Making yourself appealing as a private buyer

Thrugelmir

Deleted_User said:

Thrugelmir said:

Like buses. There'll always be another property along shortly. Let others overpay. Bide your time and be patience. 

This is a good reminder, thank you. I had resigned myself to dropping out of looking for a property in 2022 just before this one came along. It's definitely a seller's market!

Still early in the New Year. Activity levels will increase a lot further yet. Nor forget that the pandemic has impacted peoples ability to relocate. Rising interest rates, energy bills, etc etc will dampen prices at some point. 

Thrugelmir

Slinky said:

Thrugelmir said:

Deleted_User said:

csgohan4 said:

bottom line is money talks, careful about over offering if you need a mortgage, it may well get down valued. Unless you can make up the difference

Yes, you're right. It probably is as simple as that. I am prepared to go 20% over but I need to have somewhere to draw the line.

Like buses. There'll always be another property along shortly. Let others overpay. Bide your time and be patience. 

It's not always the case; it very much depends on the availability of what you want to buy. Our buyers had been looking for a house in our street for several years. We sold in 2019, the previous sale was in 2014 and nothing has come up for sale since we sold. Nor will it until somebody dies, the more usual route out of the street being in a box.

Goes without saying that if you've a desire for something very specific you may have a long wait. For the majority of people flexibility is the key. To buy my first property I had to exchange a 20 minute walk for a 25 minute drive to work. That was many decades ago. Not any different today. 

bolwin1

Deleted_User said:

Thank you! I appreciate the support! I have no chain (just have to give 30 days notice on my rental) and my deposit is fairly pretty good (25-30% but not sure if that is considered large these days!) The owners live down South so I'm not sure if selling privately could save them a lot of hassle...possibly not since Yopa will likely handle all the viewings. Just hoping that what I'm offering is good enough for the sellers...

One thing to bear in mind - if you are offering 20% over the asking price, you may well find the mortgage valuation comes in 20% lower than the price you are prepared to pay. Your 25% deposit then becomes a 5% deposit as far as the mortgage company is concerned. This will make it much harder to get a mortgage (& if you do, the interest rate will probably be higher than it would have been otherwise).

Offering 20% over is fine if you have a 50% deposit, but much harder when the excess is similar to your deposit amount. 

eidand

Deleted_User said:

csgohan4 said:

bottom line is money talks, careful about over offering if you need a mortgage, it may well get down valued. Unless you can make up the difference

Yes, you're right. It probably is as simple as that. I am prepared to go 20% over but I need to have somewhere to draw the line.

you do understand that if you offer 20% over the asking price, there is a very good chance that the bank will value the property at it's original asking price.

If that happens, the extra 20% needs to come from you. if you imagine that you will go back to the vendors asking for a 20% reduction you will discover that they won't care. Rightly so even, because others can more than likely pay what they offer while FTBs can't.

Do you understand all this?

[Deleted User]

eidand said:

you do understand that if you offer 20% over the asking price, there is a very good chance that the bank will value the property at it's original asking price.

If that happens, the extra 20% needs to come from you. if you imagine that you will go back to the vendors asking for a 20% reduction you will discover that they won't care. Rightly so even, because others can more than likely pay what they offer while FTBs can't.

Do you understand all this?

Hi @eidand,

What you and @bolwin1 are saying sounds very similar but admittedly, I don't fully understand this! Am I correct in saying if I offer 20% over the valuation (say it is £100k and I offer £120k), then I could potentially only get a mortgage for the £100k and will have to pay £20k myself. So essentially, I can get a mortgage for the valuation amount but anything additional, I will need to fit the bill. Please correct me if I'm wrong. I am also in Scotland, I don't know if this makes a difference but possibly not! Thank you for your help!

HampshireH

Deleted_User said:

eidand said:

you do understand that if you offer 20% over the asking price, there is a very good chance that the bank will value the property at it's original asking price.

If that happens, the extra 20% needs to come from you. if you imagine that you will go back to the vendors asking for a 20% reduction you will discover that they won't care. Rightly so even, because others can more than likely pay what they offer while FTBs can't.

Do you understand all this?

Hi @eidand,

What you and @bolwin1 are saying sounds very similar but admittedly, I don't fully understand this! Am I correct in saying if I offer 20% over the valuation (say it is £100k and I offer £120k), then I could potentially only get a mortgage for the £100k and will have to pay £20k myself. So essentially, I can get a mortgage for the valuation amount but anything additional, I will need to fit the bill. Please correct me if I'm wrong. I am also in Scotland, I don't know if this makes a difference but possibly not! Thank you for your help!

That's correct

The lender won't give you more than they think it's worth. You will need to find the extra cash to pay for the difference between mortgage and offer.

Not forgetting you also need your cash deposit.

So deposit +difference + mortgage whatever that amounts to

[Deleted User]

HampshireH said:

Deleted_User said:

eidand said:

you do understand that if you offer 20% over the asking price, there is a very good chance that the bank will value the property at it's original asking price.

