How low is too low on an offer?

jamtart6

Davesnave wrote: »

If the road is as good as you say, however, there may be some competition, as you won't be the only couple sitting on your hands.

Yes it is a great road. I'm thinking of all possibilities and even if we had worst case scenario this would be somewhere I'd happily live on my own (ps-this is me being fatalistic and worrying about worst case, we're getting married not divorced first!!) and its right by my family, and I know all of the neighbours and the people who back onto the house and most of the people in the road. I'd feel rightat home I think. I'm excited, but I do think there will be lots of people going after it.

If the interest rates went up to 12%, then the price of the mortgage would be less than what we were willing to pay for a house when we started looking in March, so at 5% or whatever it is at the moment, it would be quite comfortable. I'd much rather have a slightly smaller house and be able to afford the payments, as you just don't know these days who will get made redundant etc.

Thank you also for your sensible answers. I know its not the best time to buy as I'm sure they will comedown more, but this is a great price for this house and I appreciate your advice on offers rather than telling me not to buy. :T

poppysarah

OK step back and look.

Not enough rooms - don't settle for something you'll not be happy with just cos you think you'll be getting a bargain.

Painting etc needed - costs money and if it'll push the overall sum of money above what you'd pay for something that doesn't need the work doing then you're not getting a bargain.

If it needs painting it probably needs rewiring, bathroom, kitchen etc. You'd be pouring money in under the foolish guise of "oh its ok to spend £20k cos we're adding value" - no you're not. you're just wasting money.

Look for a house that has all the rooms you want and will want for the next 5-10 years and start playing a long game. Don't rush. Keep saving and wait for the right house.

besonders1

It depends how much the vendor originally paid for the house. I alway look at this when making an offer, if the seller bought it in 1998 at £90K then they would probably break even as long as they could find a buyer now and not leave it too late when the credit crunch gets worse. The "Manic" prices era started in the early 2000's so people who bought then will be the ones who will be in the most unlikely to reduce further but there most only be a handful of people who bought at this time.

At least if you offer 50% you could always increase your offer later on especially if you don't get attached to one house as some sellers will ring you back to negotiate. It is harder to reduce your offer if you have offered too much and regret it as I don't think it is right to raise a sellers hopes and then gazunder.

jamtart6

thanks poppysarah and besonders1

I do know what you mean, but looking at the potential of the house, there is room to extend at the side and back (dads a builder) if we wanted one extra room but the location is lots more important than this extra room. We want to do the whole thing up anyway as we're not in a rush to move in, so wouldnt be adding value to sell it, we would only do things to it for our benefit. A house I want with all the rooms I want is not feasible to buy! The current price reflects the amount of work I would have said. But if we had bought it at £140k and it didnt need decorating, we would have wanted to do it to our taste anyway so by getting 20k off the price and doing it ourselves is better than paying 140k and doing it ourselves?

besonders - good idea! I will get looking on a past house price website edit: looks like it was purchased before 2000, so not on the websites. last similar house to sell in 2000 was at £62k, a 2bed in the same road sold in feb for £145k (eek!)

huntersc

Right, it was purchased pre 2000. Means there's lots of equity in there. Probably no mortgage. £95k not a penny more. You have a broker ready to be called confirming your mortgage offer and a solicitor's number so the conveyancing can begin.

The offer is time limited, open till the end of play tomorrow. It'll be the only offer they get in a long time, plus there's a lot of work, take it or leave it. Wait for another 6 months the property will be worth £85k.

Play it hard.

Alternatively, if you're a bit of a girl then offer whatever the vendor wants

jamtart6

huntersc wrote: »

Right, it was purchased pre 2000. Means there's lots of equity in there. Probably no mortgage. £95k not a penny more. You have a broker ready to be called confirming your mortgage offer and a solicitor's number so the conveyancing can begin.

The offer is time limited, open till the end of play tomorrow. It'll be the only offer they get in a long time, plus there's a lot of work, take it or leave it. Wait for another 6 months the property will be worth £85k.

Play it hard.

