Offering low on already reduced house

neas

doire wrote: »

Why would i buy when prices are still falling? I spend 6k on rent each year. I have seen one house on the market since 2007. Was 220. Now offers around 149k.

Thats just one example

You believe houses will fall significantly that the loss you suffer from the following the gain you more in the longer run (whether it does or not will be decided after the event).

- paying someone elses mortgage compared to paying interest on your loan. For example a 1 bed rental was £495 a month for me and the wife, whereas we pay £300 interest on our house. Net effect was every month we rented we 'lost' £200 or so. per year £2,400 'lost'.

-low returns on savings compared with securing low % borrowing rate. Its never been a better time to be a borrower as borrowing at a low rate is better than saving at a low rate. i.e. Securing a 4% mortgage will again save you thousands in the long run. Already now the 4% deal has all but dissapeared with a 0.2% added to start with. Over 5 years with say a 100k mortgage this is a £1,000 loss. If your mortgage is more it costs you more.

- Cost of living temporarily somewhere, unless you lucky you will prob move rental ever 1-2 years, aggro of moving, cost of moving etc.


Basically if i knew at least one of the following i'd consider not buying:

1. House prices would definately fall 15%+ in 2 years time AND (this is important) that interest rates don't rise in that period. I.e. i get 15% off and same mortgage cost when i finally move. (Not believeable with interest rates already rising)
2. House prices definately fall 30% in 2-3 years time AND (again important which you missing) that interest rates rise to a reasonable rate (no double digits). I'd gain from the fall sure i'd have to pay more interest but at least i gained from the fall. Do i believe this? (no because fall of 30% is prob not going to happen from current falls)


Basically if house prices fall to give you a saving and you save your deposit... mortgage interest rates combined with you 'lossing' time and money paying off someone elses mortgage (see my 2.4k loss a year example) means you did maybe save 5-10% but cost you time and your life. Compared to someone who bought now to 2-3 years later not too much difference.

Mortgage repayments of 4% on 200k mortgage is the same as mortgage repayments of 8% on 100k mortgage. Or put in more realistic drops of 20%.

Mortgage repayments of 4% on 100k mortgage is same as mortgage repayment of 4.7% on a 85k mortgage (assume 15% drop).

So you waited 2 years but got a mortgage at 6% you saved 15k off the price but 'lost' 4.8k paying someone elses mortgage that would've reduced your capital over the same period if you had a mortgage. You put your life on hold for 10k... initial capital difference but becuase the interest rates are higher over the first few years you pay more than the person who bought first thus reducing the 10k down to less and less. TO the point its neglible.

Its a difficult concept to get through but with the current falls and increases in interest rates coming soon you will not find yourself that much better off... if house prices fall 15% if they dont and stagnate you will be worse off. You will just become bitter that you missed a personal boat.

I personally have my home, saving for new kitchen and skipped the 2 bedroom rung on the ladder to own a 3 bedroom. Mortgage is 3x my salary and we overpaying massively. I think i got a bargain... and waiting for further falls may have saved me 10-20k more but lost me the same in increased repayments.

Just like to add if the house has fallen 40% do you expect it to fall another 40%? :O... surely you can't see the opportunity? and if you did have a decent depost then that £149k would be easy to purchase.

SusanA_2

Very interesting comments... seems like the thread has caught a nerve somewhat.

I would like to comment about checking the going prices for similar properties in the street and also if the price the current owners paid is available online. The prices you see online can only be used as a guideline, it give you more information to get a feel for the street - but it isn't a hard and fast rule. I have kept an eye on prices of the street where I have lived since moving there in 2005 and have watched house prices go up and down. I've also looked at the EA pictures of these houses online and the specification, quality, decor etc vary considerably.

I happened to buy a doer-upper, but if I sell my house at a higher cost... it doesn't necessarily mean there is alot of profit in it, as the buyer cannot possibly know the original condition of the house I purchased or the money spent on getting it to the current condition.

At the end of the day, as with all negotiations - both parties need to walk away from the deal feeling that it was fair and they are happy with the price paid/received.

Hazz

neas wrote: »

Must admit first and final offer is pretty dumb.

Almost always you will get your first offer rejected.

We bought our first place last year and our first and final offer was accepted. It was probably due to circumstances as the other party had seen a place they were desperate for but even so, I don't think it was dumb - it saved us approx 4K plus interest!

doire_2

neas wrote: »

You believe houses will fall significantly that the loss you suffer from the following the gain you more in the longer run (whether it does or not will be decided after the event).

- paying someone elses mortgage compared to paying interest on your loan. For example a 1 bed rental was £495 a month for me and the wife, whereas we pay £300 interest on our house. Net effect was every month we rented we 'lost' £200 or so. per year £2,400 'lost'.

-low returns on savings compared with securing low % borrowing rate. Its never been a better time to be a borrower as borrowing at a low rate is better than saving at a low rate. i.e. Securing a 4% mortgage will again save you thousands in the long run. Already now the 4% deal has all but dissapeared with a 0.2% added to start with. Over 5 years with say a 100k mortgage this is a £1,000 loss. If your mortgage is more it costs you more.

- Cost of living temporarily somewhere, unless you lucky you will prob move rental ever 1-2 years, aggro of moving, cost of moving etc.


