Negotiation tactics - ideas please!

sleepymans

Please advise on tactics:
I am selling an unoccupied terraced house in need of total refurbishment.
Similar house in same street but already renovated has sold for £113k recently.
My asking price is £89k and I have just had an offer from a builder (I think)
of a "cheeky" £69k. Had it by letter so I am hoping for some MSE advice before responding.

Obviously I have afigure in mind which I will accept- it would be nice to try and keep this man interested and agree a deal as I think a builder will be the sort of buyer I need.
Any suggestions as to tactics?

I have checked the local market and there are few refurb project houses available at the moment.
I will need to call the EA this afternoon.

back2square1

My father has just sold an empty terraced house this week that was in need of refurbishment. Coincidentally other houses in the street were asking price of around £110-£115k.
My dad put it on the market at £95000, he had some ridiculous offers from builders. BTW if the offer is on paper it doesn't mean its their final offer it just makes it look like that is all they are prepared to pay which of course is a clever negotiation trick.

Anyway, my dad accepted £88k for this property, it was on market for 2wks!!

My dad learnt quickly that EA's have very strong relationships with builders, clearly because they both benefit greatly from one another. You as the seller need to be strong on what asking price is and the lowest you will accept (keep your cards close to your chest even from the EA about the lowest price you will eventually accept).

I also strongly recommend you check out nethouseprices.com, its a fantastic website where you can find all previous SOLD prices for properties on your road. Please bear in mind though whether the sold properties were in need of total refurb or not.

Hope this helps!!!

Doozergirl

You don't really want a builder because he wants to make a profit. You won't get best price.

You want either a novice developer who has never done this sort of thing before and doesn't know the cost of things, or a family looking for a home to make their own.

If I were selling a house that needed work, then I'd set a very low guide price and ask for offers over that. It allows people to work out what the building is worth to them . For some, it will be a lot more than others.

Reject the offer outright and don't open negotiations. Let the builder do the running.

Naetha

You could also try the tack that we tried with our (soon to be) unoccupied terraced house (4 beds) in a studenty area of Leeds in need of refurbishment.

We had three estate agents round who valued it between £90k and £100k as it stood, but had the potential to make £125-130 when refurbished

We put it up as Offers in Excess of £90k and by the first week we'd had about 12 viewings and 5 offers. We then asked for people to give best and final offers by a set date three weeks after the house originally went on the market - the offer we went with eventually was for £110k. If the house is in need of refurbishment, it may well be worth setting it up as "OIEO" and let the market decide the value. Just remember to set the lower limit as an amount you'd be happy to see your home go for.

sleepymans

To be honest I dont think the EA has taken the offer very seriously - didnt even bother to phone us about it and has put it in writing only because he is obliged to.

I did wonder if we'd have been better putting the house on at an "OIEO" basis.

In a way I suppose this is what we have done as the EA did want to put it on at £99k and I asked for it to be marketed at £89k in the hope of lots of interest and get plenty of offers. If there are competing offers then they can be encouraged to outdo each other.

Well its only been on the market for a week so that could still happen as I think there are lots of people wishing to try the renovation game". On the other hand we have to bear in mind that the house has suffered some structural movement and its unlikely anyone will get a high percentage mortgage on it so its not suitable for people without substantial cash funds. That will limit our potential pool of purchasers.

Doozergirl

Has suffered movement? Has it stopped/been sufficiently rectified yet?

sleepymans

Doozergirl wrote: »

Has suffered movement? Has it stopped/been sufficiently rectified yet?

Structural survey says no movement recently, but no remedial action taken either - underpinning would be belt and braces approach and not essential.

Hence really low asking price and intention to sell it to a builder/developer - say £10-15k underpinning and £5k max on updating would make it worth almost £120k if resold.

Alternatively it could be updated internally let out for £400-500 pm with no necessity to underpin.

sleepymans

Just spoke to EA....arent people strange??? The low offer was from someone who hadnt even viewed the house!!!!!

What is that about?

sleepymans

Well, better news today.
In the week since house went on sale we have had 15 viewings (price must be right)
5 parties showed continued interest.
Today had an offer of £2.5k above the minimum we privately thought of accepting for a quick sale.

The offer is from someone not in a chain and looking for a smal ltv mortgage.
I said I'd consider it after talking to my partner and ring the ea tomorrow with a response.

The questions are: Is it too early to accept that opening offer?
Should we wait a few days to see if any of the others interested so far, better it?
Do vendors ever accept the opening offer? - not wishing to scupper the deal by being greedy,would they have offered low on the assumption that we would automatically turn down the first offer?

What a strategic game this is and without meeting the people (ea does the majority of viewings) involved its hard to try to judge things.

Any thoughts anyone?

spunkeyrich

yep my thoughts are that almost everyone that makes an offer will go up on it. they know they will be asked to go up and offer less to start with. Sometimes best not to get involved with face to face negotiation let the agent do it.

rich

MJMum

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