What price should I start negotiations at and what should I include in my offer letter?

Posiex

So two main things really.

1) What price should I start negotiations for an offer on the house I am interested in?

I set myself a budget of 80k because I don't like to be in debt and I want to be able to afford overpayments each month to pay off my mortgage as early as possible and have money left over each month to have an enjoyable life.

The first house I am interested in is advertised with a guide price of 95k and has been on the market for less than 3 weeks. I went to see the house and told the vendor my budget was 80k but I would be happy to push it up a little if I found a property I really liked. I also told her I was viewing a number of other properties I am interested in the next week and may be in touch for a second viewing depending on my interest after viewing the others. I also made sure she knew I was in a good position to move quickly if I made an offer, with a mortgage in principle and seeking a lawyer to appoint ASAP.

Whilst viewing the property I noticed a number of issues that I think I could use to negotiate. There was fogging in some of the double glazing which indicates it needs replacing, the boiler is an old tank type which would need replacing with a combi boiler to be efficient (quoted £1500 by mates partner), the bathroom suite is green and would benefit from upgrading, the roof appears to be old. The owner said they can move out to their parents to vacate the property and want to move closer to their daughters school. I said my preference will be to offer on a house with sellers who are organised and motivated to complete quickly. I asked if she had lawyers in place to get things moving if I were to make an offer, she said no but she will tell her husband to get on with that.

The second house I am interested in is basically the same house but a lot more updated, fresher d!cor, new bathroom etc, mid terrace with a smaller garden and a front patio instead of drive which is advertised at 90k on the market for less than 3 weeks.
It has an extra third bedroom (but is basically 1 bedroom split into two, with entry to the second via the first) and does not have a lean to utility room that the first house does. Would it be unwise to use the other house during negotiations for example, I am interested in a second property which is very similar but at 90k has w, x and y which would cost me around z amount to get this property to a similar standard.

Recently sold prices are very difficult to establish as the area is predominantly council and so a very few have been sold. Zoopla has average for 88k in the last 12 months for 2 properties on this street but a number of similar houses have recently sold STC in the general area advertised between 65 and 80k. The Housing Price Index values the property at 91k based on the last purchase price.

I will arrange a second viewing next week after viewing the second house and will be with the vendor so I can start negotiations in person. I am thinking of kicking off the negotiations at 15% lower than the asking price at 81K and see what happens from there. Does that seem reasonable? I will also find out what the owner for the second house is willing to accept since it is more up to date house at a lower price it is a good plan B if I can't come to an arrangement with the owner of the first house.

2) I am going to draft my offer letter in advance. Even though I intend to pre-negotiate with the vendor and agree a price, should I include the following in the official offer letter?

- Offer
- My ability to move forward and complete quickly due to being a chain free first time buyer with no notice period and being very organised, with paperwork, lawyers and surveyors all lined up ready to go
- My decent deposit (about 12% of what my max offer would be) and secure job putting me in a strong position for a fuss free mortgage approval.
- How locally sold prices have influenced my offer to be below the asking price
- How the work required to the house has influenced my offer to be below the asking price
- Why I like the house and how I see my future there (I intend to apply to be a foster carer in the near future so it will make a lovely family home)
- Copy of Agreement in Principle Letter
- Copy of Lifetime ISA statement to demonstrate I have the funds for deposit
- Copy of ID
- Statement that the offer is conditional on the property being removed from market with no further viewings

Should I include anything else?

Thanks

[Deleted User]

I hope you find a property you are successful with eventually but your offer letter would put me off. You may eventually come across someone desperate to sell but its going to take time and waste a lot of paper, I suspect. I don't think you need to go into such detail, may offend the vendor detailing every fault in their house. I'm surprised you don't understand that the vendor and buyer will have very different opinions of the house and that writing a letter like this may well put off more than it encourages serious consideration. Most vendors who are serious about selling will need a certain amount to enable them to buy the house they want to move to.

Your post seems very very focused on what you want, which is understandable to a degree, but contains very little understanding that the vendor has wants and needs as well. You need to get this for successful negotiations.

warby68

That's too scarily full on and personal - I, as a vendor, would be put off.

