First Time Buyer in London Asking vs Selling Price

Late_Newbie

Hi there
This feels like a really friendly community with some very experienced people. I am new to the buying game and have unfortunately picked up the worst time to try and buy but if I and my partner don't do it now, we will be priced out of London more or less.

So here is my question: we are looking to buy in Northeast London in what used to be a 'cheap' area even a year ago. Of course this is no longer the case. Asking prices have gone up significantly since August (when we started looking) but I have no idea what the actual selling prices are. Estate agents say ' a lot higher than asking price' (of course they would) and we have witnessed that a couple of times already. Now we may have found our dream home but of course there are several other interested parties. The asking price is quite a bit less than what we can afford and we need to make an offer on Monday. Asking price is £325000 and our top budget is £365000 (not a penny more). What are people's feelings about this? Is it quite common for properties at that range to go over 12-15% over asking price? Are we crazy to be looking at asking prices just 14% under our budget right now?
I would be very grateful for any advice
Many thanks
Late Newbie

pinkpiglit

I've only got my own experience to go on - we're selling but also trying to buy a slightly larger place. We've bid asking price on a few places and have been rejected in favour of buyers willing to pay more (anything from 3%-20%!). I'm sure more experienced people will be along with some good advice, but right now it seems to be there are a lot more buyers than there are properties and that if you really want somewhere, you need to be prepared to pay around 10-15% more than asking price.

If a property has been on the market for a while then you may be in a better position. In my part of London, places are on the market for around 2-3 days before they are snapped up. It's a nightmare for buyers!

Turnbull2000

You should generally expect to bid 10-15% above asking price.

You may begrudge this, but the property will rise in value enough over the next 12 months to make that money back, as London and surrounding regions are currently in the midst of a positive feedback price loop.

Late_Newbie

Thanks guys - I appreciate this. This is just as I thought (and have heard a lot worse!) but I have a horrible feeling that said property will go for over 400000 (it is a lovely property) - and there is a limit to how much we can stretch. I am thinking of going 5000 above asking price as an opening gambit - this is not a best and final situation yet. I do not want to contribute to the price going too crazy too quickly, but I also want to be taken seriously. Do you think this is reasonable or should I go all out and offer say 20000 more straight off the bat?

What we have as an advantage is no chain and over 50% deposit - plus a pre-existing offer from a lender (seller decided to stay put) from last month. I am hoping that this might prove enticing but who knows?

Mrs_Z

Hi, it maybe worth offering just the asking price as an opening offer. That should be enough to be taken seriously. If there are several interested parties, the chances are that it will go to sealed bids.

We recently lost in a similar situation, offered £5,5k over the asking price and we would have been in a good situation with no chain but it was not enough. In hindsight should have offered £10k + more, the house would have been well worth it.

We totally under estimated the competition. Still gutted!

Best of luck with yours!!!

Late_Newbie

I am sorry to hear this Mrs Z. I do hope you find a place you like soon. We already had the perfect place back in August and they accepted our offer below asking price (it was another world even then). They then decided not to sell. But now we found a place that is even better and the same price as the first. So while we were devastated at the time, there are still good homes out there. Question is: for how long?

Wish you all the best
Late Newbie

ging84

Turnbull2000 wrote: »

You should generally expect to bid 10-15% above asking price.

You may begrudge this, but the property will rise in value enough over the next 12 months to make that money back, as London and surrounding regions are currently in the midst of a positive feedback price loop.

This doesn't sound a like a bubble ?

Turnbull2000

ging84 wrote: »

This doesn't sound a like a bubble ?

No, because prices are underpinned by chronic undersupply, Help to Buy, Funding for Lending, and a long-term ultra-low base rate. Prices are just being driven upwards a bit faster than they otherwise would.

HAMISH_MCTAVISH

ging84 wrote: »

This doesn't sound a like a bubble ?

Nope.

Sounds like the artificial repression of house prices thanks to 5 years of severe mortgage rationing is ending.

And the fundamental cause of rising prices in the UK over the long term, a critical supply shortage, is reasserting itself.

inigma

The best advise I can give is if you think something is too expensive then walk away. Don't be afraid to live in an uncool area, I moved to a grubby bit of London 2 years ago but the value of my flat has gone up £110k. Your first house isn't always your forever house.

AndyGuil

Look at sold prices in the area. Try and gauge the differences between the properties and come to a conclusion on the valuation. Considering the market is going up then you may have to spend a bit more than the last sold price depending on how recent it was.