FTB - just wondering - silly offer

Blue_Monkey

This is all hypothetical really, but was wondering how this scenario might play out...

We've seen a 3 bed house on RM £320k: http://www.rightmove.co.uk/property-for-sale/property-19606899.html?premiumA=true. As FTBs, we'd hope to keep the price under £250k to benefit from no stamp duty. We're not in a chain (but just about to enter a 6 month lease on a flat) and the house looks like it needs a lot of work.

Would offering a whopping £70k under the asking price just be silly? I know it depends on lots of different things and we might not know until we tried, but just wondering if anyone has had any similar successes of offering way way below the asking price!

ess0two

Depends how desperate they are,you could also run the risk of being classed as a time waster in any future negotiations.

matthorp

You can always try, but personally I think it's pushing things a bit too far.

The agents are obliged to pass your offer on, but I think the vendor would have to be incredibly desperate to take it.

Caveat_Mortgagor

Its not what anyone on here thinks that matters. Its what the vendor thinks (and that is usually determined by the vendors financial position).

You are looking for just over 20% off the asking price. The 'delusion gap' ie the difference between asking price and selling price is currently around 10% (depending on where you are in the country). It is quite possible that the vendor is hoping to get £285k and has set the price higher to allow someone to bid him/her down to this level.

But that 10% delusion gap I mentioned is based on the most recent asking price when the bid was accepted. A lot of properties are reduced 2 or 3 times before the vendor acepts a bid.

According to my property bee this is a new to market property. I would think it would be very unlikely that the LL would accept 20% off so quickly.

The Rightmove index tracks the average price of new instructions only. The average sale price according to Land Registry is about 30% below average initial asking price.

As you have stated, there is a 'no-mans land' above the £250k mark where people simply dont a price because its just above the SD threshold.

If the landlord is hoping for high 200's, but starts to think it isnt achievable then he may reluctantly accept a bid of £250k.

Personally I would sit and watch without making contact with the agent. Let the property have its first price drop and see what happens.

If you make contact with the agent, you risk giving encouragement to the agent and vendor - a false belief that people want the property - even though your interest only exists at a much lower price.

The landlord has got to 'go on a journey'. His expectations have to be dampened bit by bit until he comes into the area where your bid would be considered.

So for now, sit and wait. Good luck!


Edit - D'oh! I had property bee switched off so it wasnt showing me the history. House has been on for 5 weeks. Might not be too long before they make a reduction. I would give another 3 weeks or so - so that theyve had it at that price for 2 months and then it might be worth making tentative enquiries about the vendors position and expectations. If nothing else you might spur them into an initial price drop.

tleefox

If I was selling that house for £320k and you offered £250k I would probably not even bother trying to enter into any future negotiations with you and would tell my agent to ignore you.

woodsey2002

Thats a big reduction but then i've no idea what prices are like in that area, have you researched the area and had a look at what things are actually selling for..you need to be armed with information to back up your offer, it might already be realistically priced or it might be completely overpriced..

Find out what the vendors situation is, furniture looks old fashioned so is it a probate sale, owner maybe moved into a home..in these cases the family will be looking for a quick sale..but the house is new to the market so I doubt they'd take a low offer straight away.

As for the stamp duty issue, maybe ask them to pay it as part of your offer, we've just offered on a house where the stamp duty was to be paid by the vendor so we've got the spare cash to put down as a larger deposit. Just a thought.

We waited 9 months before going to view the house we're currently buying, by waiting we felt justified in offering low but by being in an excellent position with nothing to sell and finance all arranged, they took it, although they initially refused so we walked away..had it of sold sooner it probably would have gone for a higher price than we'd have been prepared to pay for it anyway.

runninglea

I know of a house which is exceptional but doesnt have a garden, it was originally up for 425K, lowered at start of year to 325K an offer was accepted of the full asking price but fell through on last day.

The vendor is now willing to accept 275K - due to split etc so you never know until you ask.

