moral dilema when making an offer

Nenen

Here we go again... the seemingly never-ending saga of our search for a house to buy that a) We like and b) We can afford! Oh... yes and c) Is reasonably priced and we think it will be saleable if we want to move again in a few years time.

We saw a house we liked that is way over our budget but is in a location we really like (we're currently renting nearby) and has been on the market since 15th May this year. It was originally on for 380K and they dropped the price on 14th June to 370K (thank you property snake ).

We decided that we would go and look and we do like the size and position and although the decor, kitchen carpets etc are all rather jaded it is liveable in.

However, while we were there the woman told us they were moving back to the USA (she's a Brit her dh is american) due to his job. Apparently they only moved to the UK from the USA just over a year ago and deliberately chose this house as they have 4 children and it is a brilliant school catchment area. They intended to settle here permentantly but he suddenly got offered a promotion he couldn't refuse and he has already gone back to the States to work while she stays here with the kids to finish school term and sell the house. She sounded pretty desparate and so we thought it was worth putting in a very cheeky offer (via EA) of £296,500 (approx 20% below asking price). This was turned down (unsuprisingly) and we waited a week before increasing to £306,500 last Friday. We still haven't heard anyhting back.

We know (from land registry) that they only paid £310,00 for it just over a year ago and detached houses round here have only gone up by around 6% in that time (according to land reg average figures). Therefore, on those figures it would now be worth around 330K so asking 380K was a bit optomistic i think! To be fair, they have put in a new bathroom but it is nothing fancy, bog-standard MFI type and doesn't even have a shower over the bath. They have also replaced the built-in oven in the kitchen and the boiler (both of which apparently broke). I wouldn't have thought these few improvements would make all that much difference would they?

I now feel torn... we really can't afford to go much higher without beggering ourselves (as it is we will be taking out a 250K mortgage until we are 75 :eek: ) but I feel really guilty hoping that they will be so desparate they will come down to accept our offer. If they do accept (and that is a very big if at the moment) I will feel that we have profited at someone else's expense and it leaves a bad taste.

I don't think I'm cut out for the cut and thrust of all this! We could just about manage (on a 5x joint salary mortgage already aip) to go to 320K but the repayments would leave us struggling to make ends meet and I don't really want to be doing that all my life! The plan is that we would buy this now and hope to be overpaying in the not too distant future (when we've got our three children through uni) in order to finish mortgage before we retire or sell in a few years and downsize. Are we mad?

If they refuse our second offer I don't know if we should increase it or not... and if we do by how much. Any opinions?

epz_2

remember by this thursday the cost of borrowing the same amount of money will have gone up by 28% which at that level is a lot of cash, your out of btl territory and they are in the hurry not you. hang tight and remember lots of people expect interest rates to go over 6% for a while and house prices to drop, not the situation where you want to streach to the absolute limit.


oh and remember that with the interest rate changes since last year they will have gained a fair old whack when they convert back to dollars anyway, im guessing about 14% but my memory is hopeless.

kingkano

Its a dog eat dog world out there, especially in property. So don't at all feel bad. Just beware maybe that if they accept a really low offer there is a danger of gazumping....

And take note of EPZ post above. Don't stretch yourself so thinly that 1-2% in rates will absolutely flatten you. OR take a 10 or 15yr fix if you do, so atleast you know its not going to get any more stretched for a LONG time.

Not sure why you went to see a house at 380 if your budget is more like 310 though? lol.

oh as for 2nd offer, if they refuse that, its worth asking the EA what they are thinking. I'd increase by 5k or something (with the obligatory odd figure).

Melissa177

There is another way of looking at this: you are saying to yourself "I want this house which I really can't afford at asking price, and is stretching me to the limit even if I get it for 320(and to be honest, that's unlikely)".

So you need a plan: how do you (and your family) make more money so that you can afford said property?

I am doing this same exercise at the moment, as there is a flat along the river I've seen for 400K (it will have gone up by the time I want to purchase one in the complex!), and so I've been thinking:

- What can I sell? (Alas, my only major asset is my 90% mortgaged flat)
- How can I earn more in my current job?
- How can I earn more outside work?
- Can I get a job that will earn me considerably more?