The key points are your £ offer, your status and that you wish the property to be removed from the market. You need to confirm these upfront when making the offer/negotiating which is usually verbal, and not wait for the follow up confirmation.

Keep the other personal stuff out as well as all your rationale for offering what you have. People do not want to be told what's wrong with their home - most of that stuff is visible and properties are sold as seen and in theory have their condition already factored into the asking price. The time to bring specific points forward is when you have your survey and the results mean you wish to negotiate. Highlighting what other properties you like and that they seem better value will only tempt vendors to tell you to buy one of those instead.

You also seem to want it all. You want a massive discount, lots of things fixing and for them to move really fast. You might be better revisiting the art of negotiation. These property prices are at the bottom end which means there is relatively little wiggle room eg £2k for a boiler is neither her nor there on a £250k price but is on an £80k one. Your deposit and FTB with a mortgage aren't unusual - that is what that price will probably attract. What you could offer as a FTB is flexibility in timing rather pushing them to be quick for example.

[Deleted User]

Why would you write a novel? Just make the offer.

Fosterdog

Do people actually submit offer letters? When we bought we just verbally gave the vendors EA our offer which the passed on and was accepted.

The only time I've heard of offer letters is if you think the EA is not passing offers on to the vendor so you send them a letter with your offer instead.

OP I think you will be house hunting for a long time

comeandgo

That letter would be so far from the norm that I'd dismiss you as a buyer immediately.

babyblade41

Just call the agent and make an offer, no need to write.

It will either be accepted or rejected or a counter offer will be given.

You appoint a solicitor when you are ready to proceed

FtbDreaming

Ive only been browsing so not offered/ bought a house but that sounds way too intense. Just offer what you want and they can either accept or decline. Its more of a sellers market at that price so I dont think youre in a position to make so many demands.

I'm looking at similar budget and ex council houses and they are selling fast in my area. Although I know what I think theyre worth as in I live in one and know the area well for crime asb etc... there seems to be a lot of investors snapping up the properties painting them and replacing bathroom and kitchen then relisting them for 20k more. Thus inflating the prices in the area.

Davesnave

As an OAP and a big fan of girl bands for all the wrong reasons, I thought the chorus line in Veruca Salt's "So Weird" applied to me, but perhaps it would also sum up the likely reaction of a vendor to the proposal you're making here:

You don't know me
You don't own me
You're just passing through my life
You're a stranger
With bad behavior
You're so weird I'm terrified

Others have already explained why.

[Deleted User]

Posiex wrote: »

2) I am going to draft my offer letter in advance. Even though I intend to pre-negotiate with the vendor and agree a price, should I include the following in the official offer letter?

- Offer
[STRIKE]- My ability to move forward and complete quickly due to being a chain free first time buyer with no notice period and being very organised, with paperwork, lawyers and surveyors all lined up ready to go
- My decent deposit (about 12% of what my max offer would be) and secure job putting me in a strong position for a fuss free mortgage approval.
- How locally sold prices have influenced my offer to be below the asking price
- How the work required to the house has influenced my offer to be below the asking price
- Why I like the house and how I see my future there (I intend to apply to be a foster carer in the near future so it will make a lovely family home)
- Copy of Agreement in Principle Letter
- Copy of Lifetime ISA statement to demonstrate I have the funds for deposit
- Copy of ID
- Statement that the offer is conditional on the property being removed from market with no further viewings[/STRIKE]

I think it's fine, with just a couple of tweaks.

warby68

OP, you're getting a lot of very consistent replies which pretty much disagree with everything in your approach.

I hope you're able to take this positively and rethink.

If you do have problems with overthinking, control, or are just completely inexperienced and trying to teach yourself, its really helpful to have someone in real life to bounce house buying off - relative, friend, colleague who has been through a few property transactions. Please note, if you haven't already, that the estate agent is rarely that person and that solicitors don't handhold either.

PS I didn't directly answer your first question either about what you should offer - be aware that offering £81k v asking £95k is quite a long way short and not likely to endear you to a vendor. If your budget really is £80k then you are looking at properties which are probably too expensive. You can try by all means but expect to be knocked back. If you REALLY want a property don't try and be a total cheapskate - it will likely backfire.