How long has it been up for etc

Blue_Monkey

Thanks everyone, I appreciate the replies as it's really given me some food for thought, particularly about the dead space after £250k+ in terms of SD.

I looked on propertybee this morning and it said it was new on today but I know it's been on for longer, so I'm glad it changed to show 5 weeks.

I do think it's overpriced. There are 3 good primary schools around here and it's in the catchment for the least good of the 3 (but still a good one), it's not in the centre of the popular bit of town, it's only 3 beds, looks like it needs a refurb etc etc, so I would imagine that £320k is a bit ambitious when the quality/location of some other places could be seen as slightly superior.

The issue we've now got is timing... OH and I were living in Australia for the past 18 months, moved back to the UK 3 weeks ago. He's self-employed and I'm employed, my salary is £44k pa and we have approx £70k in savings, so would plan to use about £50k of this for a deposit.

But - I'll be starting maternity leave in December.

So in terms of applying for a mortgage, I'm guessing my payslips would be required and OH won't be able to provide much at all. The general plan at this point in time is for me to take the full year and then return 3 days a week. We're about to move into a rental property, but I don't want to be stuck there forever because we can't get a mortgage once I start maternity leave/PT work. We will however, be able to save approx £10k in that time we're renting to put towards buying costs/deposit.

I got my experian credit rating which miraculously said 999/1000... We don't have any debt apart from about £300 on a credit card.

When should we apply for a mortgage? How long are offers valid for? Does the sale have to go through to completion before the mortgage offer expires or is at a different point during the process? How long will it take for a sale to go through? Ideally we would've bought straight away, but with bubba due in mid-Dec we were worried we'd be living with parents when he/she makes an appearance (not ideal)!

19lottie82

jeezo...... can you really call 6' x 7' a bedroom these days?

Yorkie1

A few thoughts:

1. Just to confirm, neither you nor your OH have ever owned or inherited any property anywhere in the world? Otherwise you don't qualify for the SD exemption.

2. You may well find that your OH's income will not be taken into account if he's self-employed and only just starting up in this country after a break abroad.

3. If you do get the house for £250K with a £50K deposit, that's £200K on your salary alone of £44K, which is quite a stretch.

4. I suspect you may have to declare the impending maternity leave / drop in income as it's a material fact relevant to the lender's decision.

You can get a mortgage / agreement in principle (MIP / AIP) which gives you some indication of what a particular lender will lend to you. This is a good idea before you start looking or putting in offers. Given you've recently come back to the country, I'd suggest that you contact an independent / whole of market broker who will guide you best.

Once an offer is accepted, you make a full mortgage application. Once this is approved you get the mortgage offer. This often lasts for 3-6 months depending on lender.

Assuming the valuation / survey / searches come back OK, you proceed to exchange contracts (when you pay 10% to the seller) and then to completion (when you pay the rest of your deposit money and the mortgage money comes through too). You are legally bound to the purchase at exchange. You must complete before the offer expires. It is not unusual for the lender to run pre-completion checks to make sure your financial position hasn't changed too much. It can take anything from a few weeks to several months for all the paperwork and legal stuff to take place.

hazyjo

Yes, it expires on completion. Sometimes they let you renew it if it's likely to expire before completion (we extended ours). Usually they're for around 3-6 months. Average house purchase takes 3 months (ours took 5!). Usually the mortgage offer will take a few weeks to sort as they'll have to do a valuation, and you'll obviously need to do a lot of form filling, etc first.

Why don't you just stay in rented until the baby arrives, then sort out your work situation. You really should be basing any mortgage offer on you working part time if that's what you're planning. Really not sure why you'd want a mortgage based on a full time salary (I think that's what you meant). How would you propose to pay it?!

I certainly would not be house hunting if I had a baby due in December! OMG what stress and panic. Do you realise how many people will be trying to get in 'before Christmas'? It's an absolute nightmare.

Good luck!

Jx