Competing with a cash buyer - help!

Inforashekel

Hi,

I'm currently house hunting and have found a fab house that needs a lot of work. It's exactly way we want and where we want to be. It's on the market at OIRO £215,000. When we first visited we were told an offer off £155k had been rejected. We waited a few days and then offered £170, which was also rejected.

The agent told us the vendor was looking for closer to £200k. Well, Christmas interrupted proceedings but on Tue I called to arrange another viewing or today with a view to making an improved offer ext week. In the meantime someone else has offered £185k cash! And there are two more viewings tomorrow.

Not sure what to do. We are in a good position, we don't have to sell our existing place, and have a consent to let sorted with our mortgage provider. We have confirmation from IFA about being able to get the requisite mortgage for the new place, and by Monday will have an agreement in principle.

So what to do to compete against a cash buyer??? I need o add that the house needs c50k spending on it, as it's a period property with zero heating that's been unoccupied for a few years. It's on the edge of a very desirable part of town. The ceiling for the area is hard to determine as a real mixof properties, but I'd estimate that it'll be worth around £280k when renovated (including adding two beds)

Any advice or help greatly appreciated,

Thanks in advance

K

kingstreet

Is it mortgageable? If the agent fears a large retention for any borrower, he may favour the cash buyer for fear of the purchase breaking down after survey.

GAH

Ultimately it will be the vendors decision whoever they choose.

Has the offer of £185K from this other buyer even been accepted yet?

You can't really compete with the cash buyer in terms of position, they don't need a mortgage and you do, so thearitcally they should be able to get a deal done quicker than you.

One thing you do know is, the you will have to be making an offer of at least £185k to stand a chance.

It really all comes down to vendor and what they want, most will want the best offer.

GDB2222

It sounds like your next offer needs to be comfortably in excess of the cash offer - say £195k. That leaves you with a total projected cost of around £250k on a house you think will be worth £280k.

hazyjo

When you say it would be worth around £280k, I'd be more inclined to say £250k as anything between that £250-280k level is on wobbly ground (especially if the market's fallen still during the time it takes to renovate).

Have they actually said they'd accept £185k cash? Are you sure the EAs aren't making it up? Not a repo is it?

Does it have a kitchen and bathroom? Agree with above - I'd be double checking it's actually mortgageable...

Jx

LandyAndy

Inforashekel wrote: »

The agent told us the vendor was looking for closer to £200k. Well, Christmas interrupted proceedings but on Tue I called to arrange another viewing or today with a view to making an improved offer ext week. In the meantime someone else has offered £185k cash! And there are two more viewings tomorrow.


K

You'd be surprised (or maybe not) how often a house has a flurry of activity and offers when you show some real interest in it;).

Don't offer more than you can afford and think it is worth.

As others have said, check that it is mortgageable without a large retention.

Inforashekel

I believe it is mortgageable as it has a kitchen (off sorts) and bathroom. My sister bought a similar property last year and had no mortgage probs. obviously that's no guarantee though.

The agent tells me that no offer has yet to be accepted, but that the 185k hasn't been rejected. My first thought (ok second after aarrgghhh) was that they were making it up, to push us higher. We can go to £200k, in fact we can go much much higher, but although I really really want the house it is still a financial decision. We may not be looking to make a quick buck on it, but it still needs to be financially feasible.

As for my rough estimation, I agree that 250 is a prudent figure to estimate, due to sd. So really need to spend no more than 200k.

It's just deciding what to put in as a final offer that's causing head scratching. Part of me thinks just to go with 200k, remove from market, proceed etc... But there's that bit of me that wants to knock it down from there. Mind you, there is always the survey, there's potential I presume to use the findings from that to renegotiate... Although it'll risk losing the place.

Hmmm.

Will ponder some more (and take any more comments into consideration) but swaying towards offering £200k.. We do really want it, and it will still be financially viable. And then see what the survey turns up.

If it's meant to be it will work out

Thanks all

GDB2222

although not particularly moral, there is a lot to be said for going in high now, so as to blow away the opposition. That then gives you some opportunity to renegotiate later on, as you say.

Grimbal

Just as an aside, how "cash-ready" are the other potential buyers? Do they have the money in an account or will it be dependent on a sale. Worth enquiring as we were in a similar position to you: the competing "cash-buyers" chain fell through, so we ended getting the house

G_M

Ignore the 'cash buyers'.

They may not exist.
They may not be genuine cash buyers (ie cash in the bank) but 'mock' ones, ie cash in a property they need to sell, but no mortgage needed
The seller may not be concerned about about speed, more interested in price and/or reliabilty.

So put them out of your mind. Work out what you want to pay, and negotiate up towards that figure. Put each offer in writing so it has to be passed to the seller for consideration, and never indicate you're willing, or able, to pay more (until, that is, you 'find' some more cash and increase your offer by really stretching your finances!)

sirmosh

As G_M says, don't even consider these cash buyers in your decision. Choose your absolute max offer and slowly work up towards it each time it is rejected but don't get sucked into going over that amount. You may see this house as a great opportunity but the last thing you want to do is go ahead and pay too much of it then spend years regretting it, after all there are plenty more houses out there and once you've made one your home you'll forget about the others.