How much to offer - need advice

G3ralt

Hello,

I am FTB and in need of advice.
The house we like has an asking price of 575k and has been on the market for about 2+ months. It has one of the largest gardens in that street (checked satellite images) and the nearby areas. We like the large garden especially. However, this unique feature also makes comparison with other sold properties nearby a bit difficult. We know that another house at the same street was sold for 599k in 2018 and it had been heavily extended (approx 30% more square foot indoor space) but had a much smaller garden. In a nearby area, we also found another similar property which was sold last year at a considerably less price - 475k, but it had a smaller garden (my guess is, by checking satellite images, about 30-40% smaller) and its interior, we think, was slightly inferior to the one we are looking at.  Interestingly,  both these three properties (the 575k house we like, 599k and 475k) were probably built by the same developer as they look almost exactly same from outside and indoor layout is also very similar, except for maybe the areas where the 599k house was extended. 

If we decide to make an offer (did a virtual viewing and planning to visit after the lockdown ends), what would be a decent offer and a decent reasoning to back it up in case required? While I don't want to arbitrarily take off an amount from the asking price just for the sake of it, I am keen to get a good deal just like everyone else. 

Any help is greatly appreciated. Thanks

jimbog

I personally wouldn't make an offer based on a virtual viewing. If your offer was accepted would you really be prepared to kick start all the legal and mortgage costs? The likelihood is that after actually viewing it you will probably want to change your offer and that would cause annoyance and extra expense. It also comes across as a little naive - I wouldn't buy a second hand car without seeing it first  

Loopyloopz

Agree with Jimbog.  Also add that you don’t need to give a reason for your offer. You offer what you think it’s worth, that is your reason.  The seller accepts or not, then you can negotiate if you wish. 

G3ralt

Sorry I meant I would offer only after making the visit, in case we like the house during that visit.

daivid

I don't want to be all doom and gloom but if you are going to wait until the national situation has calmed you will need to consider many things beyond a fair price based on previous sales in the street.

Ignoring covid 19 a fair offer would have been what you can justify/believe it is worth and if you really want it an offer that wont lead to the door being slammed in your face. If their estate agent seems reasonable you could ask what they think needs to be offered to get the property or start meaningful negotiations. Whilst the EA works for the client they only (mostly) get their money on sale so will want to help a serious bidder. The EA I dealt with when trying to buy an overpriced house and then successfully getting an optimistically priced house were open to discussions on what may need to be bid and so on (on the flip side they may have been responsible for the high list prices in the 1st place).

Post covid you will need to see what happens to house prices (long term I think things will be fine but short term blips are very possible) and possibly more importantly for you lending criteria, in particular maximum loan to value.

Davesnave

A huge garden isn't what everyone wants, unless it's large enough to confer some great advantage, like becoming a building plot.

When we attempted to sell in a great hurry in 2006 in order to buy a specific property, several viewers complained our garden was too large. We didn't sell then, but when we did a few years later, it was minus the bottom 1/3 of the garden which we sold to neighbours. Even then, the garden that remained went to ruin quickly, apart from the area where the man of the house and son  kicked a ball around!

Within the parameter of 'normal' square footage counts for more than gardens, especially if it is applied to the house in a balanced way. 

G3ralt

daivid said:

I don't want to be all doom and gloom but if you are going to wait until the national situation has calmed you will need to consider many things beyond a fair price based on previous sales in the street.

Ignoring covid 19 a fair offer would have been what you can justify/believe it is worth and if you really want it an offer that wont lead to the door being slammed in your face. If their estate agent seems reasonable you could ask what they think needs to be offered to get the property or start meaningful negotiations. Whilst the EA works for the client they only (mostly) get their money on sale so will want to help a serious bidder. The EA I dealt with when trying to buy an overpriced house and then successfully getting an optimistically priced house were open to discussions on what may need to be bid and so on (on the flip side they may have been responsible for the high list prices in the 1st place).

Post covid you will need to see what happens to house prices (long term I think things will be fine but short term blips are very possible) and possibly more importantly for you lending criteria, in particular maximum loan to value.

Thanks for the suggestions. Agreed that it is best to check how the market reacts once the lockdown is eased and also to check with the EA. Hypothetically though, in a normal situation, would you say that 4-6% off asking price is on average, quite frequent? That's what I seem to get from data available online - any thoughts?


Davesnave said:

A huge garden isn't what everyone wants, unless it's large enough to confer some great advantage, like becoming a building plot.

When we attempted to sell in a great hurry in 2006 in order to buy a specific property, several viewers complained our garden was too large. We didn't sell then, but when we did a few years later, it was minus the bottom 1/3 of the garden which we sold to neighbours. Even then, the garden that remained went to ruin quickly, apart from the area where the man of the house and son  kicked a ball around!

Within the parameter of 'normal' square footage counts for more than gardens, especially if it is applied to the house in a balanced way. 

Well, its not vastly larger than the gardens in neighbouring houses but I take your point. Thanks
 

numbercruncher8

Tough to say really. 
Guessing that 30% more indoor space is going to be a lot - 500sq ft? In my opinion this would say this would be worth quite a bit more than a garden - after all, interiors can be changed relatively easily and cheaply compared to an extension.
You don't say what the area is but if this was where I was looking, I would not think this was worth near the same as the first one because of the reduced floor space, and it would not be worth the same as a 2018 price either, because prices on many other (not all) properties have dropped off that at a variety of price ranges where I am.
If the only difference between the £475k house is the garden I would be inclined to go on for less than £475k and accept it may not be taken straightaway which reflects the uncertainty ahead. However, if you really value a large garden, your view may be different.
I wouldn't rush, and unless the garden is truly massive there will be other properties that feature a large back yard.
No reasoning is needed for an offer, I probably wouldn't offer one either. Remember the asking price is rather arbitrary as well, they are no more likely to be right than you are. Given it hasn't shifted after two months even with the lockdown it is safe to say it isn't bargain territory. 

jimbog

Thanks for clarifying.
4 to 6% off would be a reasonable figure to end up with, however I would go in at £500K if I really liked it. If that was declined I would go up to say £520K. I wouldn't give any justification for my offer. Use the uncertainty in the market in the weeks to come to your advantage. Estate agents will be very hungry for commission in the weeks ahead and will be pressuring vendors to accept offers

daivid

G3ralt said:

. Hypothetically though, in a normal situation, would you say that 4-6% off asking price is on average, quite frequent? That's what I seem to get from data available online - any thoughts?

I wouldn't get caught up to much in % (although yes those % probably do pan out in many cases) when making an initial offer but think about the number that sounds fair. If you genuinely think a house is way over priced offer what you think it is worth and be prepared to lose it. In fact I think if you are going to be successful making lower offers you must be prepared to let the house go (and get this across to the seller if possible). Without knowing the sellers it is impossible for anyone to say what offer would work out but if you think £575k is fair but want to save a bit my 'throwing grass in the wind' offer might be £550k then see what they say, if you think the asking is way over you could offer something less (£525k?) as food for thought but this would likely be thrown out for the time being. Or casually throw out a low offer (£500k?) and see if they bite, the risk with that is if they don't and you make too many improved offers you lose credibility and they think they can get you right back to asking price. 

G3ralt

Many thanks for the comments @daivid, @jimbog @numbercruncher8 . This gave me points to think through.