House Negotiations - Level of discount?

V6Matt

Hello,

I am 24 and considering buying my first home/flat.

I have a large deposit (after a considerable amount of work and sacrifice) and can get a mortgage of £180,000 (including the deposit). This is within my means and I still have money in backup for any rate changes e.t.c

My main question surrounds the price, I recently read in my local newspaper that the average discount of a property in the UK amounted to 14% off the asking price. Is this really realistic?

i.e. £180000 - 14% = £154,800 (just over £25k discount!) that’s surely not right?.

I am looking to buy a 2 bed flat (not a new build) in Clifton/Redland (Bristol) which is well known for its high prices and thus any discount would be greatly appreciated.

If the above isn't correct, what would you say a more realistic average is? Are properties still struggling to sell at the moment?

Thanks

princessamy86

It totally depends how long it has been on the market and how realistic the price was in the first place. For example, if the property came on the market in the last 2 or 3 weeks, and has been realistically valued and priced accordingley, then it will probably be worth quite close to the asking price. That figure of 14% is a rough estimate of how much the market has dropped over a period of time (around 2 years).

So, if you see what I mean, the property might be on the market at a price which is spot on for the vendor to achieve. I would personally say you would be mad to pay over £175k as this would keep you under the stamp duty threshold and reduce the amount you would have to pay.

Are properties struggling to sell? It depends on the area! As an EA (but up North), I can say we've seen an increase in activity but it depends on how the property is priced: price unrealistic=no sale. Vendors willing to price sensibly are selling with no problem as the buyers are out there, they just won't pay over the odds.

Things to consider:
1) Really do your homework; what has similar property sold for recently in that area? Is the price realistic? Has it already been reduced? How long has it been on the market for?

2) Factor in other costs such as conveyancing and actually moving, any decorating, survey etc.

3) Are there a lot of apartment developments planned for the area? Nothing will devalue your flat quite like a huge block of apartments which nobody wants to rent or buy.

Any questions just give me a shout, hope that helps though.

V6Matt

princessamy86 wrote: »

It totally depends how long it has been on the market and how realistic the price was in the first place. For example, if the property came on the market in the last 2 or 3 weeks, and has been realistically valued and priced accordingley, then it will probably be worth quite close to the asking price. That figure of 14% is a rough estimate of how much the market has dropped over a period of time (around 2 years).

So, if you see what I mean, the property might be on the market at a price which is spot on for the vendor to achieve. I would personally say you would be mad to pay over £175k as this would keep you under the stamp duty threshold and reduce the amount you would have to pay.

Are properties struggling to sell? It depends on the area! As an EA (but up North), I can say we've seen an increase in activity but it depends on how the property is priced: price unrealistic=no sale. Vendors willing to price sensibly are selling with no problem as the buyers are out there, they just won't pay over the odds.

Things to consider:
1) Really do your homework; what has similar property sold for recently in that area? Is the price realistic? Has it already been reduced? How long has it been on the market for?

2) Factor in other costs such as conveyancing and actually moving, any decorating, survey etc.

3) Are there a lot of apartment developments planned for the area? Nothing will devalue your flat quite like a huge block of apartments which nobody wants to rent or buy.

Any questions just give me a shout, hope that helps though.

Thanks, all sounds like common sense :money:

I have been looking at some of the websites that show how much homes have sold for in the area, but they all appear to be 2008 and before.

Prices do seem to vary quite significantly even across the same row of flats in the area (£10-15k difference). I am not afraid to haggle (in fact the total opposite), but looks like more research is required, work out the average price, then subtract based on condition.

Assuming that all the prices were the same (including condition), would a 10% discount normally be too much?. I realise it is highly dependent on the area, but I also want to get the best deal.

chickmug

From my experience those who start off lower will eventually get the property they want cheaper than those who go in more sensibly. On the other hand those selling who start off higher will get more than those who try and price more keenly.

So buying start low – Selling start high.

princessamy86

I think you're getting too hung up on figures! Property market is not homogeneous, all properties are different, so it's very difficult to work out averages and deductions like you are suggesting. Do your homework, then work out what it's worth to you. Is it an investment or a home? Is it a long term home or a foot on the ladder? All of these things can change the price you are willing to pay. Mr and Mrs X next door might well have paid top dollar, but for a home they will stay in for years. Mr BTL Landlord on the other side will have got it as cheaply as possible as this maximises his investment return! Chickmug's right about starting low, at the end of the day you can only try! Make sure you have a figure in your head that is your absolute maximum offer, and stick to your guns.

westv

I suppose even if the price the property is up for seems realistic, it makes sense to offer lower than that in order to give you some flexibility.

chickmug

princessamy86 wrote: »

I think you're getting too hung up on figures! Property market is not homegeneous

I was thinking about reporting this as abuse.

Posters using words where I have to get my dictionary out which is not considerate of you;)

princessamy86

Haha well consider it your word for the day!

jaqui59

v6matt wrote: »

i am 24 and considering buying my first home/flat.

I have a large deposit (after a considerable amount of work and sacrifice) and can get a mortgage of £180,000 (including the deposit). This is within my means and i still have money in backup for any rate changes e.t.c

well done !!

V6Matt

princessamy86 wrote: »

I think you're getting too hung up on figures! Property market is not homogeneous, all properties are different, so it's very difficult to work out averages and deductions like you are suggesting. Do your homework, then work out what it's worth to you. Is it an investment or a home? Is it a long term home or a foot on the ladder? All of these things can change the price you are willing to pay. Mr and Mrs X next door might well have paid top dollar, but for a home they will stay in for years. Mr BTL Landlord on the other side will have got it as cheaply as possible as this maximises his investment return! Chickmug's right about starting low, at the end of the day you can only try! Make sure you have a figure in your head that is your absolute maximum offer, and stick to your guns.

It is a foot on the ladder property, I am always in the mindset of getting a top quality item at rock bottom price. Guess I just try my luck and see where I go

marklv

V6Matt wrote: »

Hello,

I am 24 and considering buying my first home/flat.

I have a large deposit (after a considerable amount of work and sacrifice) and can get a mortgage of £180,000 (including the deposit). This is within my means and I still have money in backup for any rate changes e.t.c

My main question surrounds the price, I recently read in my local newspaper that the average discount of a property in the UK amounted to 14% off the asking price. Is this really realistic?

i.e. £180000 - 14% = £154,800 (just over £25k discount!) that’s surely not right?.

I am looking to buy a 2 bed flat (not a new build) in Clifton/Redland (Bristol) which is well known for its high prices and thus any discount would be greatly appreciated.

If the above isn't correct, what would you say a more realistic average is? Are properties still struggling to sell at the moment?

Thanks

Generally, a 5% discount is relatively easy to get if you are a first time buyer with no chain - a lot of sellers will want to move quickly. 14% is rather high, though, unless the seller has pitched the price unreasonably high. I wouldn't believe the crap that newspapers have in them - journalists are paid to write articles that help sell papers, not the truth.
The housing market is not in freefall - it's holding steady in most areas, with some actually seeing increases. We are not in 1992-94 with high interest rates and high unemployment; interest rates are rock botttom and will not rise much in the foreseeable future. The economy will recover next year and unemployment will start to fall in due course.

If you can afford a £180k property at 24 you should consider yourself very lucky indeed. Most people your age can only dream of this.