Asking price vs selling price

fiji_dave

Afternoon all,

My first post, so be gentle with me!

I've been looking for a somewhere to buy for the last few months and have found a property that I'm interested in. It's a 3bed victorian terrace house, asking price is 225k. I'm a first time buyer in the south east, no chain, with a mortgage agreed in principle.

I've done a fair bit of investigation into what I reckon the property is worth, basing that on similar properties nearby (The house next door - identical layout, but with slightly larger kitchen - sold for 213k back in October) and also assuming that the asking price isn't actually what the property is worth. I'm working on an assumption that at the moment the selling price to asking price ratio is about 96%, which would put the 225k property value at 216k.

With this in mind, plus the fact that I have finances agreed and no chain, plus the seller has already found the house that they want to buy. I would have thought this put me in quite a strong bargaining position and as such would hope that the price could come down a bit further. I put in an offer this morning of 207k which was rejected pretty much out of hand. I sort of expected this, and am considering my next offer.

Is my assumption of selling vs asking prices about right? Was the first offer too low?


cheers
Dave

Rick62

I think your analysis is quite reasonable. The problem is some sellers get fixed ideas of what their property is worth and there are still buyers that are prepared to offer too much without analysing the value as carefully as you.

I would try and get some more feedback from the EA. If you are too quick to increase your offer they will keep pushing you up in price.

robwend

most peeps will only go up to £7000 to 10,000 lower, from my experiances anyway

fiji_dave

I was going to wait a day or so before calling back. The house has already been on the market once and the sale fell through. The estate agent said that previously it was under offer close to the asking price.

Obviously I've taken that with rather a large pinch of salt!

At the moment mine is the only offer on the table, but I'm thinking that maybe i should still increase the offer, slightly. I discussed the offer with the agent but got nothing back as to whether the owners would be prepared to discuss the price. They seemed to want a higher offer before they would discuss whether they would move on asking price.

Again I'm sure much of that is just estate agents tactics trying to get more cash out of me.

Gorgeous_George

I'd look at other properties while they stew on their rejection.

Maybe offer a £210K later in the week. Tell them it is a final offer.

You are in a strong position. You know it. They know it.

Truthfully, they do not know if they will get a better or not offer and nor does their agent. Rejecting yours may prove a costly mistake. Depends how much they NEED, not how much they would like.



GG

tonydee

Ditto George.

Plenty more houses out there so don't get hung up on one. Let them do the worrying, not you.

Good luck

PoorDave

Talk to the agent and ask to see other properties, so they know you can walk away from this one. If there's another agent on the opposite side of the road, go to them conspicuously, in the home the first agent sees you, and will get on to the vendors to accept your offer (so they get the commision and not the guys across the road for a different house)

Doozergirl

You can make assumptions on asking prices but you can't draw a conclusion based on averages, nor can you judge the vendor.

You have to decide what it's worth to you and I would play it very straight.
Tell the EA you're keen to tie this up and would they please ask the vendor for the lowest price they will accept. Then you know how far their ideas are from yours and then you can make another, still lower offer!

If they want asking price, you won't get very much out of them at all; not soon anyway.

courtjester

fiji_dave wrote:

Again I'm sure much of that is just estate agents tactics trying to get more cash out of me.

Of course - that's their job! They work for the vendor (in theory) so they should be trying for a higher amount, but bear in mind that what the agent really wants is a SALE - the increase in commission they get by holding out for more is peanuts, so eventually the agents self-interest will get the better of them and they will lean their client towards acceptance (in the absence of better offers).

When negotiating, make all your offers incremental and wear them down to a point at which the feedback suggests you are getting near, don't cave in and suddenly up your offer by £10,000. You started at 207k, so your next offer could be 209k.

When this is rejected, ask the agent some questions about their client's intentions. Don't go back straight away. Discuss some problems with the house, don't reveal your funding capability - you will want to hold this in reserve for the final "this is as high as we can afford to go, take it or leave it..." offer.

fiji_dave

cheers for the advice all.

I've waited a couple of days, partly because I haven't had time to breathe at work! Anyway, I'm going to call them back tomorrow and see what extra info i can get out of the estate agent.

fingers crossed.

fiji_dave

Hmmm.

Called the agents again today to discuss the property. Increased my offer, but again got a straight "That's far too low" from the estate agent.

I pointed out again about the house next door going for 213 back in october and the reply was that my offer needed to start with 22.... to which I played the "no chain" card saying that as the vendors were really looking for a quick sale that I should be the perfect buyer for them, mortgage AIP, and no chain.

They called me back later to say that they'd discussed it with the owners but no go. They told me what the previous offer was (from the time when the sale fell through) which was apparently 223k, which surprises me a lot, and that whilst the owners might be prepared to accept a lower offer it would still need to be 220k or more.

I've said i'll consider what they've said, but that I won't be offering anywhere near 220k.

I figure the next move is to call them back and rather than put in an offer, find out how much lower the owners are prepared to go and find out if there is some middle ground which can be reached. They keep going on about this previous offer, but as far as I'm concerned that offer really is irrelevant since the potential buyer wasn't able to arrange a mortgage for the necessary amount, so they couldn't afford the offer they put in! I can make lots of offers on houses I can't afford, but those offers wouldn't be worth diddly!

I've set myself a limit though and if they're adamant they won't go under 220 then I'll have to walk away.