Basically if i knew at least one of the following i'd consider not buying:

1. House prices would definately fall 15%+ in 2 years time AND (this is important) that interest rates don't rise in that period. I.e. i get 15% off and same mortgage cost when i finally move. (Not believeable with interest rates already rising)
2. House prices definately fall 30% in 2-3 years time AND (again important which you missing) that interest rates rise to a reasonable rate (no double digits). I'd gain from the fall sure i'd have to pay more interest but at least i gained from the fall. Do i believe this? (no because fall of 30% is prob not going to happen from current falls)


Basically if house prices fall to give you a saving and you save your deposit... mortgage interest rates combined with you 'lossing' time and money paying off someone elses mortgage (see my 2.4k loss a year example) means you did maybe save 5-10% but cost you time and your life. Compared to someone who bought now to 2-3 years later not too much difference.

Mortgage repayments of 4% on 200k mortgage is the same as mortgage repayments of 8% on 100k mortgage. Or put in more realistic drops of 20%.

Mortgage repayments of 4% on 100k mortgage is same as mortgage repayment of 4.7% on a 85k mortgage (assume 15% drop).

So you waited 2 years but got a mortgage at 6% you saved 15k off the price but 'lost' 4.8k paying someone elses mortgage that would've reduced your capital over the same period if you had a mortgage. You put your life on hold for 10k... initial capital difference but becuase the interest rates are higher over the first few years you pay more than the person who bought first thus reducing the 10k down to less and less. TO the point its neglible.

Its a difficult concept to get through but with the current falls and increases in interest rates coming soon you will not find yourself that much better off... if house prices fall 15% if they dont and stagnate you will be worse off. You will just become bitter that you missed a personal boat.

I personally have my home, saving for new kitchen and skipped the 2 bedroom rung on the ladder to own a 3 bedroom. Mortgage is 3x my salary and we overpaying massively. I think i got a bargain... and waiting for further falls may have saved me 10-20k more but lost me the same in increased repayments.

Just like to add if the house has fallen 40% do you expect it to fall another 40%? :O... surely you can't see the opportunity? and if you did have a decent depost then that £149k would be easy to purchase.

If i had dived in and bought that 220k house in 2007 i would be much worse off than if i bought it now.

Every 10k a house costs means you pay back roughly 20k over 25 years.

You need to factor in where i live, the average earnings and the unemployment outlook.

I can see house falling in my area by another 20% within 3 years. That doesn't mean i will wait 3 years though.

You bought at a time you believed was right, im doing the same.

sunshinetours

doire wrote: »

40% off peak for my area! If i had been so keen and dived in at peak i would have paid 40% more than i would have had to than if i bought now.

And yes im am building up a very healthy deposit. Anyone thats not needs their head examined.

As for Doozergirl, she has a problem not me. I slagged off EA (who doesn't) and she threw a strop.

And what do you mean "hope things improve"? Im quite happy sitting back and watching prices fall thanks

You could of course have been sitting in your home overpaying your tracker mortgage on a rate probably at under 1% for the past few years

Do a variance analysis of how relatively small mortgage rate rises (1%) affect different size mortgages - its an eye opener and I can't believe so many ignore it!

Just hope you don't miss the boat

DVardysShadow

doire wrote: »

When making an offer between my first and second offer i wouldn't do it within one day. You make yourself look too keen.

If they aren't prepared to budge then tell the EA that was your final offer, the vendor has another week to think about it and then you are moving on to view other houses you like.

There is the other thread - the house with an asking price of 145 and the seller told the viewers "I have already turned down an offer of 143" while she was opening the door.

People on either side of a deal don't like to be strong armed into a position, even if they would go there voluntarily.

roboticpink

Everyone is being so nice to each other!




Our first offer was turned down with a strong assertion the vendor would not consider going under £150k. Going to have a think about it but don't think we would be happy paying that much for the house...

Consider yourselves updated

Doozergirl

Hazz wrote: »

We bought our first place last year and our first and final offer was accepted. It was probably due to circumstances as the other party had seen a place they were desperate for but even so, I don't think it was dumb - it saved us approx 4K plus interest!

What if they'd have accepted less?!

Doozergirl

roboticpink wrote: »

Everyone is being so nice to each other!




Our first offer was turned down with a strong assertion the vendor would not consider going under £150k. Going to have a think about it but don't think we would be happy paying that much for the house...

Consider yourselves updated

Stranger in your own thread now, sorry about that!

Shame. Do give yourselves time to think and view plenty of others in the meantime so you continue to get an idea of what you can get. But I'd really urge you to forget the 90% thing. It's fine to offer as low as you like, but it's an illogical assumption to make that you should be happy to pay 90% for every house you see and that every vendor is happy to accept it.

I've bought repossessions for more than 20% off their asking prices and I've paid 160% of an asking price too! But I've always been happy with the deal because I've been comfortable with what I've felt the value was.

roboticpink

Doozergirl wrote: »

Stranger in your own thread now, sorry about that!

Been lurking long enough to have expected it

Shame. Do give yourselves time to think and view plenty of others in the meantime so you continue to get an idea of what you can get. But I'd really urge you to forget the 90% thing. It's fine to offer as low as you like, but it's an illogical assumption to make that you should be happy to pay 90% for every house you see and that every vendor is happy to accept it.

I've bought repossessions for more than 20% off their asking prices and I've paid 160% of an asking price too! But I've always been happy with the deal because I've been comfortable with what I've felt the value was.

I think we've seen almost all the houses for sale in the area now! :rotfl: ii think we are looking for ideal price of £145k, no more than £148 really - seems about fair, given the amount of work that needs doing and how much the other brick houses in the area have been going for (GOING for, not how much they are on the market for... )

Reckon we'll call the estate agent in the morning and go for £142.5k and see if he bites... :O is fishing a good analogy for buying a house?

Really keen to get something soon - we are in a reasonably new build rented flat at the moment in a new town, and desperately need some project to occupy us as we've started to argue for something to do... Like maybe a house that needs a new kitchen