advice needed,offers rejected, are we expecting too much?

merlinthehappypig

Thanks - I appreciate the support.

I was a little reluctant to post the last message as I try not to be confrontational at all, but it just hit a nerve. I'm not trying to start any sort of argument, nor am I trying to have a go at Edinvestor - these boards are at their best when we get differing opinions that can be discussed sensibly.

I'm not even convinced that there will be a house price crash. It would be completely bonkers, but I wouldn't bet against prices starting to rise in the Spring. That is clearly the main aim of the interest rate cut, to bolster false confidence and re-inforce the message that things are good if your house is worth more. After all, that's what the economy has been based on these last 8 years or so.

Whatever happens, though, there is a lot of confusion amongst all buyers, not just first-timers, and people need to realise that house prices can go down as well as up. That message has gone unheeded in recent years and, if prices fall, many people will be seriously hit.

It's not just about affordability or perceived wealth. It's not just a problem if there is a crash either. It won't take many months of small price drops like those reported by the Halifax to completely wipe out all the equity for a large number of people.

Combine that with the problems in the mortgage market and people who had a decent fixed rate with 10% deposit will find it a whole different kettle of fish when they try to re-mortgage with effectively no deposit. (That's in July 2008, by the way, if prices continue to fall at 1.1%)

Even the 'soft landing' wished for by many people will cause almost as many problems as a crash.

If by posting we can help even just a handful of people think twice and look hard at their finances before committing to a purchase we will have done a good thing. That's not the same as saying 'don't buy' or doom-mongering about prices. Most of us who try to help on here have had serious money problems in the past and, hopefully, have learnt from our experience.

DenBo_4

I think it is best to go in with a low offer, sellers don't expect to get the price they advertise the house for, I didn't and neither did the owner of this house. People are nervous of a price crash and could quite easily go for the 10/15% below offer in a few weeks time, when their house hasn't sold.

Anyway, when you go looking to buy a house you go with yourself and your own interests (and limits) in mind, not the other way round. There's not many buyers about at the moment! Hope you get a house at a price you want OP, good luck.

Strapped

Someone much wiser than me once posted on here that if you're not embarrassed by your first offer, then it's too high. You're doing the right thing going in low. But be prepared to negotiate a little, to a price that, most importantly, YOU consider the house to be worth. I think that an offer of £210k on a house up for £230k is not unreasonable, although I'd be surprised if you secured it without going up to at least £215k (perhaps you could offer to "split the difference" as they want £220k) if you can afford it. OR you could wait it out for the expected fall (and I notice that average prices did fall last month, although around here at least that hasn't been reflected in asking prices yet).

EdInvestor

It won't take many months of small price drops like those reported by the Halifax to completely wipe out all the equity for a large number of people.

That's hard to see, given that 40% of owner occupiers own outright with no mortgage , so almost half of home owners wouldn't be affected at all. In addition, anyone who bought in the 1990s is likely to have a very large amount of equity because of the big rise in prices, while for most of the last decade, most lenders have required 15% deposits from new buyers.

So it will be a vanishingly small number of people who might be "wiped out" if the rate of growth in prices reduced, as Halifax reported last month.

More attention to the facts would be helpful, IMHO.

Nenen

EdInvestor wrote: »

That's hard to see, given that 40% of owner occupiers own outright with no mortgage , so almost half of home owners wouldn't be affected at all. In addition, anyone who bought in the 1990s is likely to have a very large amount of equity because of the big rise in prices, while for most of the last decade, most lenders have required 15% deposits from new buyers.

So it will be a vanishingly small number of people who might be "wiped out" if the rate of growth in prices reduced, as Halifax reported last month.

Ed you are obviously a long-standing MSEer who has helped a great number of people (judging by your number of posts and thanks) so I'm loathe to start an argument. However, I'm perplexed as to where you are getting your 'facts' from, e.g. your statement that "40% of owner occupiers own outright with no mortgage". Please can you provide a link to the source of this statistic? I did a very quick search and found a document issued by the Office for National Statistics that appears to contradict that and states that "two thirds of households have a mortgage"
http://www.statistics.gov.uk/elmr/01_07/downloads/ELMR01_07Powell.pdf

Your comment that anyone who bought in the 90s is likely to have a large amount of equity because of the HPI would be true if so many people hadn't then taken the opportunity to MEW. I haven't got any statistics regarding how many this is but I'd take a bet it is a significant proportion.

