How much to offer ?

mi-key

OK, situation is we are FTB's and have the mortgage, deposit etc... in place - have had a look around the area we want to move to, and have shortlisted 4 properties as maybes.

3 are bungalows at £180K, £195K and £197K - all of these are quite old fashioned, so would need money spending on them to bring them up to a modern standard ( mostly decoration, but I can see spending £20K over a few years quite easily to get them up to standard ). The fourth is a newer house at £185K, and doesnt really need anything doing to it.

What would people consider a reasonable first offer on these sort of asking prices ?

Bearing in mind that the market is pretty slow, especially in the village where these properties are - we have been keeping an eye on sales there for the past few months, and older properties in particular seem to stick on the market for a good few months and not sell - for example, the £180K bungalow has been with the current agent for 2 months, and before that was on at £190K for a couple of months with another agent. ( In fact, my father lives in the village, and he says there are houses there that have been on the market for 2 years, gradually dropping in asking price, and still no buyers ! ).

Out IFA advised offering around £170K based on an asking price of £200K ( so 15% off ) particularly as being FTB's and not desperate to move, we are in a strong buying position, and can quite easily walk away if the seller isnt prepared to drop the price.

One of the agents we spoke to showed us details of a few houses that were on for £225K+ and seemed to suggest that our budget of max £200K wouldnt be far off what some of the sellers would consider.

Our IFA did say that he wouldnt expect any buyers to pay more than 90% of the asking price based on the current market conditions, but would be interested to hear what others think.

Ta
Mike

MissMotivation

An asking price is just that.....an "asking" price. What you should offer and what the vendor will eventually accept are based on....

Comparable properties in the vicinty, for example if the property you are interested in is on market at £200,000 and comparable properties have sold and completed at £180,000 you will stand more chance of getting a lower offer accepted

The position that the vendor is in, for example if property is on the market for £200,000 and the current vendors have an outstanding mortgage of £195,000 they will be unable to sell for any less regardless of the fact that you are a FTB etc.

Your position and the position of any other buyers.

What you feel the property is worth to YOU......a property is only worth what someone will pay for it.

I think its's a dangerous generalisation to say that sellers will accept, 10/15/20% off the asking price as each property and vendor varies.

My advice......do your research, find out from agent if there has been any previous offers, find out what position the vendors are in...do they need to sell asap, where are they moving too, are they buying again etc.

No harm in making a low offer just be prepared to have to increase if you want the property.

Careful_girl

I think you are absolutely right in what you are doing.
1. Look at how much you are prepared to pay and keep it in mind.
2. Look at how long the property jas been on the market.
3. Ask the agent what they think the vendor would accept before or after the offer.
4. Never offer so low that you offend the vendor. But they expect offers to be below the asking price at first. We got 10% off our current house and 8% off the one we are buying. These were not our first offers. The house we are selling the EA cleverly under valued and called it a guide price. We got 5% above the guide price and we chose a cash buyer.
5. Take advice from those who know the market and the properties, just as you are doing.

I would always buy something to do work on. I like tidying up properties. Have totally done up one. It is not only very satisfying but also a good investment.
Good luck!
Oh look at this thread he mentions offering. http://forums.moneysavingexpert.com/showthread.html?t=175653
CG.:j
CG.

mi-key

Comparing to similar sales is a bit tricky in this case as with the older properties in the village, no comparable ones have sold within the last few years ( have checked up on Nethouseprices ) and even with the modern one then one hasnt sold for over two years.

I can see the sense in comparisons if there has been a recent sale, but as prices shot up so quickly over a couple of years, looking at what next door sold for 2 years ago doesnt help much with a current value. ( In fact, the more modern house at £185K we are looking at - one a few doors down which is the same sold in 2004 for £120K ! ).

I was planning on ( assuming the places arent very overpriced to begin with, and taking into account the cost of work needing doing ) to look at offering 12 to 15% lower than the asking price initially, and work up to maybe 10% off as a maximum.

Especially in the current climate and area we are looking, getting into a bidding war is extremely unlikely, as all the properties have been on the market for at least a month or two, and having a choice of a few similar sized places all at similar prices means walking away from one of them if the seller isnt prepared to come down isnt a problem.

samspam

Why are you looking at a Bungalow?

No disrespect to bungalow owners but it is notoriously hard to re sell a bungalow. If you buy one of these then make sure you get it cheap as chips!

As someone else said, a property is only worth what someone is prepared to pay for it. Go in as low as you can without taking the !!!!!! and you have more room to bargain. If you don't ask, you don't get!

Iso

It sounds as if you've looked at various houses and you should have got a 'feel' for the market. It's often sensible to work out what you'd be paying per sq. metre (or per sq.ft.) of living space for each house and average it out (obviously if the house you like is more expensive and in better nick than the others you should bear that in mind and add a 'premium'). Get an idea from EAs what the average price per sq. meter is in the area for similar aged/type prioperties.

Have the vendors bought a new house? Do they have a bridging loan? Have there been any other offers? How much for? Has a sale(s) fallen through? Why? Ask as many searching questions as possible. Having done your homework make an offer that you feel comfortable with. If you'd feel happy paying £180K and the vendor accepts it that's great! Don't start thinking you might have been able to squeeze them down a bit - it just creates bad will all round.

mi-key

samspam - main reason for looking at the bungalows is that in this village, they are much nicer than most of the houses and are all detatched, whereas most of the houses tend to be semis, or huge 5 bed detatched places that cost twice as much !

Plus, all 3 of them come on big plots with big front and back gardens and proper sized drives and have the possibility of dorma conversions or extending if we wanted more space.

Some of the few criteria we had when looking for places to buy was that they had to be detatched, and also that they had to have a decent bit of space around them rather than being crammed in and overlooked from all sides like you tend to get on new build estates.

I'm not particularly bothered about reselling as I dont plan on doing this within 10 years anyway, and if I'm happy with the location, would much rather extend than move. Even though we are FTB's we are looking to buy a bigger place straight away, rather than get somewhere small then sell it within a couple of years. If we wanted a 2 bed starter home, we could get one for a lot less, but then would probably want to move 2 weeks later, so it wouldnt be that sensible.