If that happens, the extra 20% needs to come from you. if you imagine that you will go back to the vendors asking for a 20% reduction you will discover that they won't care. Rightly so even, because others can more than likely pay what they offer while FTBs can't.

Do you understand all this?

Hi @eidand,

What you and @bolwin1 are saying sounds very similar but admittedly, I don't fully understand this! Am I correct in saying if I offer 20% over the valuation (say it is £100k and I offer £120k), then I could potentially only get a mortgage for the £100k and will have to pay £20k myself. So essentially, I can get a mortgage for the valuation amount but anything additional, I will need to fit the bill. Please correct me if I'm wrong. I am also in Scotland, I don't know if this makes a difference but possibly not! Thank you for your help!

That's correct

The lender won't give you more than they think it's worth. You will need to find the extra cash to pay for the difference between mortgage and offer.

Not forgetting you also need your cash deposit.

So deposit +difference + mortgage whatever that amounts to

Thank you @HampshireH. That certainly changes things...

jenni_fer

HampshireH said:

Deleted_User said:

eidand said:

you do understand that if you offer 20% over the asking price, there is a very good chance that the bank will value the property at it's original asking price.

If that happens, the extra 20% needs to come from you. if you imagine that you will go back to the vendors asking for a 20% reduction you will discover that they won't care. Rightly so even, because others can more than likely pay what they offer while FTBs can't.

Do you understand all this?

Hi @eidand,

What you and @bolwin1 are saying sounds very similar but admittedly, I don't fully understand this! Am I correct in saying if I offer 20% over the valuation (say it is £100k and I offer £120k), then I could potentially only get a mortgage for the £100k and will have to pay £20k myself. So essentially, I can get a mortgage for the valuation amount but anything additional, I will need to fit the bill. Please correct me if I'm wrong. I am also in Scotland, I don't know if this makes a difference but possibly not! Thank you for your help!

That's correct

The lender won't give you more than they think it's worth. You will need to find the extra cash to pay for the difference between mortgage and offer.

Not forgetting you also need your cash deposit.

So deposit +difference + mortgage whatever that amounts to

I think this is misleading.

If you offer 120k and it's valued at 100k, this is the figure that will be used for the LTV calculation.
So. If you were putting in 20% of the £120k you would be paying a deposit of £24k and asking for a mortgage of £94k.
As the bank thinks the property is worth £100k for their calculations they'll do 94/100 = 94% and therefore assuming the product you applied for is 90% max ltv will tell you you can only borrow up to £90k
BUT if you were putting down £35k and asking for £85k, while the LTV would change as a result of the valuation it wouldn't necessarily change anything else.

This is why FTBs who are usually the ones with high LTVs are the most impacted by valuations. If you have a low LTV, as long as you are happy with the price you are paying there won't be any issue.

Slinky

Deleted_User said:

Slinky said:

It's not always the case; it very much depends on the availability of what you want to buy. Our buyers had been looking for a house in our street for several years. We sold in 2019, the previous sale was in 2014 and nothing has come up for sale since we sold. Nor will it until somebody dies, the more usual route out of the street being in a box.

Similar situation to the one I'm in. Looking in a small Scottish village that I've taken a liking to and property is very few and far between. When houses do come on the market, they are often in need of renovation or are too large/ expensive for me. It also appears that one family owns a lot of houses in the village and lets them out as Airbnbs. Being presumptuous but they may well do the same with this one.

Have you checked out your intended village at all times of the year? We looked at a very popular coastal town where lots of all types of properties, even some of those worth over £1m are available as holiday homes. Anything you buy could have a holiday home as a neighbour even if it wasn't at the time of purchase.  Where we were looking, there are visitors all year round. Other places can become ghost towns in the winter where over 50% of homes are second/holiday homes. We decided we couldn't risk being next door to party central and bought a property in a river town a few miles inland. We get plenty of visitors but far fewer airbnbs here.

[Deleted User]

Slinky said:

Have you checked out your intended village at all times of the year? We looked at a very popular coastal town where lots of all types of properties, even some of those worth over £1m are available as holiday homes. Anything you buy could have a holiday home as a neighbour even if it wasn't at the time of purchase.  Where we were looking, there are visitors all year round. Other places can become ghost towns in the winter where over 50% of homes are second/holiday homes. We decided we couldn't risk being next door to party central and bought a property in a river town a few miles inland. We get plenty of visitors but far fewer airbnbs here.

Yes, I've been looking in this particular village for the last couple of years and familiar with the houses that are AirBnBs. The neighbours on each side are full-time residents I believe ( unsure about one of them). It is an area that attracts a lot of tourists/ walkers but the house I'm looking at is pretty far from the touristy bit! The house is also detached so I'm hoping there won't be much (if any) noise from nearby properties.