Unsure of Asking Price due to Stamp Duty

Matty0682

Hi All

I am about to put my flat on the market and am undecided on what asking price to set because of the stamp duty.

I own a 3 bedroom flat, and a couple of 2 beds in the same development (exactly the same lay-out but I less single room) sold in Jan and Feb 09 for £245k and £242k respectively. So here is my dilemma.....my flat has been valued by estates agents at £270-275k, however the stamp duty switches from 1% to 3% for properties over 250k. Therefore the buyer will be paying an additional £5k (at least) (£7,500 - £2,500) on top of their offered price.

So my question to this forum, would anyone ever consider, in this falling market, to offer £260-270k for a flat they really liked? and would you be happy to pay the additional £5-6k stamp duty on top?

If people won’t be prepared to pay over £250k (because of the stamp duty), I do not want to alienate potential buyers by putting in on the market with a price that is too high. So I can either put in on for £270-275k and gamble on a £260k+ offer, or I can put it on for £260k and realistically expect a £250k offer
Your thoughts are much appreciated
Matt

princessamy86

You could offer to pay all or part of the stamp duty? I would probably say put it on at £250,000 as you will certainly open yourself up to more potential buyers that way. Realistically, you are going to get lower offers than your asking price whatever you price it at, and you're right, putting it on for £275k could potentially alienate a lot of buyers, as it's just not far enough over the stamp duty threshold for it to be worth it to them. I suspect most people would offer under £250k anyway, I know that I personally wouldn't offer over that if I could get away with it! They won't want to pay the stamp duty, but if you offer to pay all or part of it that might act as a sweetener.

Depends what you can afford to accept!

Matty0682

Thanks princessamy86, I never thought of offering to part/all of the stamp duty. Although is this difficult to arrange contractually?

I suppose I could put in on for £270k and then pay the £8k stamp duty.

If I don't get many interest at this, how long would people take until they lowered the price?

hethmar

That the problem, people will want to think they have a bargain, whatever price you put it on at.

JayZed

It's certainly an awkward dilemma, and one of the things about stamp duty that I find infuriating (why not have the extra 2% applied only to the amount above the threshold, in the same way that income tax is applied?).

You say that the EAs value it at £270-275. If that's a genuine, realistic selling price, then I would put it on above that price at around £290-295, and aim to accept an offer around the EA's valuation.

If you think the valuation is optimistic and are prepared to accept £250, then put it on at around £270 and aim to sell it for £250.

princessamy86

I don't think it's difficult to arrange, your solicitor will be able to sort something out for it. I would be wary of letting it go stale, I generally advise people to give it 6-8 weeks and then think about reducing, depends on the level of interest though. If you've had absolutely nothing then I would say reduce after a couple of months, if people are viewing or asking about it in the office then maybe leave it as it is. You definitely want to go with the agent most likely to give you proper feedback on price, it's no good just sat at £270k if there's absolutely no interest in it. If you do then decide to reduce, try and reduce a LOT! A £3k price reduction is just not as exciting as a £15k one!

princessamy86

JayZed wrote: »

It's certainly an awkward dilemma, and one of the things about stamp duty that I find infuriating (why not have the extra 2% applied only to the amount above the threshold, in the same way that income tax is applied?).

You say that the EAs value it at £270-275. If that's a genuine, realistic selling price, then I would put it on above that price at around £290-295, and aim to accept an offer around the EA's valuation.

If you think the valuation is optimistic and are prepared to accept £250, then put it on at around £270 and aim to sell it for £250.

I'm not really sure this is a good idea, you want to get people looking round it, not pointing and laughing at the price. As evidenced on this forum, buyers really do their homework. Chances are they will just think the OP is trying his luck especially if recent sales were agreed at £50k less! I think the best way to sell in this market is to be realistic with pricing, and putting it on much higher just to get offer wiggle room isn't always a great idea. Did the EAs give an indication of what they actually thought you would achieve?

Doozergirl

It's a horrible issue and I have always tried to avoid having a property in this bracket as it's a nightmare to sell.

I would market for 275k with Stamp Duty paid. It isn't very complicated, your EA and solicitor will work it out for you if that's the offer you get - which people will be prepared to pay if they see yours is clearly better than anything at 250k - but it needs to be clearly better! If in two months you're not having any joy, it's time to drop the price - there's little point at marketing at more than 250k at that point because that's what you're going to be offered Be prepared for 250 offers at 275 though as well.

sarah_elton

Did you ask the agents what you'd be looking to achieve as a sale price? My valuations were all around £115k to market at, looking to achieve £100-105k or £105-110k depending on which agent it was. That's the first thing to ask them.

Secondly, I understand you want to price realistically and get sold, as I was the same, but are you selling yourself a little short thinking you'll only get £250k for it?

You say that two 2-beds sold in just the last two months for £242k and £245k. Although it's only a single bedroom, an extra room really should add more than £5k to your value, assuming that they're all in the same condition and all other things are equal.

Others are right that everyone in this market wants money off the asking price, so if you price at £250k you're inviting offers well under that (unless you do an "Offers in the region of £250k" job).

I agree with princessamy86 that 6-8 weeks is a good amount of time to go before reducing. Try and get whatever agent you use down to 6 or 8 weeks on the minimum sole agency period. That way, if you don't think the agent is working hard enough you can switch and drop the price.

Matty0682

princessamy86 wrote: »

I'm not really sure this is a good idea, you want to get people looking round it, not pointing and laughing at the price. As evidenced on this forum, buyers really do their homework. Chances are they will just think the OP is trying his luck especially if recent sales were agreed at £50k less! I think the best way to sell in this market is to be realistic with pricing, and putting it on much higher just to get offer wiggle room isn't always a great idea. Did the EAs give an indication of what they actually thought you would achieve?

The problem is that my flat is a 3 bed and this is extremely rare in the area. All flats in the area are 2 beds!

Therefore this is no real comparison on prices for us to make.

One of the EA's said an offer of £270k is realistic because they believed a 3 bed is highly disirable in the area.
The second EA said realistically expect £250k becuase of the stamp duty.
Decisions, decisions

sarah_elton

But if you market as stamp duty paid, and sell at £270k, you pay £8,100 leaving you with £261,900 - better than £250k.

I guess the downside is if you market as stamp duty paid and end up having to accept an offer of £250k, you're still stuck paying their 1%.

I would be inclined to try it at £275k stamp duty paid to see what happens. Then drop to £250k later and lose the stamp duty offer if need be.

I still think an extra bedroom should add something to the value....

Out of curiosity, at £275k say, what would you be up against in your area? How much are 2 and 3 bedroom houses on the market for?