in freefall. the longer you wait the less you'll pay. It's at least another 2 years yet before the prices hit bottom.

mewbie_2

Mansfield, Nottingham?

I checked Property Bee and yes they are dropping, same as everywhere. 4 bed detached for 55k, 3 bed semis at 60k up for auction. I stopped looking after that.

That's a scary market to be buying into.

mikthe20

A BTL investor will be looking for yield. How much rent do you pay? Yield = annual rent divided by house price. You'd normally expect a yield of 8%-10% but in the last couple of years some silly landlords have accepted less than 5%. Anyroad, yield should be at the very least more than you can get in a bank savings account so should be at least say 6% or 7%. You also ought to discount that in order to refurbish.

So, how to calculate house price for a landlord:

house price = annual rent divided by yield

Let us know the figures - I bet it shows the house is well overpriced. HTH.

Beckymarshall07

Hi again

Thanks for the advice. Just to respond to some questions - yes its mansfield Nottingham. We would have a 10% deposit if we bought the house below 110k and we already have money set aside for fees but I take the point about getting a mortgage sorted out now. We are paying peanuts in the house we are renting (250 a month) as its my husbands sisters house. Houses prices are dropping here but I dont have a magic ball and dont know when they'll stop dropping. My thinking is be cheeky now when market is still uncertain vs looking for houses when mortgage lending becomes more affordable which I dont think is too far down the line. FTB are going to jump on the band wagon when that happens. Oh hum just my opinion :-)

MrSafeGaz

Average house prices fell by 1.9% this month, you don't need a magic ball to know that it is very unlikely that next month we will see anything but a further drop.

You are lucky enough to be paying a low rent which puts you in a very nice position to continue saving. While you are in a position where house prices are falling and your deposit amount is rising you would have to be crazy to buy now from a financial perspective.

glenni_2

MrSafeGaz wrote: »

Average house prices fell by 1.9% this month, you don't need a magic ball to know that it is very unlikely that next month we will see anything but a further drop.

You are lucky enough to be paying a low rent which puts you in a very nice position to continue saving. While you are in a position where house prices are falling and your deposit amount is rising you would have to be crazy to buy now from a financial perspective.

I agree with the chap above. Unless of course you have fallen in love with the house and know its the place you must live. If you must have the house then put in a sensible offer, there's no point wasting the sellers time offering a price too low. Have a look at http://www.zoopla.co.uk/ their estimates usually seem to be pretty much in the ball park most of the time.

Pick an odd number. Offering an amount like £107000 makes it sound like your are stretching your budget and offering as much as you can possibly afford. You could then have room to up it a little if its rejected.

I would still say stay put wait it out another 6 months though.

Bf109

House prices actually fell by 2.75%. The 1.9% is the seasonaly adjusted figure (ie. lies).

Prices now down 10.5% on the years and 11.5% since the peak.

moneybagsuk

Wow, I checked Nationwide and you're right - 2.75% drop in a month is a heck of a lot.