Gazumping

Jowo_2

I suppose 2 offers, albeit low, from 18 viewers in the space of a month sounds quite promising. You obviously have to take the risk that it continues to yield those level of viewings and offers if you turn down that one so it requires nerves of steel. I have a friend selling a flat in Brighton who has had no luck in 5 months despite dozens of viewers - 2 buyers changed their mind before they even arranged surveys, a third said they wanted to buy it but hasn't sold their property.

Your agent isn't currently getting a good price for you, though, are they? I don't know what the commission rates are in central/East London but I know someone else in South London using a reputable agent and their rate is 1.4%. Do you think you might be throwing away a good extra 1% on this agent for no actual greater return? That's an extra £2,500 minimum (plus VAT) you may end up gifting them for not getting you the price you expected...

eattothebeat

I know, it's a difficult one with a long story behind it...I was with an estate agent previous to this one at 1.6%, the flat was on their books for over 5 months with a grand total of about 9 viewings. The flat had been in a bit of a state at this point as I was letting it to a japanese student who sublet it without my knowing, did not look after it and moved in about 5 people to a small 2 bed flat, turned living room into bedroom etc. The estate agent didn't seem bothered about my property at all and I could never get hold of him and when I did he was rude and disinterested so once I got rid of the Japanese hostel we gutted the place, fresh coat of paint etc and changed tactics with the estate agent. I went with these other guys cos of their reputation of shifting things quickly and for a good price even though you pay them a higher commission, in fact, the highest in London, of which they do not negotiate. they have had more viewings in a month than the other guys had in 5 months.

It's true what your saying about the extra commission but at the end of the day, I don't have the energy to change again, plus I'm locked in with them for 2 months. The flat is currently unoccupied so I had thought it would be better to pay them this and get the flat shifted quickly rather than it sitting empty for months whilst costing me money in mortgage payments etc. I have to say though, that they are working for their money, always giving me feedback, text me when there are viewings and my contact there always answers my calls or calls me right back. the other lot couldn't have cared less.

Jowo_2

Is your agent still trying to negotiate a higher offer with the buyer or is this someone who is prepared to walk away if you don't sell it for 250k? The agent works for you - if you are only prepared to sell it for 260k, for example, and are happy to risk losing this prospective buyer, then resist their pressure and instruct them to get closer to the asking price. Why are you scared to reject the offer?

But if they are badgering you to accept 250k, do you think this is because they are hungry for their commission or because they know they've over priced your property and its probably the highest you are likely to get because of the state of the local market and the stamp duty threshold which is acting as a barrier?

Also, you need to factor in your mortgage payments if the property doesn't sell in x months versus the x% you lose from a lower sales price.

My friend who has encountered numerous timewasters on her flat, included a lady who sold their property more than a year ago, a cash buyer, who is too nervous to re-enter the market. If she's renting a property locally, she's likely to be spending up to 10k per year on her accommodation, waiting for prices to drop and perhaps wiping out any price falls for the next property. Same with you - if you are stuck with this for a year, how much will you have paid out in mortgage costs?

A BTL landlord should make a purely commercial decisions, they don't fall in love with the properties, they more onto the next cheaper one. It's a business - they don't pay over the odds if they can help it.

sunshinetours

The key part from your post is that you were told to expect to sell at around £260k. So £250k isn't far short. The agent has deliberately overmarketed the property like many so as to encourage offers at over £250k.
But because of the SDLT, as others have mentioned, you are unlikely to get offers over £250k unless you inceentivise the stamp duty

Why not market it at offers over £260k with a 2% contribution to SDLT so as to take out the £250k barrier as such which does artificially suppress the market

Can you agree any fixtures (genuinely not made up) that form part of the flat so as to get another couple of grand that may cover the agents fee for instance

Can you get the agent to reduce their commission and maybe the buyer could oay a finders fee to the agent for instance for agreeing to pay £250k

think outside the box to get the maximum - but I cannot see you getting over £250k, and i cannot also see prices going anywhere but down sio you may end up chasing the market down

Good luck

eattothebeat

Yes and yes I imagine. I thought that too. In his opinion it does no harm to accept the offer of £249,950 and up to the point of exchange if there are no more offers on the table i can either choose to accept or reject the offer then. He thinks that I may get a few more offers of the same bid if I don't accept this one but if I do and still view it, if someone really wants it then they will put in a higher offer. I know for a fact that the people who offered £249,950 aren't going to put in a higher bid. I thought that he was just after the commission too and wants to get another sale under his belt but then isn't it in his best interest to get the highest offer possible for the flat? There are more viewings booked in today and a viewing on Sunday from someone coming over from Norway for the day to view my property (and others I assume) I'm not scared to reject the offer but wonder if I should accept it and see how that affects things in the next couple of months. This is a BTL investor so it's all about business for him.

Jowo_2

eattothebeat wrote: »

.. I thought that he was just after the commission too and wants to get another sale under his belt but then isn't it in his best interest to get the highest offer possible for the flat?

ah bless. You have to remember that they only get the income when it's sold. The sum they get for selling at 250k isn't that much less than if they get you 260k or 280k. It ranges from 6.25k to 7k and losing £750 is better than getting zero if you don't accept any offers.

eattothebeat wrote: »

.. I'm not scared to reject the offer but wonder if I should accept it and see how that affects things in the next couple of months. This is a BTL investor so it's all about business for him.

But I thought you said it's market is BTL rather than residential?!

You have moral qualms about accepting an offer and then leaving it open for gazumping - there are no legal issues with this until after contracts are exchanged, so are you happy to adopt a similarly business like approach and bin this buyer if someone offers you more - after all, it's only business..?

I'm sure your hard nosed buyer will just walk away if you dither anyway.

eattothebeat

Yes, I suppose I should get a bit hard nosed about this. I think I am going to accept the offer then and see what happens. The property could also be a good first time buyers home and if that was the potential buyer I think I would be a bit more reluctant to gazump them. The fact that it is a BTL investor makes me feel a little less guilty.

Thanks for all your help, it really is very valuable and I will let you know how it goes!

eattothebeat

I've accepted the offer on the condition that he knows that I am going to keep viewing the property. I am happy about this. The EA tells me that at the end of the day he has offered way below the asking price and that I am well within my reasons for keeping viewings going and he has to accept the fact that if I get a better offer I am going to take it. That is the risk that he takes. Apparently there was a second viewing last night so I will wait and see what happens.

Thanks again to you all for all your help.

myhouse_2

You may think your house is worth that much. Maybe it is worth that much. There's little chance though of any house in the 250-290k bracket going for above the stamp duty threshold though. It's a big psychological and financial barrier. Take the 250k and run!

sunshinetours

myhouse wrote: »

You may think your house is worth that much. Maybe it is worth that much. There's little chance though of any house in the 250-290k bracket going for above the stamp duty threshold though. It's a big psychological and financial barrier. Take the 250k and run!

£250k - £275, maybe £280 I totally agree, but not £290k apart from the most optimistic buyers. of course if a house is overvalued at £290k that is a different issue......

Also incentifying buyers with Stamp duty contributions takes away that issue. Silly thing is that a graduated systme that charges only on the amounts above a level rather than the whole amount would do away with these silly artifical markets around £250k and £500k

Anyway OP has updated and is prepared to gazump if necessary so no further comment needed from me