Finally, I don't know where you have been looking for mortgages with your assertion that "most lenders have required 15% deposits" but the whole Northern Rock debarcle was caused to a great extent by sub-prime lending... with NR (among others) lending 125% of value! :eek: Chel&Glos are continuing to advertise 100% mortgages and we've been offered 90% mortgage by numerous Building Societies.

Perhaps your suggestion that we should 'pay more attention to facts' should be applied unilaterally and we all need to be more careful about backing up our 'facts' with proof/links!

ragdoll

If time is on your side I would say wait, most sellers think the lack of any interest in their property is due to it being quiet for Christmas, Jan/Feb will start to tell them otherwise. I was talking to a friend who works for a local estate agent and she was saying most of the agents locally have made people redundant over the last few weeks. It is not just quiet for Christmas it is dead.

Only the next few months will tell if buyers have been lulled by the rate cut/s and start buying or they remain nervous and stick it out and then prices will fall.

I think chain free buyers are sensing the tide maybe turning, how will you feel if in Jan one of the properties you have offered on comes back and says yes, will you jump for joy or will you think what if we wait a bit longer...

I think the housing market is as quiet as its been for a long time, traditionally Spring is a busy time for moving, I think the jury is very definately out as to what will happen this year.

I would put houses out of your mind for now, enjoy Christmas and see how it goes in the New Year.

Just thought have you looked on net house prices to see what recent properties have sold for in the roads where you have offered. That will tell you if what you are offering is in-line with what they have been selling for.

Ewarwoowar2

My experience, from speaking with EAs and hearing EAs speaking with sellers, is that they're being encouraged (and have ben for a couple of months) to delay putting their property up for sale in the hope that the IR cut and the New Year brings more buyers into the market.

Although this will undoubtably happen, if a glut of new houses for sale comes on to the market without enough buyers to go round, there could be some real bargins in the New Year. Fingers crossed :beer:

dolce_vita

Ed-

I have read many of your posts on the "savings & investments" board and have admired your stance against IFAs and the like and your advice is often well-informed and accurate.

I would stick to that board if I were you because, with all due respect, some of your comments on this board show that you know jack !!!!!! about the property market and I'd hate to see you lose your good reputation.

tomstickland

I feel very sorry for novice FTBs being misled by people trying to talk the market down in this way.They will simply waste their time and get nowhere. Very few sellers are forced to move, so if they can't get what they want for their property, they will just stay put.

The worst that can happen is that they spend a few more months looking. Considering the current situation and outlook then that's nothing to feel sorry about. If very few sellers are forced to move then they can just sit there forever, in which cash a crash will never happen because noone will sell. So why didn't they do that back in the early 90s?

merlinthehappypig

At the risk of inflaming anyone still further here is another house that we viewed about 6 weeks ago when it was new on the market. We viewed it at £499000. It 'sold' fairly quickly (we didn't like it and thought it was overpriced). About 4 weeks ago the agents rang us because it was back on the market and reduced to £475000. Rang us again a couple of weeks later - would we be interested at £450000?

Here it is now - 'sold' again priced at £435000 and paying the first £15000 of stamp duty:

http://www.fish4.co.uk/iad/homes/advert?adId=3261500&sid=s51E1C3E42895645&pos=121&src=search&tot=129&page=13

Here it is at £475000:

http://www.primelocation.com/uk-property-for-sale/details/id/BIGGA110519/

Can't do the £499000 as it has been reduced on the webpage, but still have the brochure.

That's a reduction of just under 16% if they got the full £435000 - more if they didn't.

Bear in mind that this is a thatched equestrian property in the Exmoor National Park. Go back a few months and they could have gone to sealed bids for this house, like in Scotland...........