A cheeky but reasonable first offer

misslrc

Hi there,

I am looking for some advice and I hope I am in the right place! My partner and I are first time buyers with a 10% deposit and have seen a house we love in the area we want to live. What I would like advice on is what to offer without offending the vedors.

Property is a 3 bed detached house to the west of Hull in a popular village. On the market for £149950 for 3 weeks (two others similar are up for circa £160,000 but have been on sale a while)

Vendors paid 148000 in April 2006
Similar property (not in as good condition) sold for £135,000 down same street in Aug 2010
Well presented (nothing to do to move in) and nice garden
A 4 bed on same street sold last year for £151,000
We are FTBs with 10% deposit and Agreement in Principle.
Vendors are moving to bigger house in same area.
Have been told to offer 15% lower and expect 7% but were thinking inital offer should be around £138000

Advice appreciated, thank you in advance

hcb42

offer what YOU think!

there is no formula, the people who told you to offer 15% off are not considering that some people might price their house first time to sell!

If someone was to offer me 15% less than my asking price, I would be at almost £60K - there would be no point moving then, as I wouldnt see any benefit of moving (i.e. downsizing in my case) but then I would price realistically to start with.

Rubyshoe

Agree entirely - offer what you think is right rather than a formula. If 138 feels a decent place to start then my personal view is that although you MAY have got them to accept a lower offer if you went in low, the more haggling there is the higher the likelihood that they may make life more difficult for you during the sale process, or they may not think you are serious buyers. I think there's a lot to be said for making a serious offer, even if you know that's not your final offer, to begin with. Also - you've done a great job of researching local prices and you know what is a good price to be paying, o have confidence in that and dont feel you should follow a formula just because someone else says you should. One further relevant point though is the vendor's positin. Has the house has just come on the market? If so, the vendors may not accept a much lower offer because presumably they can hang on to wait for someone else. Or, if they are in a rush to move or have found somewhere else already, that may give you some leverage. But I think the point remains that if you are comfortable offering 138, offer 138. And well done for getting together a deposit - good luck with the next steps!

DVardysShadow

hcb42 wrote: »

offer what YOU think!

there is no formula, the people who told you to offer 15% off are not considering that some people might price their house first time to sell!

No formula? There are 2:

AskingPrice = ExpectedSellingPrice * [ 1 + MarkUpFactor ]

MinimumSellingPrice = ExpectedSellingPrice * [ 1 - SellersContingencyFactor ]

From these, it is possible to calculate MinimumSellingPrice to the nearest £1, initially offer lower by a little bit and negotiate up to MinimumSellingPrice.

The 15% and 7% are attempts at approximating to the effects of MarkUpFactor and SellersContingencyFactor. But as these are individual to each seller, your cannot crunch out some ordinary numbers.

Credit-Crunched

We bought a house on the market for 130k, offered 90k and we negotiated to 97k!

33k under value, not 15 %, not a magic formula.

Just the power of a FTB and mortgage offer in place! It's a buyers market and dont let the estate agent tell you different, remember thet work on a % of the sale price so the higher the better. Make a cheeky low offer, whats the worst that could happen.

Turns out our guy was in a huge rush to sell so accepted!

misslrc

Thank you all for your replies. I guess what I was looking for is a little reassurance and these posts have given me confidence. I need to be strong and stick to my guns and appreciate that there is no formula, it is a very individual thing! My OH likes to follow his heart and loves the house but I can see how hard we have saved for that deposit and want to see equity from day one or at least be sure I have made a good investment. I am going to put the £138 in on Wed and have a "maximum" in mind. Must stay strong and cool headed in the meantime!
Viewed house on Sat and Estate Agent called to ask our opinion on Sunday so guess they must be keen!
Regards
LRC

hcb42

DVardysShadow wrote: »

No formula? There are 2:

AskingPrice = ExpectedSellingPrice * [ 1 + MarkUpFactor ]

MinimumSellingPrice = ExpectedSellingPrice * [ 1 - SellersContingencyFactor ]

From these, it is possible to calculate MinimumSellingPrice to the nearest £1, initially offer lower by a little bit and negotiate up to MinimumSellingPrice.

The 15% and 7% are attempts at approximating to the effects of MarkUpFactor and SellersContingencyFactor. But as these are individual to each seller, your cannot crunch out some ordinary numbers.

Right, just what every prospective seller and purchaser thinks

and my point remains, if the 15% and 7% are individual to each seller, then the buyer cannot assume 15% in all cases -which is what I said earlier.

DVardysShadow

hcb42 wrote: »

Right, just what every prospective seller and purchaser thinks

and my point remains, if the 15% and 7% are individual to each seller, then the buyer cannot assume 15% in all cases -which is what I said earlier.

Indeed. As I said earlier "The 15% and 7% are attempts at approximating to the effects of MarkUpFactor and SellersContingencyFactor. But as these are individual to each seller, your cannot crunch out some ordinary numbers." Perhaps you were blindsided by the formulas, but essentially I am agreeing with you.

robert2011

Hi Miss lrc,
Take note ! the average current selling price in the uk could easily drop by 10% - 15% in the next 3-4 years .These are not my figures these are the percentages based on the current market predictions. Beware of negative equity !

traineepensioner

.....Or could easily rise http://www.thisismoney.co.uk/money/article-2027809/UK-house-prices-rise-14-2015-predicts-Centre-Economics-Business-Research.html

nomoneytoday

robert2011 wrote: »

Hi Miss lrc,
Take note ! the average current selling price in the uk could easily drop by 10% - 15% in the next 3-4 years .These are not my figures these are the percentages based on the current market predictions. Beware of negative equity !

Do you have a crystall ball?

The price today is the price to negotiate on. Not what may or may not happen in the next 3-4 years