Acceptable offer on house

Xiderpunk

Hi folks, we are currently in the process of selling our 2 bedroom house and making a jump to a 4 bedroom house. We have found the house we wish to buy. Now we are relatively new too moving having bought our current house house back in 1994 as first time buyers. Therefore am seeking some advice.

We wish to make an offer on the house and see here that offers in the region of 10-20% less than the asking price is currently expected.

The purchase price of the house is £520,000. Therefore 10% alone equates to offering £468,000 which too me appears almost insulting? My concern is alienating the vendor because we really love the house. (The property had previously been on the market two years before at £700,000).

I know this is a kind of inane question, but still wish to ask if mid price bracket houses are applicable for these kinds of offers. (We had in mind to offer £500,000.) Any advice welcome.

CloudCuckooLand

The vendor already appears to accept that it is worth £180,000 less than it was once "worth". I'd suspect that £20k is the easily negotiable element. £500k being a stamp duty threshold - they cannot expect to get more, really. So far, £200k off...

Have you checked Rightmove's "price comparison" section? If you know it was on for £700k, you may have. But if not, you can see other instances where a property was for sale. If it was on for say £550k in the summer, then there may not be any more room below £500k. If £520k was their start point, maybe there will be room for further negotiaton.

How long they have had it, and what they paid will also be a factor. £700k may always have been pie in the sky. Or included some land, or other feature that is no longer in the deal. So beware of getting blinded by the apparent huge reduction.

Obviously check out similar houses around the place, to get a feel for relative value.

tyllwyd

I think 10-20% below the asking price - especially 20% below - isn't the kind of offer you would realistically expect to be accepted.

You would probably be better off thinking about the stamp duty threshold at £500K. I'd have said that by pricing at £520K, the vendors are saying that they don't expect to get over £500K, but they are hoping for close to it.

Doozergirl

I don't think offers of up to 20% are expected! 10% maybe but also not really expected to be accepted, iyswim.

I think at £520k, the price they are probably really looking for is £500k. I'd start at £470k by all means but perhaps don't expect them to accept it! Offer 20 less and I should think the EA would feel uncomfortable even putting the offer forward.

What you have to realise about this board that as well as people involved in property, it is also populated by people who don't own houses but see themselves as armchair pundits. It's very easy to tell an internet stranger to offer 20% less, it's a throw away comment. You ask any vendor who feels their asking price is in the right ballpark if they would like an offer 20% below asking and I can guess what the answer would be.

Arthritic_Toe

The percentage of the asking price is irrelevant. Your offer should be based on what YOU think its worth and are prepared to pay. If you had viewed that same house when it was on for 700K, would you have been prepared to offer more? Of course not.

Forget phrases like "insulting offer" or my personally most hated, "cheeky offer". These things just cloud the issue. Its worth what someone is prepared to pay, not what some tinpot agent has 'valued' it at.

DizzyDasher

There are two issues here really:

1) What is the right price for the property? To get a sense of this you need to use land registry data to look at what other people have paid recently for similar properties. Sometimes if you look for recent land registry data for properties in nearby streets at a similar price level, you may be able to find the details still on estate agents websites (even if the properties have come off RightMove). Of course these properties may not be identical but they will give you an idea of what money can buy in the area you are looking at

2) Will your vendors sell at that price? My sister made an offer well below asking a few months ago and the vendors wouldn't accept it - but the place is still on the market now, so they obviously aren't in a hurry. On the other hand I know somebody (friend of friend) who got somewhere nearly 40% below asking price - which seems completely nuts to me (why not try advertising it at 20 or 30 percent below if you are going to accept an offer that low?) though knowing the property and the area a little bit, I think the offer they accepted was probably about right, and certainly the asking price was a total dream price.

Personally I wouldn't worry about offending somebody if you go in at 470: it's less than 10% below the stamp threshold, and as others have said if they are asking 520 they can't actually be expecting to get above 500 unless they are very deluded. So I'd be surprised if they took it as a personal affront (and you can always say some blah about this is stretching your budget, and come up with a "family loan" if they say no and you want to then stretch a bit further). But it may well be that they are wedded to getting that 500k at least (plus possibly a bit for furniture or fittings) ... so in the end you may have to go up to that if you really really want it.

Good luck!

Xiderpunk

Many thanks for the replies, these kind of responses was really what I was looking for to serve as a sanity check really. The house is worth every penny in my opinion as ultimately this will be our home (fingers crossed) for many years. I have made an offer at 496,000 and am awaiting a response.

hazyjo

Obviously we can't really help with its value - and I don't agree with just going in at 10% or so under any valuation. All you can do is research the market and see if it's a fair price.

House we're buying was up for a similar price 10 months ago, and they've since dropped the price a couple of times and we're now buying for £65k less than it originally went on for - £15k under the actual current asking price. Hard to say if it was overvalued in the first place or if it's just cos of a rubbish market people weren't buying. If we'd seen it up for £500k, we'd probably be paying over £470k for it so are very pleased we came along when we did, not sooner! And that's not cos of not researching the area, things just differ so much. This one was on for less than an adjacant 3 bed similar house (same new-ish) estate, and around £100k less than 2 others - one of which has an identical layout and is terraced (ours is end of terrace), and the other's bigger, but not £100k bigger!

It might be that you buy at £475k or even £500k, but buyers are few and far between at the mo so just make sure you're happy with the price as you don't want to be gutted to find it sold at something like £430k 10 months down the line. If your budget was £700k, would you be absolutely gutted to see it on for £520k now? Sometimes you have to just buy what you believe it to be worth on the day and go with your gut feeling. It's a bit like an auction where you can put a guide price on something, but, sometimes, things will go for way under what you expect or just won't sell at all.

There's no mathematical equation to say what it's worth, you just have to look at the market and make sure it's not the highest price house in its bracket!

They obviously know they won't get over the £520k mark so I wouldn't feel bad at offering under £500k. If you're not in a rush, leave an offer of around £470-480k on the table. At some point in the very near future, they'll more than likely drop the price to £500k and would probably bite your arm off for £480k.

The last house we offered on was up for £500k and we were buying at £475k (our one and only offer - they ummed and ahhed, but that really was our absolute limit, so they accepted). All fell through so doesn't matter now anyway. They'd lost their last buyer who was paying £495k (they pulled out a week or so of our offer).

Jx

somethingcorporate

Just IMO but as a starting offer that was too high and leaves you with very little wiggleroom before you are going to get whacked with the highest rate stamp duty.

We just managed to get 15%+ off asking price for the house we just had an offer accepted on and it has only been on a couple of months. I would have started at £475k and gone up in big increments rather than at £496k and leave yourself such small room for negotiation. You can disregard this if you don't have a problem with going above the threshold.

Catatonia

I agree that going for a particular figure under asking is nonsense. Apart from, as has been pointed out, the fact that asking price doesn't necessarily reflect value (ie could be overpriced or could be priced to sell quickly) it also depends on your local market.

A useful thing to do is do a price comparison report on Rightmove using the postcode. This will often show you properties that are now off the market, with their asking and sold price. This might give you a better idea of both the local market and the house's value.