Alternatively, if you're a bit of a girl then offer whatever the vendor wants

I am a bit of a girl haha! I don't really want to lose it (my poor OH hasnt even seen it yet and I've picked the wallpaper! :rolleyes:) there are no houses in this area under £140k at a reduced price! I dont want to pay full whack either!

Is that what I'm telling them that we have a broker ready to confirm our mortgage? does that make us sound stronger than "yes we're hoping to get it sorted"

moneysaver

Surely if you are looking to buy a house you must find out the actual value of the house first, then make an offer from there based on what you think it is worth to you. Also what you can afford to pay in repayments.

It is no good making an offer on a house if your offer is way above or well below the actual value.

Find out the value first then work from there.


Moneysaver

huntersc

jamtart6 wrote: »

I am a bit of a girl haha! I don't really want to lose it (my poor OH hasnt even seen it yet and I've picked the wallpaper! :rolleyes:) there are no houses in this area under £140k at a reduced price! I dont want to pay full whack either!

Is that what I'm telling them that we have a broker ready to confirm our mortgage? does that make us sound stronger than "yes we're hoping to get it sorted"

I should have guessed from the name!

"I don't want to lose it" is a statement that should be thrown into the bin. You're buying with emotion here and that's not good.

Put it this way, you're about to invest the most money you have ever invested, so much money you have never even seen it in your hands, money that could ruin you, money that it would take 5 years (?) to earn, into a market that is in it's worst state in 30 years while the economy is in a massive recession.

Now, anyone that says they "don't want to lose it" or is concerned with picking the right wallpaper is a lunatic

Think about what you're doing. The moment you enter into this purchase and let your emotions get into it you're going to make the wrong decision.

If this was not a house but something else that cost a load of money, and the market for that item was in it's worst state in living memory, no one wanted to buy, would you still risk your financial security on it?

So you need to forget the wallpaper

Offer a price that protects you from falling prices, a price that you can afford especially once you go onto a standard variable rate, imagine interest rates are at 7%.

Without seeing the house and going by what you are saying, it sounds like I wouldn't offer over £95k.

As for negotiation tactics, yes, having a broker ready to call to confirm your financial status is a massive plus. The EA will advise the vendor that you are in a brilliant position to get going. Same with a solicitor, the EA can get the letters out today and the solicitor can start work tomorrow.

I would pitch it to the EA. "Get the vendor to accept the offer you have a rock solid offer from a person that knows the locality, has a mortgage in place, can have a survey in within a week and a solicitor ready to get this wrapped up in 4 week. You'll have your commission faster than you can blink. Alternatively wait for another 6 months and 'hope' that someone in as strong a position as me comes along. You might get your commission before next Christmas. Plus, you know as well as I do by the time you find a new buyer the property will have dropped another £15k so take the offer now".

But that's me

If you REALLY want the house, have tons of money and don't care about prices etc and don't want to negotiate then be a jamtart and offer £10k over asking price That'll make the vendor and EA really happy.

That's what you want to do isn't it? Make the EA and vendor as rich and happy as possible?

Seriously, if you really want it then offer whatever the EA asks for. Personally I think it's a mistake but it's your decision.

Heyman_2

huntersc makes some good points there, but he/she is operating from a position of absolutely no emotion as has been made clear (i.e. a financial transaction rather than a place to make your home).

It's very easy to fall in love with a place and let your heart rule your head, so I think you have to strike a balance between that and the fact that you are shelling out a heck of an amount of money. The lower your outlay, the better!

It sounds like the EA is already trying to play you off against 'another' couple (might be a completely imaginary couple!) so you need to be strong with your offer.

Maybe offer 100K (just so you're at least in the 100s) and then time-limit it as other's have suggested.

flissh

lol, huntersc, I want you with me when I view a property, what great advice.

jamtart, no one can tell you how much to offer, only you can work that out, but heed all the good advice above. I have 'lost' houses I 'fell in love' with, (in the old days of gazumping!!) and another always came along. We look back at those we lost now and invariably say thanks to our Guardian Angel that has kept us from making mistakes.