Should we go straight in 25k over asking price?

lhg91

We have been looking for a property to buy for a few months; 15 viewings, 5 houses offered on, all rejected (even when offering 15% over asking, and we have no chain).

We have found a house that needs a lot of work, which we don't mind. It's not my 'dream home', but it has a lot of potential and is a sensible option. It is currently up at £195,000. We viewed it and put an offer in at full asking there and then with the estate agent. He said that he will put the offer forward, but it is unlikely to be accepted as they have a lot of viewings lined up, and he knows it will exceed the asking price.

I rang to follow up with the EA a couple of days ago, and the vendor wants to go ahead with even more viewings on Friday this week, and it's likely going to end up as a 'best and final offer' situation.

We like this house, and truth be told, we are starting to get a bit desperate (we are currently living with parents and thought we would have found somewhere by now!) We are only willing to go up to £220,000 due to the work that is needed. I am considering contacting the estate agent and raising our original offer to 220, and ask if they would take hte property off the market.

If you were in the same scenario, would you wait to see what happens once the viewings are done, or just go straight in now and raise your offer to really show your interest? We had a situation twice previous where the vendor accepted another offer and didn't even give us a chance to raise our original offer of full asking... It's annoying as we know we are paying well over the odds for the house, but unfortunately that is just the situation of the market at the moment.

Thankyou in advance from a VERY frustrated home-buyer   

AFF8879

I reserved a new build, even though I swore I never would, simply because the market where I was looking (North Hampshire) is EXACTLY like this and not only was it impossible to even get viewings, the houses that needed lots of work were going for significantly more than the new build despite being almost the same size!

JCarmello

Before raising that much, I would wait to be asked for BAFO. How long has it been on the market, and how difficult/easy was it for you to get a viewing?
If you straight with 220 now, what would you do if the bank down-valued it?

eidand

piece of advice ...
assume the bank valuation comes back at 190k. If you decide to offer over then you need to cover the difference yourself.
Are you happy to do that? if yes then go in at 220k or whatever you feel you can afford.

lhg91

JCarmello said:

Before raising that much, I would wait to be asked for BAFO. How long has it been on the market, and how difficult/easy was it for you to get a viewing?
If you straight with 220 now, what would you do if the bank down-valued it?

It has only been on the market 8 days and it was quite easy to get a viewing but I rang pretty much as soon as it went on rightmove (I have it constantly open on my computer and refresh it every 30 mins) 

When we went to view it on Friday last week, we were told they had 5 viewings lined up for the Saturday and 3 for the Monday at that point, and had another offer already. It's difficult, because I know that the EA is trying to get the most money for the vendor, but I just don't trust what they say at all!

To be honest, I think it's overvalued even at £195,000. Thankfully we made a bit of money on our previous property selling in the current climate, so we would have at least a 50% deposit. I don't know if that would make a difference to the bank valuation?

lhg91

AFF8879 said:

I reserved a new build, even though I swore I never would, simply because the market where I was looking (North Hampshire) is EXACTLY like this and not only was it impossible to even get viewings, the houses that needed lots of work were going for significantly more than the new build despite being almost the same size!

I know, everyone has been telling us to look at new builds, but I just can't do it. Plus the ones in this area are quite character-less and bland. Push comes to shove, we may have no option!

FaceHead

lhg91 said:

... we know we are paying well over the odds for the house ...

You should not be paying well over the odds for anything. Let alone a house. What are you doing? (Rhetorically, as a homeowner who has every incentive to stoke house-price-mania.)

If you believe the price is well over the odds and you believe you can only sell it for the fair price, you are effectively flushing the difference down the loo. Offer what you think it is worth. If someone buys it for 'well over the odds' then think that its better someone else overpays rather than you. 

Ask yourself, how would you feel if someone bought it for £220k? Is it 'Better them than me' or 'dang, I should have gone to 222-and-a-half'? 

JCarmello

lhg91 said:

JCarmello said:

Before raising that much, I would wait to be asked for BAFO. How long has it been on the market, and how difficult/easy was it for you to get a viewing?
If you straight with 220 now, what would you do if the bank down-valued it?

It has only been on the market 8 days and it was quite easy to get a viewing but I rang pretty much as soon as it went on rightmove (I have it constantly open on my computer and refresh it every 30 mins) 

When we went to view it on Friday last week, we were told they had 5 viewings lined up for the Saturday and 3 for the Monday at that point, and had another offer already. It's difficult, because I know that the EA is trying to get the most money for the vendor, but I just don't trust what they say at all!

To be honest, I think it's overvalued even at £195,000. Thankfully we made a bit of money on our previous property selling in the current climate, so we would have at least a 50% deposit. I don't know if that would make a difference to the bank valuation?

