How much justification should I give when making an offer?

Bookgal88

LAD917 said:

I was in a similar situation to you with my recent purchase.  In addition to the points you mention (chain free, eager and able to move quickly, AIP with strong LTV), I do think it's worth emphasising that you're realistic about the condition of the house and do not intend to ask for reductions or credits after a survey.  We have quite a number of threads on this board about people asking for reductions, etc. post-surveys.  Many of them believe they are entitled to reductions for the types of plainly visible things you mention.

My current place needs a lot of work, yet the estate agents marketed it as in "great condition."  Some of the defects are only obvious to a more trained eye -- meaning, a proportion of buyers would do a survey and likely come back with a laundry list of items.  They'd be justified in doing so because the property was marketed as in "great condition," which it isn't.  (I'd not even say it's in good condition.)  When we got stuck in negotiations, I held firm on my price but re-emphasised that I was comfortable with the condition, as-is, and would not be doing a survey or asking for any reductions.  It worked for me.  The vendors had three offers - full ask from an unproceedable buyer who hadn't yet sold their home, a low offer from a cash buyer, and mine (chain free, small mortgage, no survey).  My final price was a lot closer to the cash buyer price than the asking price.

This is interesting - thank you for your response. The agent marketing the property I'm interested in (wisely) hasn't made any comment about the condition! 
I've seen a lot of the threads about people wanting to negotiate their offer after the valuation or survey. I think in busy markets, people are actually offering more than they can afford in order to get their offer accepted and then hoping that the valuation or survey comes back with things they can use to negotiate the price back down to the level they're comfortable with. For the sake of everyone, I'd like to try and avoid doing this by making what I consider to be a sensible offer now that the vendor can be confident in. So I think I will add your line about not intending to request a reduction down the line. 

Crashy_Time

brett19852010 said:

You are offering 10% less, give it a go by all means but dont expect to talk someone into that when prices have risen since last year.

Mainly due to the SD stunt though, there is a lot of sense in this article, especially the last paragraph.
https://www.independent.co.uk/money/property-market-crash-prices-values-mortgage-worth-buy-sell-house-b1853367.html

Bookgal88

Thank you so much for all your responses. I guess because I know that the vendors haven't really done anything to the property (I can see from RM that the kitchen and bathroom are exactly the same as when they bought it, and on viewing you can see that the carpets are now threadbare in places) that they're either aware of the issues I've highlighted, or not too sensitive about the kitchen and bathroom because they didn't even install them. But I can see how me highlighting what I think needs to be done and how this has influenced my offer might still sting. 
I'm going to mull it over overnight and then likely submit an offer tomorrow, only mentioning the price I'm offering and reaffirming my (hopefully favourable) position. 

Redwino222

Good luck.

I think you are taking the right approach.  Hopefully your offer will be accepted.

I would also say highlighting these more obvious points invites them to say the asking price already takes them into account. And then you get into a cycle about justifying your offer.  Which you don’t need to.  All you need to do is make the offer.

come back and let us know how it goes.

GDB2222

You can also say how much you love the house, that your hordes of children/grandchildren/nephews/nieces/dogs/cats will enjoy the garden, and that you'll be using it as a happy family home for many years to come. 

Crashy_Time

GDB2222 said:

You can also say how much you love the house, that your hordes of children/grandchildren/nephews/nieces/dogs/cats will enjoy the garden, and that you'll be using it as a happy family home for many years to come. 

Don`t say that, just stay completely neutral on the house as you make low offers.

Mickey666

Crashy_Time said:

brett19852010 said:

You are offering 10% less, give it a go by all means but dont expect to talk someone into that when prices have risen since last year.

Mainly due to the SD stunt though, there is a lot of sense in this article, especially the last paragraph.
https://www.independent.co.uk/money/property-market-crash-prices-values-mortgage-worth-buy-sell-house-b1853367.html

From that article: "The last time house prices increased by similar rates was in the months leading up to the financial crisis of 2008-9. Now there are growing fears that we’re set for another collapse."

'crash' . . . 'fears' . . . 'collapse'  . . . all good emotional stuff

Now lets put some figures into the mix.  Based on this data https://propertydata.co.uk/charts/house-prices the house price 'crash' of around 2008/9 meant a fall from around £185k to £155k, a drop of £30k or about 17%.  And within six years prices had risen back to the 2008/9 levels.   So is this what a 'house prices crash' really looks like?  

