Chain-free cash buyer. Thinking of offering 20% lower than asking price - Too low? Or reasonable?

[Deleted User]

For some reason I keep having issues making posts so I hope this goes through. 

I need to note that I am absolutely looking for small flats that need work doing to them, not bog-standard flats which have been done up. 

[Deleted User]

In my limited experience (also as a FTB), money talks. I have tried to sell the fact I am chain free, accommodating, flexible etc. but if someone else is offering a higher amount, that speaks volumes. I don't think being a cash buyer will necessarily override a decent offer for most sellers.

I think you'd need to assess it on a case-by-case basis. In some instances, a 20% under offer would be perfectly reasonable if, for example, the property has been on the market for a while. Unfortunately, due to it being a seller's market, it's not a tactic that would work in a lot of cases. I am in a situation where I've offered 20% OVER asking, and it still seems like it won't be accepted (albeit, I'm in Scotland). Wishing you the best, being a FTB is a minefield. Just make sure you're offering what the property is worth to you.

propertyhunter

Best advice is to get your feet on the ground, see lots of properties and find out what's selling for what amount of money. Speak to the local EAs - find out what the situation is - they'll tell you if you make the effort to form a relationship with them. I found out that a house I offered on previously sold for 4% over and I lost out by going under. The next house I went over and got it based on my insights from speaking to different EAs. I was shocked to discover how much houses were going for, but then I knew what I needed to offer to get the house I wanted. 

[Deleted User]

Deleted_User said:

In my limited experience (also as a FTB), money talks. I have tried to sell the fact I am chain free, accommodating, flexible etc. but if someone else is offering a higher amount, that speaks volumes. I don't think being a cash buyer will necessarily override a decent offer for most sellers.

I think you'd need to assess it on a case-by-case basis. In some instances, a 20% under offer would be perfectly reasonable if, for example, the property has been on the market for a while. Unfortunately, due to it being a seller's market, it's not a tactic that would work in a lot of cases. I am in a situation where I've offered 20% OVER asking, and it still seems like it won't be accepted (albeit, I'm in Scotland). Wishing you the best, being a FTB is a minefield. Just make sure you're offering what the property is worth to you.

Thank you! 

Shaztastic3000

I wouldn’t. 5% over asking seems to be the sweet spot.

caprikid1

If a cash buyer offered me 20% under I probably would ignore, if they got to the point of equalling other buyers I probably would still go with the other buyers as you would have annoyed me for being cheeky and potentially mess me around

Cash buyers can be viewed as a negative, they don't invest in the transaction till later, they potentially invest less and are more likely to try and chip the price at the last moment as they have less to lose.

I think its a myth that cash buyers are something special, I have never sold a house for anything other than money , I actually don't care if comes from your mattress or Lloyds bank.

If a typical house costs £250,000 20% is £50,000 not sure about anyone else but I will take a lot of hassle and the odd delay or stupid question for an extra £50K, in fact an extra £5 or £10K buys some nice furniture and nights out.

Feel free to put in silly offers but you may find you have been sold the myth, also estate agents don't like cash buyers often as a 1st time buyer seeing their mortgage advisor, using their conveyancing panel and getting B&C through them can add quite a lot of money to the deal.

Offer sensible money but don't be in the illusion that everyone wants a cash buyer.

yksi

You're offering on properties needing work and in the bottom end of the market (like I was). The competition will be stiff if it's mortgageable because the other bidders will also be FTBs. That makes you more attractive than them, but not more attractive than the grey army who are buying an investment property and are also cash buyers.

If it's not mortgageable there won't be as many bidders, but you're still unlikely to be the only offer, unless it's burnt out or needs a new roof of there are no windows or no kitchen, in which case, go nuts, you don't have much to lose. Bid rejected? Ok, you try a bit more. Laughed out of the room? Ok, next property. It wouldn't be the end of the world.

steampowered

Imagine the same property which is actually worth £200k.

One seller lists for £220k, the other lists for £180k.

If you offered the first seller 20% under asking, it would be the same as paying asking to the other seller ...

Offering a fixed % under asking price is a silly strategy. It takes no account of what the property is actually worth!

[Deleted User]

steampowered said:

Imagine the same property which is actually worth £200k.

One seller lists for £220k, the other lists for £180k.

If you offered the first seller 20% under asking, it would be the same as paying asking ...

Offering a fixed % under asking price is a silly strategy. It takes no account of what the property is actually worth!

Yeah, lol, I get it. I regret making this thread now.

[Deleted User]

I wish it wasn't so hard to find out what properties have gone for. It seems to take ages between properties being sold and the information on how much it went for being made available.