Understanding offers in excess as FTBs

MissMarble

Hi everyone,

After posting on a previous thread with lots of great input and advice, I thought I'd share our latest dilemma/query with hope of receiving some help!

We are first time buyers and live in Manchester, hoping to buy in a few small towns which are either on the up or already slightly established. Earlier this week we put our first offer on a house, which for a day was the highest - before we got out-bid by another couple who I believe may have offered £1,000 / £1,500 more than our second offer. The house was on for offers over £220,000 and so it is our understanding it may have gone for £225,000+. We were prepared to go up to that, however there was work to be done to the house hence why I think we may have been overly cautious.

As we were out-bid, we are now back to the drawing board and before we find somewhere else I wondered if you could help with understanding how much to increase offers by? I read that it's generally good to put two offers down on a property and to start out low before increasing - however, I think we are just confused about how much to increase it by and with the 'offers over' it's difficult to go in low to begin with.

We've noticed the property market in Manchester is extremely quick moving and houses in good areas are SSTC in a week with multiple offers on the table. I've also seen how properties are generally advertised at 'offers over' which adds more confusion because it sounds like there's never a cut off point - i.e. if we offered on a house on at offers over £200,000, how far up should you go bearing in mind there are several other offers?

I know each circumstance is different, but if anyone can shed any light in terms of offers in excess that would be really helpful. We were gutted to have missed out on the house we offered on and looking back wish we had gone in at the higher price.

Thank you in advance.

Lokolo

Or, you could just offer what you think is right and say "This is my one and only offer", and if you lose out, move on.

If you love somewhere and it's long term, a few £thousand, is going to make very little difference over 5-10 years.

Obviously there is a difference between offering £250k on something thats £220k, but if you were desperate for it, why didn't you go back and offer higher?

victoriavictorious

I personally steer clear of any listing asking for offers "in excess of" however much I might love the property. When a seller doesn't price their property according to what they want, it just seems that they're trying to make it sound like a great bargain (and fall within a lower search criteria) whereas in fact it could be nothing of the kind, if they are *really* expecting £30K or whatever, over and above.
If they want it to go to bids, or indeed a higher price, I prefer them to just be upfront about it and say so. The process is stressful and fraught enough as it is, without putting extra (and imo slightly underhand) obstacles in the way.
I also could not be certain that I wouldn't get gazumped further down the line when I've spent money on surveys, legal fees, etc.

ReadingTim

I suggest no more than 3 offers:

1. opening offer - high enough to be taken seriously, low enough to demonstrate you're not a pushover.
   
2. follow up - this is the serious one - you need to be within 10% (or so) of your maximum offer. Ideally, rounded up to the nearest thousand or ten thousand, as psychologically, people like nice round numbers - a hundred thousand sounds better than ninety nine thousand nine hundred to the ears of the vendor.
   
3. final/maximum offer - this is the most you're wiling or able to pay. Ideally a random (ie nor round) number, implying you've scrimped, saved, and checked down the back of every sofa to find every single penny you have.

Some say if your first offer does't embarrass you, it's too high - personally I think you risk coming across as a timewasting dreamer that way. You could always split your serious offers into two, if only to gauge whether the vendor has realistic expectations as to price - regardless of what the market thinks it's worth, if you can't agree a price with the seller, you don't have a sale.

Finally, your final offer is just that - final. You can't come back with more afterwards. But most vendors expect some element of negotiation, even if it's more of an elaborate charade or courtship dance than hard-bitten haggling, so starting with your final offer will only confuse, as people expect another, regardless of what you say.

Good luck - you're unlikely to get it right first time, so maybe "practise" on some places you're not that keen on so you get your strategy right for when you see the perfect one.

MissMarble

Lokolo wrote: »

Or, you could just offer what you think is right and say "This is my one and only offer", and if you lose out, move on.

If you love somewhere and it's long term, a few £thousand, is going to make very little difference over 5-10 years.

Obviously there is a difference between offering £250k on something thats £220k, but if you were desperate for it, why didn't you go back and offer higher?

Hi Lokolo, thank you for your comment. We are mainly focusing on a house for the next few years (up to 3-4 years) rather than the long term as we may move away from the city. We would have liked to put another offer in, but by the time we found out the vendor had accepted the other one and the estate agent said it was going to be taken off the website - I questioned the same thing, but they really weren't inviting any additional offers.

JoJo1978

Don!!!8217;t over think it. For each property, decide the absolute max you will pay. Either offer that and make it clear you won!!!8217;t go higher, or knock 5-10% off to give yourself wiggle room to offer higher.

Ignore offers over except in Scotland. Your first (and final) offer can be lower than the asking minimum. Unless the vendor has instructed the EA to not be informed of offers under a specific value the EA will pass on all offers.

Be careful not to end up bidding against yourself, you only have the EAs word about other offers. So if you go in low, wait and ask for it to be left on the table before offering higher. Ask to be kept informed of competing offers and only respond then or when you are asked for a best and final offer.

Mr.Generous

Couple of tips,

Firstly they all need work. When you look round you will not spot everything, even a lovely house will have some things you will change. Don't be fooled into thinking (or being told) any property is absolutely prepared for just moving furniture in, they never are.

Personally I take no notice of "Offers over" and just look at the price and what I think its worth. Look what has sold locally - not at asking prices.

I offer on a property and depending on the value I'll go another £1000 if its rejected, unless £500 would settle it I won't go any higher after that, I will tell the agent its my best and final offer and I stick to it.

Twice now agents have come back to us (We buy and renovate quite a few) after rejecting offers to say the vendor has reconsidered and accepted. We could easily have gone higher, remember even £1000 buys you a few rooms carpeted or decorated.

Its your money, you work hard for it - spend it carefully and wisely. If you really want a place and your offer is rejected tell the EA your lender won't go any higher, wait a couple of days then offer £1000 more and say your parents have offered to help out but that is your limit.

The seller will be told your tale by the EA who only gets paid when it's sold and doesn't want to loose a buyer. Bidding wars I would steer clear of. Just pay what you think its worth, not what someone else is prepared to pay. The mystery buyer who outbids you might have been given £50k by their Aunt or won the lottery, or might not exist, who knows.

Cakeguts

If you offer more than the value that your mortgage company puts on it you will be expected to make up the difference out of you savings.

ACG

I sold my house last year for "offers over", I received 2 offers for the asking price (which was all I actually wanted). So my thoughts are if there is something saying "offers over", you are free to offer the asking price.

To be fair, you are free to offer below that, but chances are it will be declined. I would accepted a couple of grand below what mine was up for, but not a massive amount less.

Crashy_Time

Cakeguts wrote: »

If you offer more than the value that your mortgage company puts on it you will be expected to make up the difference out of you savings.

And in this market who in their right mind would be doing that?


https://www.theguardian.com/money/2018/feb/07/uk-house-prices-fall-again-as-household-income-squeezed

ACG

Crashy_Time wrote: »

And in this market who in their right mind would be doing that?


https://www.theguardian.com/money/2018/feb/07/uk-house-prices-fall-again-as-household-income-squeezed

As I have said many times before, every link you post about house prices dropping, there is one to say house prices are growing:
https://www.mortgagestrategy.co.uk/house-price-growth-slows-2-2-january-halifax/

GROWTH slows, still increasing jsut not as quickly as in the past. I bought my house in May, house opposite has gone up for £25k more than I bought mine for and in a similar condition. That is on top top of the £70k I made on my last house. In all those years you have been banging on about house price drops, I have made over £80k even if my house drops by 25%, I will still be in profit.