First time buyer - How much should we offer?

clemce

Dear all,

My husband and I are looking for our first home. We already have an AIP for 250K and a mortgage advisor who did all the research for us so we are just waiting for the right house now.
We are viewing a house tomorrow that could be the one (right size and location, right price range too). It looks a little old and is advertised as in need of modernization (house looks like stuck in the 80s with wooden panels on walls) which we are not afraid of as it is on the market for 225K.
We know from the estate agent that the current owners are not in a rush of selling as they are selling for parents therefore no chain involved.
Viewings start tomorrow and we will be the 13th to see the house.
If we do like the house it would perfectly fit with our possibilities in terms of mortgage but also personal loan to start making improvements quite quickly.

May I please seek for your recommendation? What kind of offer do you think we could make to be sure we will be seen as serious candidates and could eventually start negotiations?
Houses are selling so fast at the moment we will need to react quickly if we want to make an offer.

Many thanks for your help!

london21

clemce said:

Dear all,

My husband and I are looking for our first home. We already have an AIP for 250K and a mortgage advisor who did all the research for us so we are just waiting for the right house now.
We are viewing a house tomorrow that could be the one (right size and location, right price range too). It looks a little old and is advertised as in need of modernization (house looks like stuck in the 80s with wooden panels on walls) which we are not afraid of as it is on the market for 225K.
We know from the estate agent that the current owners are not in a rush of selling as they are selling for parents therefore no chain involved.
Viewings start tomorrow and we will be the 13th to see the house.
If we do like the house it would perfectly fit with our possibilities in terms of mortgage but also personal loan to start making improvements quite quickly.

May I please seek for your recommendation? What kind of offer do you think we could make to be sure we will be seen as serious candidates and could eventually start negotiations?
Houses are selling so fast at the moment we will need to react quickly if we want to make an offer.

Many thanks for your help!

It depends on a lot of factors, if you like the property, how much properties in the area are going for, the number of interests/offers received, and cost to renovate etc.

You can view the property and based on your research and price history in the area put an offer in. You can start with the asking depending on the above.

you may not want to under offer if you are the 13th person viewing. On the other hand you do not want to over offer, the survey might come back lower. 

Mind you the estate agents over sell the property telling you so many people viewing etc, depends on the number of offers received etc. The estate agent is working for the seller to get the highest offer so take what they say accordingly.

Show the EA you have your AIP, Deposit, not in a chain, etc sometimes buyer's position also plays a part when seller is considering offers received. 

MaryNB

You should look at other houses in the area and see what they've sold for ("sold" figures, not "under offer" or "SSTC" figures). Then factor in that modernisation is required. They'll be a few months behind but more accurate than under offer. The under offer figure is just what it was advertised at, not what offer was accepted.

There's always the chance the advertised price is deliberately low to generate a bidding war so make sure you know how much you are willing to go to. This isn't necessarily £250k, you may decide it's not worth more than £240k. Make a decision and stick with it.

If you offer over asking, bear in mind there's risk your lender could downvalue it. You can accept paying more than your lender thinks it's worth if you have a decent deposit. If you have a small deposit you may have to reduce your offer, might not go down well if you bid high to get the property in the first place.

The lender calculates LTV based on their valuation, not your offer. 
Example of the potential implications:
Say you have a deposit of £25k, you're looking at a 90LTV mortgage on an offer of £225k (88.9 to be exact but LTV is rounded up to the nearest 5%). If the bank decides it's only worth £200,000, for a 90LTV mortgage you'll need to put down £45k 
(0.9 x £200k) +  £45k = £225k.
They may allow you to get a 95LTV mortgage but you still need to up your deposit.
(0.95 x £200) + £35k = £225k.

If you do have a £45k deposit, if the bank values it at £225k you'll have a 80LTV mortgage. If they decide it's worth £200k and you end up with a 90LTV mortgage you can still buy it if you meet the banks criteria (90LTV will be stricter than 80LTV) but the interest rates will be higher. 

clemce

Thank you both for your advice, I really appreciate

It's a hard one.
I can't post the link on the forum as I am new. Property is located at 80 Neville Road in Darlington county Durham (it's on Rightmove).
From the prices I have seen for this street an neighborhood, it doesn't seem too overpriced, depending on the state the house is in obviously.
A 3 bedroom detached house on this road went for 245K in January this year (though in better overall condition and slightly bigger), another one at 209K in December 2019.
As it is a vendor market at the moment I thought that we could maybe go for an offer 5% below the asking price to get us in the negotiation.
I am just worried, would it be shooting ourselves in the foot to start so high or would it close the door to any negotiation if we offer lower?

Brewerspride

This one?

https://www.rightmove.co.uk/properties/109818434#/

MaryNB

That was surprisingly hard to find. 
https://www.rightmove.co.uk/properties/109818434#/

clemce

yes that's the one

purplebutterfly

Regarding the decor - do be aware that not everyone will factor that into their decision when making an offer. 

 We actively opted to view properties "in need of modernization" as we don't particularly like the "open plan kitchen diner with glossy kitchen units look" and have an aversion to grey - so 80's wood panelling on the walls sounds right up our street!  

Definitely factor in how much you think it would cost you to get it to an acceptable standard but, to me, that house is 100% liveable as it is.  Even the blue bathroom suite is fun in my eyes!  

So take into account that it might not go for under asking based on decor alone. 

It is a really lovely house and the garden is gorgeous and obviously well cared for

UnderOffer

That house looks lovely with some great potential so that you can put your mark on it. Hope the viewing goes well. You may well need to offer over if it’s a buyers market but how does the price compare to homes nearby? Have they priced low to entice the many viewers? 

Cakeguts

That house could easily sell for the asking price or more. It is a nice house and a bit dated but you could live in it as it is and modernise as you go.

MaryNB

That's a decent, well kept house. I've see a lot worse advertised as "in need of modernisation". Nothing you can't live with right away and decorate as you go. I bought a house in November that was much more up to date in terms of decor and I've pretty much painted every room and got the bathroom redone (kitchen to be done in the next few months) because it wasn't to my taste. Long term you could take out a downstairs wall and get a nice open plan kitchen diner. 

On a first glance, if you are successful in buying it, I'd recommend getting an electrician to install more sockets. It can be a messy job and easier to decorate afterwards. But don't do it until you have a feel for the place and where you need sockets, no point in having loads if they're in the wrong place.