How low can you go?

Chop

Hello, FTB here!

We're just beginning to look at houses and know that we can afford up to around £150k. (We're about to get mortgage appointments etc to finalise the exact figure we can afford)

My question is, how much under an asking price do you make an offer? I am sure there is no hard and fast rule and it depends on the local market, house itself, chain etc etc I don't trust Estate Agents to be honest about what the vendor wants to realistically achieve.

We're in a good position as FTBs and can move very quickly - so I'm wondering to what extent we can exploit this? Eg, could we offer £150k for a house on the market for £165k? Is there a point where we'll just really put the vendors backs up if it's a ridiculously low offer?

Also - Phil Spencer once said that you shouldn't offer a round figure, ie £150k, you should always make it look like you really have stretched to your absolute limit and offer something like £151200......make it look like you have scraped every last bit of money and really can't go any higher. Is there any truth in this?

Any advice for a newbie much appreciated!

Ken68

Cash is king, Chop, little point in saying you can move quickly if somebody else, like the bank or mortage man, doesn't move equally as fast.
Find a house you like, show him the money, get a quick but sure survey and a fast solicitor. Job done.

NSR2

Chop wrote:

Hello, FTB here!

We're just beginning to look at houses and know that we can afford up to around £150k. (We're about to get mortgage appointments etc to finalise the exact figure we can afford)

My question is, how much under an asking price do you make an offer? I am sure there is no hard and fast rule and it depends on the local market, house itself, chain etc etc I don't trust Estate Agents to be honest about what the vendor wants to realistically achieve.

We're in a good position as FTBs and can move very quickly - so I'm wondering to what extent we can exploit this? Eg, could we offer £150k for a house on the market for £165k? Is there a point where we'll just really put the vendors backs up if it's a ridiculously low offer?

Also - Phil Spencer once said that you shouldn't offer a round figure, ie £150k, you should always make it look like you really have stretched to your absolute limit and offer something like £151200......make it look like you have scraped every last bit of money and really can't go any higher. Is there any truth in this?

Any advice for a newbie much appreciated!

I too I'm an FTB, with a limit of 180K
I've started off looking at property.
Yesterday I saw 170K 2 bed ex council flat.
I checked with nethouseprices and found out that flats sold in that block for 155K in 2004.

So I'm not going to be putting in an offer above 150K,
I'm probably looking at 140K if I wanted to put an offer in.

F_T_Buyer

Home track - http://www.hometrack.co.uk/ - says the selling price is 6% less than asking on average. So, aim for this.

Whatever you do, do not get emotional about one particular house. The EA will blead you dry. Preferably have 3 or so houses you like before you start to make offers.

One good tip, if you have the balls, is to say to the VENDOR (do not say it to the EA) "what is the lowest you will accept". Say nothing after this question (I mean nothing), and wait for the vendors repsonse. If you get a laugh, you will probably find they are not really interested in selling (they're probably testing the market). If they are a motivated seller you will probably get "err, well, err I don't want to take less than £xxx" - this always works a treat. If they are expecting it (or been asked before) they will say will say the asking price!

NAR

Chop, if your limit is around £150k I think you would be being reasonable going after properties on the market up to £165k. You are in a strong position as a first time buyer and offering 10% less than asking price is certainly not unreasonable. You might be able to squeeze an extra £2 - £3k if a property had been on the market for a while/seller needing quick sale/work required to property. You are in a situation to be looking for a bargain, without trying to be unrealistic. Good luck.


NSR2 you are looking at property and saying that it has not appreciated in value by 10% in 2 years; you are looking to get someone to accept a selling price lower than was acceptable 2 years ago - all I can say is (tongue in cheek) good luck! :rolleyes:

NSR2

NAR wrote:

...
NSR2 you are looking at property and saying that it has not appreciated in value by 10% in 2 years; you are looking to get someone to accept a selling price lower than was acceptable 2 years ago - all I can say is (tongue in cheek) good luck! :rolleyes:

Yes.
You see its only suitable for a FTB.
a FTB would need 50K to be able to realistically afford 150K.

Now I can afford that because of an inheritance.
Whoelse can? The EAs have actually informed me, that FTBs have been priced out of the market, the EAs line on this was "don't worry in 3 years it will still have gone up" (Which I take to be a total lie, in 10 yrs we will be back to where we are now)

I'm not going to use the postcode for the property I'm after, however, this is close by, look at the national price for flats!
http://www.upmystreet.com/property/prices/flats/l/tw11+8sd.html

Property prices haven't increased all that much, and I'm factoring in a potential fall.

In the meantime the owner is paying for a morgage on an empty property.
Who's going to give in first? Me, them, or their morgage company?

Also note there are other FTB properties out there, also so high, most FTBs can't buy them.
So in terms of price ranges, in the FTB market there are too few people chasing too many properties...

NSR2

NAR wrote:

Chop, if your limit is around £150k I think you would be being reasonable going after properties on the market up to £165k. :

Sorry to post again but I just re-read this.
Eerrr if his limit is 150K, he can afford to buy up to £145K ( need 5K for costs / spare change). Why are you telling him to spend above his limit?
That's dangerous!

silvercar

Your first offer should be high enough to be taken seriously and low enough to give you room to increase. We can all say try ridiculously low offers but if you want to be taken seriously accept that there is a limit below which the seller can't afford to make his next move or would be willing to sell out at at.

I always chat with the EA, ask them what offers would be acceptable. I've had comments back "as long as the offer starts with the number X its worth making" and "I know its above your limit but don't let that put you off, the seller is looking to move."

towseriv

I just had an offer accepted and the ask price was 19950, we settled on a price of 113k after starting at 105k and two days later we got accepted. The best rule I know of is ALWAYS aim to have your first offer rejected (but not total stupid figures) because if they are desperate and come back with a counter offer then you could end up paying less then you thought you would (we were prepared to go to just under asking price)

Hope this helps.

It may also serve as a warning for you to not get offended when some people (and they will) tunr you downand you think your offer was more than reasonable. There are some greedy people out there that think prices are still going to rocket (which in my opinion they are not)

NAR

NSR2 wrote:

Sorry to post again but I just re-read this.
Eerrr if his limit is 150K, he can afford to buy up to £145K ( need 5K for costs / spare change). Why are you telling him to spend above his limit?
That's dangerous!

Please reread post again. I suggested offers 10% less than £165k, which is £148.5k and therefore within £150k budget. I also suggested possibly offering £2 - £3k less. So therefore not "dangerous" advice. As a house buyer and seller for 25 years I do try to offer, especially to FTB's, good advice.

Doozergirl

I think it really depends on the person as to what price they can look to. If you can distance yourself and not get too emotive about property, then looking at £165,000 and making cheeky offers on a few properties may get you a house at the £150,000 mark. If you can't help but get excited and want to fall in love with a property, then you are better off not putting temptation in front of you and look to the £155,000 mark as a maximum.

Can't remember who said it, but someone here said that if your first offer doesn't embarass you, it's not low enough. You've answered your own question really - if you view enough properties, you will get a feel for the what the price of a property should be. If you find a house you like, then check websites for what others have sold for and do a drive-by for a better comparison.

Phil Spencer's advice is good, I think. It will give them an impression of you not being able to afford any more, but I'd use this on a second offer if the first is refused (I feel this would also be a more acceptable point to ask for the lowest a vendor will take). Third offer can then be what you've *managed to scrounge from relatives* (nudge ) if you're still getting turned down.