[Buying] How do people afford offers over asking price?

TripleH

When buying a house, we first worked out the maximum amount we could afford.

We then made a list of what was essential to us for the property we were after.

We then started looking at properties.

Due to our ages etc, we are lucky we didn't have to push all out to afford any house. We also didn't look solely at houses at the top end of our price range. This gave us some wriggle room to offer above the asking price if the right property came along. In the end we offered below the asking price partly because we bought one of the last new builds on the estate and the developer was wanting to cut their ties and move on.

[Deleted User]

TripleH said:

When buying a house, we first worked out the maximum amount we could afford.

We then made a list of what was essential to us for the property we were after.

We then started looking at properties.

Due to our ages etc, we are lucky we didn't have to push all out to afford any house. We also didn't look solely at houses at the top end of our price range. This gave us some wriggle room to offer above the asking price if the right property came along. In the end we offered below the asking price partly because we bought one of the last new builds on the estate and the developer was wanting to cut their ties and move on.

That's what we did, except that now everything even half way suitable (based on us having a much longer commute and needing to renovate the place) is at or well above our maximum. Prices are rising much faster than we can save up.

strawb_shortcake

[Deleted User] said:

lookstraightahead said:

[Deleted User] said:

MobileSaver said:

[Deleted User] said:

It's a nightmare for FTBs at the moment. You can either hang on and hope prices crash back down down to something you can afford, but who knows if that will happen. Or you can press on, keep making offers, and maybe you will get lucky.

Or do what most of us did when we were FTBs and buy a less than perfect property and/or in a less than ideal location.

Even 30 years ago, when I was a FTB, I couldn't buy the house I would have liked in the location I would liked so I had to compromise and buy what I could afford. There will be affordable properties the OP could buy today if they wanted to rather than hanging on in some forlorn hope there'll be a price crash. 

If only it was that easy. Location isn't a free choice, it depends on work and school. With flats out of the question now options on the type of home are limited.

If you can renovate yourself you have more choices, but for some people that's not possible.

Most can move schools, change jobs, commute, change location. I moved 5 hours away when I was 22 to secure a job. My daughter moved school 4 times. 

How does getting a worse job in a cheap area help? Those areas are cheap for a reason.

Pitty the poor kids who end up in bad schools because their parents can't afford to live near good ones.

I live near Bristol, often considered expensive there are many houses in perfectly acceptable areas 3 beds within a 30 minute drive to Central Bristol on for £200-250k? Just how much cheaper should houses be?
As well as Bristol, you have Bath, Gloucester, South Wales, Swindon all within reasonable commuting distance

Gavin83

Everyone wants a nice house in a nice area near good schools with a small commute on a modest salary. This’ll never be possible and ultimately people either need to adjust their criteria or increase their income.

Houses such as the above are, for obvious reasons popular and therefore expensive.

When people say they can’t afford a suitable house I do often wonder what their idea of a suitable house is. I expect in a lot of cases they could actually afford a suitable house, just not their idea of suitable.

lookstraightahead

[Deleted User] said:

lookstraightahead said:

[Deleted User] said:

It's a nightmare for FTBs at the moment. Prices rising faster than people can save, anywhere with jobs is unaffordable.

You can either hang on and hope prices crash back down down to something you can afford, but who knows if that will happen. Or you can press on, keep making offers, and maybe you will get lucky.

Oh, there is one other option. If you have any elderly relatives try to get in their good books. You might be able to inherit some money or property.

 I'm sure most people would rather have their loved ones than any inheritance. What a horrid thing to say.

Why is the market worse for FTB? What about those who get divorced etc. I'm presuming your suggesting everyone else had equity. Simply not true.

It is horrible, but that's the country we live in. These days the majority of FTBs either inherited or got help from their parents.

Now we are at the point where young people's parents already got the inheritance and used it for their house, and don't have money to help their kids out.

It's awful but not something people can afford to overlook. Especially in these difficult times there are opportunities.

I can't think of any FTB who bought with an inheritance, how do you work that out?

as for help from parents, that happened years ago, nothings changed. There might have been more debt then with 100% mortgages and high interest rates and negative equity.

oystercatcher

I was in a bidding war and paid over asking price for the property I live in, this was 22 years ago. It's nothing new!

Sunsaru

lookstraightahead said:

[Deleted User] said:

lookstraightahead said:

[Deleted User] said:

It's a nightmare for FTBs at the moment. Prices rising faster than people can save, anywhere with jobs is unaffordable.

