Help with Estate Agent speak

sympatex

Hi all, hopefully someone's had some experience of this.
small background, i'm a FTB with my gf in the south east, we've been looking for just over a year and are aware of the problems with the housing market and hopefully by holding out longer we will get better housing for the same cost. We keep tabs on the market using property-bee and rightmove and nethouseprices to see the prices attained by the few houses that are selling.

We've seen one house thats sparked our interest and it's been up since late June 08 so not on for a long time, it's a 3bed semi with separate dining room, lounge, family room and alround good egg. It started life at OIEO 270k and has gradually gone down to 245,000 and has now updated to "Guide Price" 245,000.

My first question is does guide price suggest to you the vendors are more likely to take offers, we're looking at offering 10% less as our first an final offer.

220 is the max we are prepared to spend on our first house. At 220 if accepted would take house prices back to the beginning of 2003 according to nethouse prices on this road/area. Although the argument of "it will be cheaper in 6months is 99% true in my mind, houses in this area don't come up often sadly.

Any opinions would be greatfully received!

GDB2222

I really don't know what guide price is supposed to signify, unless it's going to auction. I would just offer what you think it's worth and can afford, or hold out a while longer until something better comes along.

You have no idea, really, what the vendor's position is. For example, they may owe £250k on the property, or they may owe nothing. They may have just won the lottery and be dying to move into one of those footballers wives places.

Kez100

If you have been loking for sometime, are you sure the funding will still be available at the level you are looking at?

It probably means the EA has been hassled by the vendor, told them to drop again and they don't want to - so a mid way point has been agreed changing status to 'guide price'.

You just never know. In a dropping market I wouldn't ever set my heart on a particular house as you don't generally get a real bargain that way. If you feel you have to buy now in a dropping market, I'd go in very low to test what they are up to but then, if not agreed, back off and keep looking. It will be those inheritances, repos and desparate sellers that will be most likely to drop the most. You won't know if they are in one of these catagories unless you go and check the property out.

The other thing is, so often on paper a property seems right and then you go in and it doesn't. Our present house we both said no way too when stood outside waiting for the owner (ours was a private buy). As soon as we went it we loved it! Been there 14 years now with no intentions of moving.

sympatex

I had a new mortgage certificate given to me a couple of weeks ago, although this is no contract the advisor did say that with the information given and a clean credit history (we have been offered a mortgage but the offer expired after 3months issued in April 08) we should be ok on that front.

I understand we don't know the vendors position, i think we will just have to go see it and if you get the feeling stick our only offer in and just wait it out, either way whats meant to be will happen! Thanks for your help. Wondered if guide price was code for "we'll accept a reduced offer"...

lethal0r

sympatex wrote: »

Wondered if guide price was code for "we'll accept a reduced offer"...

I think this is a reasonable assumption.

I've just seen a house go from being priced as '£119,950' to 'offers over £115,000'. A pointless change which I would take to mean that they're either close to negative equity or are in denial over house price falls. Unlikely to accept a low offer I think.

poppysarah

What can you realisticly afford? What deposit have you got?

IHS88

Hi sypatex

Guide price is really auction speak for "offers around".

A dilemma for you. Market will fall but houses dont come up that often???

The answer. Buy well.

You are a desperate vendors dream come true. You've got nothing to sell and you're not in a chain. If you have your finance arranged you're on the home run.

On the market at £270k in June? You should be coming in with an offer at around £215k with a view to perhaps increasing your offer to £220k.

How much the market will fall nobody knows and purchaing right at the bottom of the market is wishfull thinking.

If you plan on living there for at least a few years, I dont think you could go too wrong at this level.

What did the vendors pay for the house? Where are they going? Always good to know these answers as it will give you an idea as to whether a cheeky offer could be accepted.

If you plan on bidding well below the price you see it on the land registry,there may not be enough equity for the vendor to accept a lower offer.

Good luck and let us all know how you get on.

sympatex

Poppy, We've set our limit to borrowing 185k we feel we can afford to borrow this as its 3.7x our joint income which is still a bit of a stretch but there's simply nothing for less we would be able to stay in for say 10years (if housing market goes down for a considerable time) . We've saved 27k between us and we're planning on borrowing the remaining 8,000 offered to us by our parents.

We're willing to put in the offer and expect to get rejected but hopefully they will come back in a few months by which time we would have saved more appx 1,000 a month between us. We're not going to stretch any further in a falling market.

IHS88 - thanks for your usefull reply, i checked on nethouseprice.com and they probably bought it prior to 2000 or as a repo as there is no information on the house. So hopefully they should have a sizeable amount of equity.
As it's a 3 bed + 3 other rooms i don't forsee it being a house we would ever NEED to move from given all 'expected' events..unexpected i can't really plan for!

Hmm i think it's going to be worth a look and a chat with EA. We've set our targets and there isn't any flexibility. 220 or nothing, not sure if i want to go in lower as if we then say oh actually we'll offer 5k more the EA will just pressure more out of us.

Incisor

sympatex wrote: »

... Hmm i think it's going to be worth a look and a chat with EA. We've set our targets and there isn't any flexibility. 220 or nothing, not sure if i want to go in lower as if we then say oh actually we'll offer 5k more the EA will just pressure more out of us.

You said 'first and final offer' in your first post. While it might work out the way you think, more likely you are going to provoke a little tantrum from the owner, which the EA gets to see, but you only hear a little of, with an ultimatum of £240,000 or no deal. If the EA is worth his salt and he thinks that you are good for your offer and that you are free to buy, then he will do his duty, pass on the vendor's counter offer to you, but bear you in mind. One day the vendor will go back to the EA and tell him to get more out of you. If you have already given full and final, there is no more to come, unless you soften and offer some more.

But if you start below your best offer, you can give the vendor the satisfaction of squeezing a bit more from you and still remain within your budget. If you don't go this way, then the vendor feels trapped and resents you if the deal is accepted or you lose out on making a deal.

sympatex

Thanks Incisor for your view, i guess that's a good reason too it's not meant to come across as an ultimatum, its meant to come across as "we will give you everything we can afford" if it's not enough then fair enough. it's a non starter!

With all the bear news about at the moment maybe in a couple of months or so they will come back!

Incisor

sympatex wrote: »

... its meant to come across as "we will give you everything we can afford" if it's not enough then fair enough. it's a non starter!

In a sellers' market, your position would be very credible, but in the current buyers' market, the proportion of buyers who are offering the max they can afford rather than offering the min they can get away with is much reduced, so you will be quite hard pressed to convince a seller that you are offering the max as first go.