Yes, your deposit means you'd be fine on the bank valuation in all likelihood.

But, they've had 8 viewings, and at least one offer. But they want to do more viewings - this indicates to me that they've not gotten the level of bids they were expecting. Who is to say that more viewers will bring them up >10%?

The agent realistically focus on getting it sold for at least asking. The extra commission for selling it over asking isn't worth the work to most agents.

I know that you've been outbid on many places, but have many of those been in the last month, when things have been quietening down in certain parts?

MaryNB

lhg91 said:

JCarmello said:

Before raising that much, I would wait to be asked for BAFO. How long has it been on the market, and how difficult/easy was it for you to get a viewing?
If you straight with 220 now, what would you do if the bank down-valued it?

It has only been on the market 8 days and it was quite easy to get a viewing but I rang pretty much as soon as it went on rightmove (I have it constantly open on my computer and refresh it every 30 mins) 

When we went to view it on Friday last week, we were told they had 5 viewings lined up for the Saturday and 3 for the Monday at that point, and had another offer already. It's difficult, because I know that the EA is trying to get the most money for the vendor, but I just don't trust what they say at all!

To be honest, I think it's overvalued even at £195,000. Thankfully we made a bit of money on our previous property selling in the current climate, so we would have at least a 50% deposit. I don't know if that would make a difference to the bank valuation?

Generally with high deposits it could mainly affect your interest rate (rather than the valuation or your chance of getting the mortgage at all) if it changes the LTV band but if your deposit is 50% of the £220k then you'll still be below 60% even if the bank's valuation is £195k. the lowest interest rate provided by most banks is at the 60% mark and generally doesn't change if the LTV drops further.

If your deposit is £110k, the interest rate would only be affected if the valuation is below £184k (110/184 = 60% ).

lhg91

FaceHead said:

lhg91 said:

... we know we are paying well over the odds for the house ...

You should not be paying well over the odds for anything. Let alone a house. What are you doing? (Rhetorically, as a homeowner who has every incentive to stoke house-price-mania.)

If you believe the price is well over the odds and you believe you can only sell it for the fair price, you are effectively flushing the difference down the loo. Offer what you think it is worth. If someone buys it for 'well over the odds' then think that its better someone else overpays rather than you. 

Ask yourself, how would you feel if someone bought it for £220k? Is it 'Better them than me' or 'dang, I should have gone to 222-and-a-half'? 

JCarmello said:

lhg91 said:

JCarmello said:

Before raising that much, I would wait to be asked for BAFO. How long has it been on the market, and how difficult/easy was it for you to get a viewing?
If you straight with 220 now, what would you do if the bank down-valued it?

It has only been on the market 8 days and it was quite easy to get a viewing but I rang pretty much as soon as it went on rightmove (I have it constantly open on my computer and refresh it every 30 mins) 

When we went to view it on Friday last week, we were told they had 5 viewings lined up for the Saturday and 3 for the Monday at that point, and had another offer already. It's difficult, because I know that the EA is trying to get the most money for the vendor, but I just don't trust what they say at all!

To be honest, I think it's overvalued even at £195,000. Thankfully we made a bit of money on our previous property selling in the current climate, so we would have at least a 50% deposit. I don't know if that would make a difference to the bank valuation?

Yes, your deposit means you'd be fine on the bank valuation in all likelihood.

But, they've had 8 viewings, and at least one offer. But they want to do more viewings - this indicates to me that they've not gotten the level of bids they were expecting. Who is to say that more viewers will bring them up >10%?

The agent realistically focus on getting it sold for at least asking. The extra commission for selling it over asking isn't worth the work to most agents.

I know that you've been outbid on many places, but have many of those been in the last month, when things have been quietening down in certain parts?

Unfortunately the way that the market is at the moment, we don't seem to have a choice other than paying over the odds. All houses in my opinion are overvalued at the moment based on previous selling prices. And unfortunately we are in a situation where we need to purchase a house now rather than waiting until the market comes down (if it ever does?!)

That is true, maybe we should keep our offer as it is for now then. I just wish things were more transparent!

The previous homes we were outbid on have been in the past month. Some we've been outbid on, some the vendor has chosen a lower offer (we are assuming cash-buyers), and some have just accepted the first offer and not even given us a chance to increase ours.

Monsternextdoor

It all comes down to the rics valuation. 

We put in an offer over the value of the house and we were happy to pay it, but the rics came back and it was valued at £17,000 under what we offered. 

So we renegotiated on the house and we are not far off completion now.

Will you get a mortgage on it if you go in over its worth and at what rate will it be at, lower the value of the property even with deposits means you will pay a higher rate as the house is not worth what you have paid for it.