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

caprikid1

There use to be a fantastic Plug-in for Firefox call Property Bee that screen scraped Rightmove and showed you when it was updated etc.

propertyhunter

What does everyone use now? I use PropertyLog. 

user1977

Deleted_User said:

I compiled a list of sources in response to the "lol where you getting 20% from?" question, and it wouldn't go through because I can't post links. 

You can, you just need to make them look like they aren't links - stick in a space or similar. 

Scotbot

How long a property has been on the market is key. If a property was listed this week and you offer anything less than asking they will ignore you and see what other offers they get. If a property has been on the market for 3 months or more it is overpriced. 

I have been tracking the markets I am in for several years now. I know instantly when some thing is realistically priced and they always sell fast

Thrugelmir

Deleted_User said:

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. 

Then auctions might be a more fertile source of suitable properties. Though please educate yourself first. Auction houses are not places for the unwary and unknowledgable. 

MysteryMe

Research, research, research. But it has to be relevant research to your buying location and type of property.

Decide what location you want to live in and then concentrate on researching the recent sold prices for one bedroom flats (or whatever property you want) and keep an eye on sold prices so you can pick up any price movements up or downwards.

Although you have specified a property in need of renovation I agree with others that you are likely to face competition from other FTBs and also property developers / BTL. If there is competition is may drive the price up and you could end up paying more for property plus renovations then you would if you bought a property that costs more initially because it's not in need of renovation but does not need any more money spent on it. So you also need a realistic understanding of how much renovations are going to cost and remember if it is a leasehold property you may be restricted to what kinds of renovations you can make.

General questions are always difficult to answer on an internet form as the answer is usually how long is a piece of string as there are so many variables. 

[Deleted User]

Deleted_User said:

I feel even more confused now than before I started. I know now at least that places do go for 20% less. It is a thing that happens. But moreover, I think I really should just go with my own instincts depending on each individual property, the state of repair it's in, against what similar properties in my area have actually gone for. In which case, 20% less may be totally reasonable, or totally unreasonable. This seems wisest rather than "20% less than asking price of every property I see". 

Exactly! After you've been looking in an area for a while, you start to get a sense for what is reasonable and what isn't. I completely agree with your earlier comment about it being annoying to have to wait so long between a house being sold and the sold price being made public. I am in a situation where a house price has been vastly overestimated based on recent sale prices in the area. Unfortunately, this doesn't take into account two that were on the market for months, in which case offering under asking would have been perfectly reasonable. 

I agree with @Scotbot that how long a property has been on the market can tell you a lot. In a sense, the way the market is currently does make it easier to gauge what is a reasonable offer to make because houses aren't staying around for long. Keep posting questions, it'll stand you in good stead when it comes to putting in an offer in and helps other people too!

Sandtree

Deleted_User said:

First time buying, so I'm completely new to this.
Is 20% less a common kind of offer? Obviously I know you can offer anything you want, but I'm more curious as to if this is a common kind of ballpark for a first offer (possibly then increasing to 15% if turned down). I'm also assuming that my having the advantage of being being chain-free cash buyer could make an offer like this seem more reasonable to some sellers. 

You need to understand the sellers position... cash buyer is really not much better than someone with a mortgage agreed in principle. Ok there is some risk that the mortgage company will undervalue the property or the buyer develops an unhealthy gambling habit between now and then but most are not that risk adverse.

Being chain free is more appealing as it gives more certainty over timing but does the seller care about timing? Last property I sold was my mothers, she was moving in with her sister in another city and would then look for somewhere to buy after and so being chain free really didnt mean anything to her -v- an extra 10% on the sale. 

You potentially can offer to pay less than someone in a long chain who's had several buyers fall through and be selected over them. That amount will not be a percentage of the asking price however. Like anything, house price setting is a strategy, some will intentionally under value the asking price to drum up interest and then move to sealed bids. Paying 20% over the asking price may not secure you the property 

Noneforit999

You would have no hope where we are for 20% under asking.

It probably varies by area but reading some of the other posts on here, It does seem to be a market where people are either getting the amount they want or in many cases, above it.

It really depends on the property too. If its been for sale for four months, needs a bit of work or is in perhaps a less desirable area you might have a shot but if your offer is part of several others on a 5 year old house which is move in ready and the other offers are above asking, I would suggest its not even worth bothering.

caprikid1

About 15 years ago when the market was not buoyant I tried doing what you are doing with 4 bedroom houses as a cash buyer. I did a lot of research and realised that anything worth buying in the right areas was going to be maximum 5% discount, if it was a possibility to discount it by 20% I probably should not touch it ! 

I spoke to estate agents and the message always came back, if you want that level of discount in this area you need to go to auction.