It's a great game to play - work out what income you need to have coming in and work backwards from there.

InMyDreams

Nenen wrote: »

but I feel really guilty hoping that they will be so desparate they will come down to accept our offer. If they do accept (and that is a very big if at the moment) I will feel that we have profited at someone else's expense and it leaves a bad taste.

How would you have you profited at their expense? Time and flexibility are valuable commodities (on both sides) that will effect the end sale price. So don't feel guilty about putting a value on them. If they're desperate to go and you're offering to buy their house, then the last thing you should be feeling is guilty! If you did get guzumped, would your feelings towards them be any more charitable? What if you upped the offer unnecessarily and then you were guzumped anyway?

You also don't know to what extent the price paid a year ago might have been similarly effected and in which direction, so don't dwell toooo much on that.

silvercar

If they really wanted the house to sell quickly they would not have put it on the market at an inflated price. Who really puts a house on the market at 370 if they will accept 320?

I would bet that the husband's job will finance the move and they may not be as desperate to sell as you hope.

exasperated_2

I think you should probably start looking for back-up houses and not fall in too in love with this one, as it is out of your price range at asking, and even at a reasonable underbid it is still out of your price range. Realistically, you aren't going to get them to go down to what you can afford if there are other buyers who will offer 340, 350, 360.

You might get lucky and because of their situation they may take your very low offer, but that also might be wishful thinking and you should have a back-up should it not pan out.

Also, as it's something out of your reach already, do, as the others have suggested, keep in mind the rising interest rates, which will really hurt down the line if you jump in at the deep end now.

For what your limit seems to be, you'd be better off looking at properties around 360/50 and have a more realistic chance of getting the owner down to 320 or less.

But good luck, either way!

kennyboy66_2

Worth bearing in mind that American schools go back much earlier than in UK despite having 10 weeks off in the summer. I think they go back 13th August. I would imagine they would like to get it wrapped up by then. A house hardly gets more sellable once its empty and utilities switched off.

I wouldn't go any higher as it sounds like you would be struggling too much.

Nicki

I also feel this isn't really a moral dilemma! You make the offer you can afford, and its up to them whether they wish to accept it or not. If they think it is too low, then they either wait for a higher bidder or keep the house and rent it out. You will not force them to sell for less than they are prepared to accept. Look at it another way. If you knew this family, and knew they were going back to the states, would you walk over to their house and offer them £20,000 of your money to make their life easier. That is in effect what you are doing if you offer £20,000 more than you can really afford for their house.

We had a similar situation recently where we saw a house we quite liked but which was in our opinion overpriced by about £120,000. We ended up putting in an offer for £100,000 less than asking which was refused, but our view was that if we offered any more we were effectively taking money away from our family to give to strangers to help them finance their relocation, so we walked away. About a week later we found another house which was on the market for the same amount as the first, but was just miles nicer, and we are hoping to move into this one by the summer (all fingers crossed!)

Rick62

There is absolutely no moral issue in getting the house for a good price. They are selling because he has a great new promotion in the states - your moral quandry might be more understandable if they were desperate because he had lost his job and they could no longer afford the mortgage.

Your offer, however low, will enable them to get on with their life, move back to be with the husband/father in the states, start new school for the new year, give them cash to buy a new house. Chances are his employers are meeting all their moving costs too, including EA fees etc.

Offer what you want, even at less than they paid a year ago you will be taking a much bigger risk with rates about 1% higher and rising. If they don't want your money thats their choice. I would try to not increase more (if you don't want to) but instead emphasise what good buyers you are, lack of chain, able to complete before new school term etc, whatever you can think that is attractive to the seller without increasing the cash.

billinge

I am at a position to make an offer on a property, probably 15k less than the asking price, possibly moving up a little. My concern has to be Gazumping. Is Gazumping Insurance worthwhile?

This house has been under offer twice in the last 6 months, both accepted, both fell through one with the buyers about to move in.

We are next time buyers, but would consider a Bridging loan if our house did not sell in time as our house has over 60% in equity. Is this a good idea?

Our house is a 2 bed terrace, near bottom of the ladder, and these tend to sell quickly.