Offering under asking price

kisaki757

Hi, I am a FTB and I need some advice about how to negotiate with EA's

I have two properties I am sort of interested in (not in love with) but I feel both have too high of an asking price.

Property A has been on the market since Sept and reduced once in Oct. I made an offer that is about 10% lower than the reduced price. EA immediately told me this is the lowest offer they received so far and won't be accepted. But he never confirmed the owners actually rejected the offer. He strikes me as a bit dodgy...

Property B was previously sold but then the chain collapsed at the last minute. EA says it previously had sold at the asking price (in June) and it's now on the market at the same asking price. The current owners were due to exchange 1 week ago just before the chain collapsed so they are in a big hurry. As I am a FTB, I can move really quickly. On this one, I made an offer that's 17% lower than the asking price because, first, I feel that the asking price is waaaay too high and (I can't believe it sold for that even in June), second, I feel there should be a significant discount for speed. The EA immediately replied that the offer is much too low and that it won't be acceptable to the vendors. He is then suggesting I increase it before informing the vendors.

I won't cry if I lose either of the two properties but still wanted some advice on how this should work: I was under the impression that the EA is required to inform the owners of any offer, no matter how small. I'm not interested in the EA's feedback (since they work on commission) but in what the owners say so I can then adjust my offer accordingly. "Too small" is not enough feedback for a proper negotiation in my view...

Any advice on this or in general?

Thrugelmir

kisaki757 said:

Hi, I am a FTB and I need some advice about how to negotiate with EA's

It's not the EA's property. The EA will merely relay your offer to the vendor. The EA's role is to try and bring the parties together to reach an agreed price. 

All the EA wants to do is achieve a sale and as that's what they ultimately get paid for. The price is pretty irrelevant as the commisson on a few thousand pounds is neither here nor there. The EA isn't paid until the sale eventually completes which is some months away. 

ciderboy2009

Your "feelings" about the price don't really come into it - what are comparable houses in the area selling for?

If your offer is too low for the sellers then it might just be that they don't see the point in negotiating with you.

The EA aren't going to be too bothered about the diffence in commission either - you're talking about around £100 commission per £10,000 on the house price to the company so probably less than £10 per £10k to the EA personally.

kisaki757

Thrugelmir said:

kisaki757 said:

Hi, I am a FTB and I need some advice about how to negotiate with EA's

It's not the EA's property. The EA will merely relay your offer to the vendor. The EA's role is to try and bring the parties together to reach an agreed price. 

All the EA wants to do is achieve a sale and as that's what they ultimately get paid for. The price is pretty irrelevant as the commisson on a few thousand pounds is neither here nor there. The EA isn't paid until the sale eventually completes which is some months away. 

Thanks, that was my understanding too! But so far in both cases, the EA hasn't even told the vendor about my offer, they just dismissed it straight out. I realize it's low but that's the whole point of a negotiation: you start low and go up. How can I do that when the other party isn't even aware?

comeandgo

You don’t start too low as you may just give the impression you have no idea what you are doing and people will just put you on ignore.

SpiderLegs

kisaki757 said:

Thrugelmir said:

kisaki757 said:

Hi, I am a FTB and I need some advice about how to negotiate with EA's

It's not the EA's property. The EA will merely relay your offer to the vendor. The EA's role is to try and bring the parties together to reach an agreed price. 

All the EA wants to do is achieve a sale and as that's what they ultimately get paid for. The price is pretty irrelevant as the commisson on a few thousand pounds is neither here nor there. The EA isn't paid until the sale eventually completes which is some months away. 

Thanks, that was my understanding too! But so far in both cases, the EA hasn't even told the vendor about my offer, they just dismissed it straight out. I realize it's low but that's the whole point of a negotiation: you start low and go up. How can I do that when the other party isn't even aware?

In order to start a negotiation you need to be credible.

your offers are clearly not. Nobody is going to waste time on offers which are nowhere near expectation.

Flugelhorn

I am not sure that there is a "significant discount for speed" - you have to get a mortgage etc and that can take time - even being a cash buyer takes its time and doesn't get the chain immediately back on track. 

Windofchange

But what other offers are on the table do you suppose? Maybe offers have already been rejected at 5% under asking as an example, therefore the vendors have told the EA don't waste my time with anything under that? I would tend to agree with the EA on the 17% under offer as you would probably come across as a bit of a time waster to me if you were offering that far under. If you can justify it in some way with the roof needing replacement and a large damp problem then who knows, but just because you don't agree with the valuation doesn't really cut it. I think Ferraris should be cheaper, but I'm not heading to the local garage to try and get 50k off a new California because it's a rip off.

The issue really sounds like you just aren't that bothered with either property, therefore you are being treated accordingly. Regardless of how quickly property 2 wants to exchange, they aren't going to be selling it for (much) under asking, particularly given the fact that property indexes such as the Halifax and Nationwide continue to go up each month. When we brought, we loved the property and went in at asking alongside disclosing our position and ability to move fast. It showed intent and it worked. Maybe you should be waiting for a property that does that for you rather than buying something that you sort of like?

Snookie12cat

17% is a bit too low. Speaking as someone who just had their chain collapse and then trying to get it back on track, we reduced the price by about 7% off the bat and ended up accepting 10% less than we sold it for previously. We would not have accepted another 7% regardless of how desperate we were. The agent knows this and that is why they are not wasting their time or the vendors.

They have a property and likely need a price to be able to continue with the purchase. If you don't really love it, then move on. Arguably you if you did get it you would be benefitting to as the chain is ready to go and you don't have to wait around for the chain to complete which might take months or never happen.

propertyhunter

My estate agent would tell me about the offers they outright rejected on my behalf on the basis that I had rejected earlier offers that were higher. The vendors of the properties you are viewing might have set their own thresholds that the estate agent knows are unacceptable to their client too. If this was a buyer's market, you might have a chance with lower offers combined with being chain-free, but it sounds like it isn't where you are looking? 

I used to think property prices were too high, but actually the prices are set by what people are willing to pay. The house that was sold STC in June is an example of that. Although we had the SDLT holiday supporting higher asking prices in June, now it's a lack of stock - so I can understand why the vendor is listing at the same price in November. 

user1977

kisaki757 said:

I feel there should be a significant discount for speed. 

How much of a discount do you "feel", and how quickly do you think the average FTB can actually complete? They're the buyers most likely to have problems with their mortgage applications, and (because they've never done this before) the most likely to get flaky or be difficult to negotiate with.