Need idiot's guide to negotiation

rafraf03

Hi Guys,

We put our place on the market a couple of weeks ago, and have just received our first offer (£190,000), which in my opinion is an OK offer: it's not the asking price (£195,000) :rolleyes: but it's good enough to enable us to find a nice new property.

The property is a leasehold maisonette. We are keen to get the asking price because we know that works are going to be carried out in the next year or so which would come up with the solicitor, at which point we would be willing to renegotiate the price.

Is this the best approach ?

We know that each resident will not have to pay more than between £3,000 and £5,000. Should we tell the buyers about that and propose a slightly increased offer (£192500) which is not the asking price but that would make us pariticipate in the cost of the work?

I need a fairly quick answer as I promised the agency to come back to them before lunch time !

Any advice is much appreciated :T:p

Tassotti

Just say to the EA that if the buyer is willing to go to 193K, then it is theirs.

Tass

lynzpower

i thought if you bought a exla maisionette theres a top limit you have to pay of a couple of K if there are major works in the offing?

Have I got that even half right?

rafraf03

Hi,

Thanks for your replies!

lynzpower: what do you mean by exla? I think the section 20 of the Landlord and Tenant Act 1985 stipulates that if the works are going to be over £250, the landlord must consult the leaseholders... But there are no limit as to how much they can ask the leasholders to pay as long as the amount is "reasonable" (reasonable being defined by the LVT ...)

Tassoti: Thanks for the suggestion! Shall I also add that we have agreed to bring the price down from the asking price because of the works ?

Thanks again !

pusscat

If I was a buyer, what benefit would I get from this deal?

I pay an extra £2500 for the property and still have to pay £2500 for the work to be done? (assuming your participation is 50/50)

Therefore I pay extra stamp duty and pay you 50% of the maximum cost of the work, £2500 - you pay the remaining cost (which potentially could be £1500 if the lowest quote is used). This leaves you in the position of having got £2500 extra for your flat and paid out (potentially) £1500 (£1000 profit to you) and me in the position of having paid out an extra £2575, but paying £1500 less for the leasehold work - loss of £1075 for me.

Even if the highest quuote is used, I still loose £75!

Quite why I would want to go with this as your buyer I am not sure?

Puss

rafraf03

Hi Pusscat,

In my opinion as a buyer, you don't pay an extra £2500 (I am guessing you started from the offered price) but you get a £2500 from the asking price, which correspond roughly to our contribution for the maximum cost of works.
You also get to pay marginally less in stamp duty!

I guess this is just a question of point of view, but I take your point !

Thanks for the reply though!:T

I need to get back to the agency now so I'll keep everyone posted!
I think it's still worth a try !

clairehi

If I was your buyer I would lower my existing offer by the cost of the planned works as soon as I found out about them.

Good luck!

PoorDave

clairehi wrote:

If I was your buyer I would lower my existing offer by the cost of the planned works as soon as I found out about them.

Good luck!

Agreed. But it would then be up to the buyer to fight to split it 50:50

rafraf03

hey clairehi,

If I was accepting the 190,000 offer, no further deduction relating to the works should be made: I would actually be financing the full cost of the works so there would not be a question of splitting the cost of the works 50:50

I am actually trying to avoid renegotiating the price...

CB1979_2

is the valuation based on there being works carried out? ie would it have been valued at £200k otherwise?

if not and it's been valued as no ongoing issues (ie no worked needed to be done) then it's tough I'm afraid.

the value is at £195k in 100% state, the buyers have offered £190k on this assumption as well, as soon as they find out about the work they will negotiate down, well they should do anyway.

the only alternative i can see is if you want £190k, then you're gonna have to start off with only accepting full asking price.

pusscat

rafraf

Point taken too! It is a question of perception.

But.....there is a fundamental flaw in the maths, your current buyer only believes your flat is worth £190k, and that is without any problems.

Did your EA value the property at £195k whilst knowing about the work requred?

If I was your buyer I would also knock £5k off my existing offer. That was what I meant on my first post - what is in it for the buyer, they offer £190k on the basis that all is reasonably OK with the property, you tell them that all is not OK and that it will cost £3-5k, and then ask them to fund between 50% and 83% of that work up front.

If you want to get £190k for your property then you either have to go for the full asking price, or you have to refuse to negociate downwards when the problems come to light. Either is usually quite a difficult path.

Asking price = estate agent inflated hopfulness
value = the hard cash someone will pay for your property
The two are rarely the same.

In my area the difference between the two is approx 10% at the moment

Hope this does not sound condescending, I am on a teleconference at the moment and I can only give this about 80% of my attention - I have reworded it twice, but it still sound a little snooty - not meant to!