Negotiating during private sale - advice please!

[Deleted User]

Hi all,

Looking for advice please. In brief, I am a FTB and have found a one-bed property I love that is due to go on the market in the next fortnight. I have viewed it and had some discourse with the seller. I asked what they would be willing to accept to avoid it going on the market and to complete the sale privately. The home report estimate is between £90-95k (I am in Scotland) but the estate agent has given a valuation of £110-120k based on recent sales in the area (and demand). The last sale was Sept 2020 for £91,500. The seller said she'd be looking to sell at the higher end of the valuation. My ceiling is £115k. Do you have any advice as to how I can negotiate to this level? £120k is paying above the odds but I would really like to secure this property. Thank you!

Slithery

Do you have an extra £25k saved up on top of your mortgage deposit to make up the difference between the home report price and what the seller wants?

user1977

Deleted_User said:

The home report estimate is between £90-95k 

Is it not a definite amount? I haven't seen a HR valuation which just specifies a range rather than a specific figure.

Moreover, have you read through and understand everything in the Home Report?

eddddy

So I think your saying the seller wants £120k, but you're only willing/able to offer £115k - and you want to persuade the seller to accept your offer and not to put the property on the open market.


I guess you could put yourself in the seller's shoes. If you were selling the flat, what would a buyer have to say to you to persuade you to accept £115k instead of £120k - and not put the property on the market?

I guess they might save the estate agent fees, if they sold privately. 

And I guess you might want to invent an excuse why your offer of £115k wouldn't still stand, if they put the property on the open market. (e.g. If they don't accept your offer within the next few days, there's another property you're going to offer on instead.)

[Deleted User]

user1977 said:

Is it not a definite amount? I haven't seen a HR valuation which just specifies a range rather than a specific figure.

Moreover, have you read through and understand everything in the Home Report?

It will be a definite amount but I believe the home report is being prepared so this is the range the EA has given as an estimate. Obviously all this is based on an acceptable home report.

[Deleted User]

eddddy said:

So I think your saying the seller wants £120k, but you're only willing/able to offer £115k - and you want to persuade the seller to accept your offer and not to put the property on the open market.


I guess you could put yourself in the seller's shoes. If you were selling the flat, what would a buyer have to say to you to persuade you to accept £115k instead of £120k - and not put the property on the market?

I guess they might save the estate agent fees, if they sold privately. 

And I guess you might want to invent an excuse why your offer of £115k wouldn't still stand, if they put the property on the open market. (e.g. If they don't accept your offer within the next few days, there's another property you're going to offer on instead.)

Yes, this is pretty much the situation though there is no guarantee the seller will get £120k for the house on the open market, hence the wide range. Really, the main benefit would be to me as the buyer in securing a property I really like, as the seller would only serve to save EA fees and potentially time, hassle. Seems a bit of a dire situation when I put it that way.

[Deleted User]

Slithery said:

Do you have an extra £25k saved up on top of your mortgage deposit to make up the difference between the home report price and what the seller wants?

My deposit is £30k. Not entirely sure how it all works as this has happened very quickly and I'll need to look further into what I can afford to borrow, but I have a mortgage in principle arranged.

propertyhunter

Say you're in no chain, with the offer give your solicitor details so they know you mean business, state the cash amount/versus mortgage (bigger deposit is better), give your mortgage advisor details and attach an email from the mortgage advisor saying that you can afford the offered amount. 
Then say something along the lines of... other buyers may be dependent on the bank to value the property at the price offered, whereas your offer can be substantiated regardless of the bank's valuation. This will put you ahead of others offering over asking. Only say this if you have the cash to absorb a downvaluation from the bank, and don't expect to negotiate when a downvaluation comes through. You can still negotiate is the survey highlights issues.
I only recommend this approach for a house you absolutely love and ticks all of your boxes. Be prepared for a fall in property prices in the next few years that could wipe up to 20% off the value worst case scenario. Would you be happy with that? 

eddddy

Deleted_User said:

Yes, this is pretty much the situation though there is no guarantee the seller will get £120k for the house on the open market, hence the wide range. Really, the main benefit would be to me as the buyer in securing a property I really like, as the seller would only serve to save EA fees and potentially time, hassle. Seems a bit of a dire situation when I put it that way.

Yep - it's hard to see a benefit for the seller in accepting your offer now. The obvious thing for the seller to say would be "I'll leave your offer on the table, whilst I market it through the EA for a couple of weeks."

Slithery

propertyhunter said:

Only say this if you have the cash to absorb a downvaluation from the bank, and don't expect to negotiate when a downvaluation comes through.

This is Scotland. The lender doesn't do a valuation, they take the what the home report says as the value of the property so OP will know this figure before putting in an offer.

If the home report comes in at £100k then the bank will only lend £90k on a 90%LTV mortgage. The OP will have to have the rest of the cash saved up themselves.

[Deleted User]

propertyhunter said:

Say you're in no chain, with the offer give your solicitor details so they know you mean business, state the cash amount/versus mortgage (bigger deposit is better), give your mortgage advisor details and attach an email from the mortgage advisor saying that you can afford the offered amount. 
Then say something along the lines of... other buyers may be dependent on the bank to value the property at the price offered, whereas your offer can be substantiated regardless of the bank's valuation. This will put you ahead of others offering over asking. Only say this if you have the cash to absorb a downvaluation from the bank, and don't expect to negotiate when a downvaluation comes through. You can still negotiate is the survey highlights issues.
I only recommend this approach for a house you absolutely love and ticks all of your boxes. Be prepared for a fall in property prices in the next few years that could wipe up to 20% off the value worst case scenario. Would you be happy with that? 

Thank you. I would be prepared and fully expect a drop in property prices in the next few years, though I would hope to stay in the house long term so hopefully this wouldn't be too much of a factor. I absolutely love the house but, for me (and arguably objectively), it is not worth £120k. It sold for approx £30k less about 18 months ago so I don't think I could justify going higher than 115k.