You can either hang on and hope prices crash back down down to something you can afford, but who knows if that will happen. Or you can press on, keep making offers, and maybe you will get lucky.

Oh, there is one other option. If you have any elderly relatives try to get in their good books. You might be able to inherit some money or property.

 I'm sure most people would rather have their loved ones than any inheritance. What a horrid thing to say.

Why is the market worse for FTB? What about those who get divorced etc. I'm presuming your suggesting everyone else had equity. Simply not true.

It is horrible, but that's the country we live in. These days the majority of FTBs either inherited or got help from their parents.

Now we are at the point where young people's parents already got the inheritance and used it for their house, and don't have money to help their kids out.

It's awful but not something people can afford to overlook. Especially in these difficult times there are opportunities.

I can't think of any FTB who bought with an inheritance, how do you work that out?

as for help from parents, that happened years ago, nothings changed. There might have been more debt then with 100% mortgages and high interest rates and negative equity.

I know of 1 person who bought using their inheritance and that was 15 years ago.

oystercatcher

Sunsaru said:

lookstraightahead said:

[Deleted User] said:

lookstraightahead said:

[Deleted User] said:

It's a nightmare for FTBs at the moment. Prices rising faster than people can save, anywhere with jobs is unaffordable.

You can either hang on and hope prices crash back down down to something you can afford, but who knows if that will happen. Or you can press on, keep making offers, and maybe you will get lucky.

Oh, there is one other option. If you have any elderly relatives try to get in their good books. You might be able to inherit some money or property.

 I'm sure most people would rather have their loved ones than any inheritance. What a horrid thing to say.

Why is the market worse for FTB? What about those who get divorced etc. I'm presuming your suggesting everyone else had equity. Simply not true.

It is horrible, but that's the country we live in. These days the majority of FTBs either inherited or got help from their parents.

Now we are at the point where young people's parents already got the inheritance and used it for their house, and don't have money to help their kids out.

It's awful but not something people can afford to overlook. Especially in these difficult times there are opportunities.

I can't think of any FTB who bought with an inheritance, how do you work that out?

as for help from parents, that happened years ago, nothings changed. There might have been more debt then with 100% mortgages and high interest rates and negative equity.

I know of 1 person who bought using their inheritance and that was 15 years ago.

I know a couple of people who have bought with an inheritance . It's something that is mentioned regularly on this forum too.

Greymug

Marvel1 said:

Maybe look at cheaper properties to offer over.

This.

The problem I've found with people in general is their tendency to wanting to live beyond their means.

If, for example, they have a 50k deposit and say a 50k yearly salary, they say "ok great I can afford a house costing £275k" (deposit plus 4.5 times the salary) or even worse their brokers tell them that. And then off they go bidding on houses listed in the 250-275k range. Obviously they get outbid each and every time.

What they should be doing instead is being extremely realistic and honest with themselves and start looking at houses in the 200-230k, which will give them some wiggle room to place offers over home report valuation and not get outbid.

fewcloudy

juliushibert said:

I'm looking for advice on the current property market and how to fund / be competitive when most properties are going for over asking price. Seems like most EA are saying properties are going for 5-10% over the Home Buyers report valuation. This is especially the case if it goes to a Closing Date. We're buying in Scotland and it seems like there's way more buyers than sellers, with most properties selling in 1-2 weeks. With many going to closing date.

TL:DR

How do people afford to offer over the asking price / Home Buyers valuation price?

Questions

• Should I use a part of my deposit to offer above the Home Buyers Valutation price?
• Is it worth stopping the search for the time being and trying to save extra money to be able to add on top of the Home Buyer valuation without dipping into the deposit savings?

Background

• I'm a first-time buyer buying in Scotland.
• Looking at properties approx £200-300k.
• Deposit of £45K
• We put in an offer on a property that went to closing and were outbid. We were told by the Solicitor they thought it went for 10%+ over the asking price. The property was valued at £260K and we came 6 out of 6 bids.

@juliushibert

Can I ask if you are buying in Edinburgh or another popular area? In such places for quite some time now, properties have generally been selling for more like 10-25% over the valuation.  If solicitors are saying 5-10% I'm guessing outwith Edinburgh anyway?

People can afford to do so because in most cases they have a huge deposit from the equity they made on their last property/hard savings/bank of m&d etc. Often a combination.

Sounds like you need to look at a lower price bracket. Coming 6 out of 6 tells it's own story.  Either you are looking at properties that are too expensive, or you have a misunderstanding of how the Scottish system of O/O works.