Obviously it would be better to buy at £155k than £185k, no one can doubt that, but what of the long term implications?  Firstly, anyone buying a house who cannot afford a reasonable drop in property prices or a reasonable increase in mortgage rates is living dangerously.  That applies pretty much to anyone buying anything on borrowed money.  Lenders have already tightened up on lending criteria to ensure that buyers CAN afford such movements and, of course, long term fixed rate mortgages are already widely available, which can eliminate rate repayment uncertainty for many years or even decades.

Secondly, even if there is a 'crash' all the historical data shows that it won't be many years before prices recover.  So the window for any financial stress is relatively small, especially compared to the mortgage term.  Someone posted a statement that there has never been a 20 year period over which house prices have not risen.  In other words, No one has EVER suffered from negative equity over the term of their mortgage.

Of course, there will be SOME people who stretch themselves near to breaking point, give themselves ZERO financial headroom and then are FORCED to sell within a couple of years and unfortunately it is THOSE relative few people who will be at risk of financial problems if house prices do 'crash' soon after they purchase.  But to characterise an entire market on such an unrepresentative small examples seems daft in the extreme (and extreme is what it is, of course!).

So yes, there is SOME risk in buying a home right now, but there is SOME risk at any time.  Life is full of risks and we generally weigh them up by comparing the them with the risks of NOT taking the risk, ie considering the pros and cons.

In this case the risk of NOT buying a home right now is the risk of house prices rising, making them more expensive to buy next year and beyond.  There's also the additional risk (well, not so much a risk as a certainty) of having to rent a home while waiting for the right time to buy.  Again, put some numbers to this risk and we find that someone who waited a year before buying today is now faced with average prices having risen by around £24k.  Add to that, say £1000/month for their rent over the past year, and we see that their decision to delay buying for a year has just cost them £36,000.  Does that seem like a good risk to take?

Given the frantic market activity this year as people rush to buy within the SDLT holiday period, it seems eminently likely that things will slow down when SDLT returns to normal.  But does a slowdown mean a price crash.  Even if house prices fall by the SDLT amount payable (which would seem reasonable) we're only talking about 3% on houses up to £500k, which is hardly FTB territory anyway.  For average priced houses, the SDLT saving are relatively tiny, so I'd be surprised if suddenly having to pay a few £1000 in SDLT is going to stop most FTBs, especially when these amounts are 'in the noise' of house price negotiations anyway!

OTOH, a slow down in the market (if it happens) could mean that fewer people are deciding to sell, perhaps on the basis that if they now have to pay SDLT then they'll just stay where they are - which would mean fewer houses placed on the market and it's hard to see how reducing the supply of houses would lead to a 'crash' in prices.

So basically, yes it can be financially risky to buy a home in the short term . . . but not as risky as the renting alternative.  And in the long term there is no comparison.

GDB2222

Crashy_Time said:

GDB2222 said:

You can also say how much you love the house, that your hordes of children/grandchildren/nephews/nieces/dogs/cats will enjoy the garden, and that you'll be using it as a happy family home for many years to come. 

Don`t say that, just stay completely neutral on the house as you make low offers.

You're right. Just tell them the truth, that you'll be turning it into a cannabis farm. Bound to work.

Redwino222

GDB2222 said:

Crashy_Time said:

GDB2222 said:

You can also say how much you love the house, that your hordes of children/grandchildren/nephews/nieces/dogs/cats will enjoy the garden, and that you'll be using it as a happy family home for many years to come. 

Don`t say that, just stay completely neutral on the house as you make low offers.

You're right. Just tell them the truth, that you'll be turning it into a cannabis farm. Bound to work.

The first time buyers who are buying my house told the estate agent they loved it, and the lady screamed with delight when he said their offer had been accepted.

While I was still nervous it might fall through, I was more generous with them about leaving things like blinds and also didn’t kick up a fuss when things took longer than I had wanted.

it didn’t mean I accepted a lower offer or anything, but I would rather deal with people who I think are excited to buy my house.

people try and play games - in my experience they don’t work.

Bookgal88

I might have sounded a bit down on it, but I'm a real sucker for period houses, so I'm just trying to balance my head and my heart and not go in with rose-tinted glasses. FWIW, I do think the house could be great, and I can see my partner and I in the living room in the winter with a glass of red, the fire roaring and Netflix on. Or in the back garden in the summer with a glass of white, playing with the dog. I've debated adding a "personal touch" to my offer, as I know some vendors like the idea of selling to people who will make a home there, and in some cases it secures them the property. I know at least one person who viewed the house wanted to tart it up and rent it out, so, all other things being equal, some vendors might prefer me to them. OTOH, I don't want to seem like I've envisaged my whole life there, and I'll pay anything to secure it. It's such a minefield!