Advice on how much to offer?

Processinginfo

Hey!

I (a FTB) was just wondering if anyone had advice on how much they’d offer for this property on RM (deleted). It was last sold for £280k in 2016 and the EA suggested that they’re looking for 280-290 despite it being listed as OIEO £265.

There are several properties on the street but they can be quite different in both size and in how much they’ve been done up so I’m finding it difficult to match them well.
They may have listed it at 265 to drum up interest and expecting a bidding war, but it’s still available a month on so I don’t know if that’s a sign that the property has in fact lost value since it was last sold.  

Any advice would be appreciated! Thank you!

Crashy_Time

I doubt they will get a bidding war now, nice flat but overpriced in 2016 IMO.

hazyjo

If it was going to go for more than the figure it's up for, it would've done so by now. If there have been no offers, it suggests it's probably even worth under what it's up for.

I certainly wouldn't be offering over asking price.

RelievedSheff

Offer what you feel the flat is worth if you are interested in it.

It has been on the market for a month with presumably no offers on the table so the bidding war they expected has not happened and is unlikely to happen now.

It is largely irrelevant what the property sold for in 2016. A lot has happened since then and the value then does not necessarily equate to the value now.

It is a nice looking flat. I would ignore the offers in excess off and just put in a reasonable offer based on what you can afford to pay. You are a first time buyer which puts you in a strong position.

We don't haggle with property we just go in with a firm and fair first offer and make it clear that this is what we will be offering and no more. We don't see the point in quibbling over a few grand which in the scheme of things on a 25 year mortgage makes naff all difference. It has worked for us so far in that we have secured both of our properties at the first time of asking. On this property I would be putting an offer in at around the £260k mark and leaving it on the table for the vendor to consider. They would be unlikely to accept it straight away but who knows a month or so down the line if there has been no more interest. In the meantime continue looking for other properties.

seradane

RelievedSheff said:

It is largely irrelevant what the property sold for in 2016. A lot has happened since then and the value then does not necessarily equate to the value now.

See, people on this forum say this a lot but I'm not so sure it's true. Yes, in terms of where the market is at it is irrelevant, but in terms of the seller and their position it's very much not. They will most likely have a mortgage based on the previous sold price, which if they've only owned the property a couple years won't have very much paid off it, so if the place is no longer worth what they paid for it they'll likely be in negative equity. Unless they are super desperate to sell, for whatever reason (OP you can try to pry out their reason for selling from the estate agent) most people are going to try to avoid going into negative equity if at all possible. Vendors in this position are a lot more likely to hold out for a price that breaks them even than the ones that have made a nice profit over the last 10 years and it's largely bonus money.

I guess my point is, the price it sold for previously may not translate exactly to the price it will sell for now, but it will very much affect the vendor's attitude towards accepting what may otherwise be perfectly reasonable offers.

RelievedSheff

seradane said:

RelievedSheff said:

It is largely irrelevant what the property sold for in 2016. A lot has happened since then and the value then does not necessarily equate to the value now.

See, people on this forum say this a lot but I'm not so sure it's true. Yes, in terms of where the market is at it is irrelevant, but in terms of the seller and their position it's very much not. They will most likely have a mortgage based on the previous sold price, which if they've only owned the property a couple years won't have very much paid off it, so if the place is no longer worth what they paid for it they'll likely be in negative equity. Unless they are super desperate to sell, for whatever reason (OP you can try to pry out their reason for selling from the estate agent) most people are going to try to avoid going into negative equity if at all possible. Vendors in this position are a lot more likely to hold out for a price that breaks them even than the ones that have made a nice profit over the last 10 years and it's largely bonus money.

I guess my point is, the price it sold for previously may not translate exactly to the price it will sell for now, but it will very much affect the vendor's attitude towards accepting what may otherwise be perfectly reasonable offers.

The owner being in negative equity does not affect what the property is worth today.

A property is worth what someone is willing to pay for it not what is owed on it.

Processinginfo

RelievedSheff said:

Offer what you feel the flat is worth if you are interested in it.
 On this property I would be putting an offer in at around the £260k mark and leaving it on the table for the vendor to consider. They would be unlikely to accept it straight away but who knows a month or so down the line if there has been no more interest. In the meantime continue looking for other properties.

Thanks everyone for the thoughts! I put in an offer at 257.5 which was rejected. After further thought I've put in a bid for 265k (might've moved up too much in one go? But the EAs have been adamant that the vendor was thinking of 280-290). We like the property, it would require zero work and, like you said, a few grand over 25 years is a small difference in the long run. Also, I guess if the bank/RCIS valuation comes back significantly lower I'd renegotiate.

RelievedSheff said:

seradane said:

RelievedSheff said:

It is largely irrelevant what the property sold for in 2016. A lot has happened since then and the value then does not necessarily equate to the value now.

I guess my point is, the price it sold for previously may not translate exactly to the price it will sell for now, but it will very much affect the vendor's attitude towards accepting what may otherwise be perfectly reasonable offers.

The owner being in negative equity does not affect what the property is worth today.

A property is worth what someone is willing to pay for it not what is owed on it.

What I'm hearing suggests that you're both right really. A property is worth what someone is willing to pay, but the vendor can be tied by what they've previously paid and if the current market value is too low then they may simply opt to pull out of the market entirely. As far as I'm aware this vendor is moving as they'd like to move into a larger property which they have an offer accepted on. I guess we'll wait and see if they like it enough to swallow a 15K loss (possibly mitigated but the stamp duty holiday). I just don't want to be in their position in a few years time so wouldn't go up any further really. 

RelievedSheff

I think your £197k offer was way off the mark and ambitious at best. Your new offer is A far more serious offer for them to consider.

Only the vendor knows if they can afford to accept that offer or not but if they already have an offer accepted on another property then they will be looking to secure a deal on their current property quite quickly to complete the chain.

Stick to your guns and don't be forced into raising your offer unless you can absolutely afford too and have considered the risks in doing so.

Processinginfo

RelievedSheff said:

I think your £197k offer was way off the mark and ambitious at best. Your new offer is A far more serious offer for them to consider.

oops! I meant 257.5! I had a brainfart and put in a figure we put in as an offer for a different property. 

Yeah, fingers crossed. Thanks for your insight!