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

pinkshoes

Deleted_User said:

Yes, my thread is serious.It isn't the same everywhere in the country, or for every property. 20% below the asking price is not unheard of where I live, and from the research I've been doing, which I should have just stuck with instead of asking here. 

My mother has just purchased a property here for around £10k below the asking price. I'm so relieved that she didn't come here asking for advice on what to offer! 

I also live in the South East, and some of the property asking prices are utterly bonkers, so the whole 20% less thing will depend on demand in that particular area, condition of the house, whether the seller themselves are chain free etc...

We bought for £430k a 1980s time warp about 7 years ago. A very solid house but extremely dated. We have been SLOWLY doing it up. Similar houses are now demanding £550k+, or £600k+ for a new build. The house we bought had an asking price of £475k, and being chain free and letting the seller choose the exchange/completion date made our low offer much more attractive.

I know someone who bought a 3 bed semi in this village and paid 11% under the asking, but a 4 bed detached that sold a month ago went to sealed bids and over the asking price. 

Yet if you go just 6 miles away, there's a much "grottier" town where £500k will get you something massive with a big garden and not particularly over-looked (like the new builds!).

So my advice is to ignore any generic websites that say that cash buyers can offer XYZ, and instead do your research specifically in the area you want to buy, look at actual SOLD prices of similar properties, HOW many properties are for sale etc... 

TXC

gingercordial said:

It's true that for your part of the country and for the type of property you're after, an offer below asking price could be reasonable.  But it will be equally reasonable for mortgage-funded and cash buyers.  20% seems extremely low though.  I don't agree with the "you should be embarrassed by your first offer" theory as I think in this country that's equally likely to result in the seller simply refusing to deal with you.  

But anyway beware back seat drivers who have not researched your market.  When I was buying, my parents and in-laws both had lots of helpful comments to make about how we should "always" go in at x% below asking price, never offer asking price and god forbid more.  However that was based on their experience in other parts of the country, decades ago.  Similarly they were all for insisting we should demand lots of money off for issues in the survey or pull out, to the extent that we were almost reluctant to tell them that we'd split the difference with the seller, but they weren't the ones doing the negotiation or needing somewhere to live so all very easy for them to say!

Excellent advice, neither of my parents have ever bought a house (aside from our house through right to buy but very different to buying on open market) but are extremely forceful with opinions on how much to offer, always offering under, demanding money off for this, that, the other, and my fave: that the market will crash so I shouldnt even be buying anyway. I've habitually lied about the actual size of offers I've made against houses, and if the current house I'm offered on is downvalued I've a sum put aside to plug - but I'd never dare tell them.

Thing is they just want the best for you so its hard to push back - but they're not the buyers, you are

newsgroupmonkey_

Deleted_User said:

aoleks said:

is this thread serious? even in "normal" times, 20% under is a bit of a push, to put it politely. in this market, you might want to add 10% to the asking price to even stand a chance. no one will let a FTB-er with a mortgage go and miss out on tens of thousands of pounds because there is a tiny chance of the deal falling through, most don't.

Yes, my thread is serious.It isn't the same everywhere in the country, or for every property. 20% below the asking price is not unheard of where I live, and from the research I've been doing, which I should have just stuck with instead of asking here. 

My mother has just purchased a property here for around £10k below the asking price. I'm so relieved that she didn't come here asking for advice on what to offer! 

Is the £10k 20% under value?

The problem with Googling advice on something like this is that it's a moving target. 2 years ago, we picked our place up for £10k under the asking (around 4%) because the vendor was desperate as his chain had collapsed and we were effectively FTB as had been renting for a while.

Get to know your market. First of all, install the PatMa Property Tools plugin to your browser. It's free. It's actually designed for people who are in the Buy-To-let market, but it works for anyone.

Then you can look at a property like this;

https://www.rightmove.co.uk/properties/113981948#/

What you'll now see is the history of what's going on with it.

Now you've got a lot more information about what's going on with the property. We can have a guess at what might have happened.

September - went on the market. No interest.

November - dropped the price by £20k to get more interest.

December - still no interest, so dropped by another £10k. 2 weeks later, finally sent SSTC.

BUT....

Something obviously went wrong with the purchase - either the valuation didn't meet the offer price or the buyer couldn't get a mortgage on it (or perhaps just pulled out).

So yes, this property may have an opportunity to put a cheeky bid in (although 20%, I'm afraid it's not going to happen).

You can also now use this tool to see other similar SOLD properties in the area (tick the SSTC box when you're searching).

https://www.rightmove.co.uk/property-for-sale/find.html?searchType=SALE&locationIdentifier=POSTCODE^679411&insId=1&radius=5.0&minPrice=250000&maxPrice=350000&minBedrooms=2&maxBedrooms=&displayPropertyType=bungalows&maxDaysSinceAdded=&includeSSTC=true&_includeSSTC=on&sortByPriceDescending=&primaryDisplayPropertyType=&secondaryDisplayPropertyType=&oldDisplayPropertyType=&oldPrimaryDisplayPropertyType=&newHome=&auction=false

Now, notice that the plugin has quickly given you more information in the search window alone.

As we can see, this one sold in 6 days.

https://www.rightmove.co.uk/properties/115511279#/

Now this one clearly has an advantage, being detached, but we can see the market is definitely moving.

These, btw, are for 2 bed bungalows - something that is never particularly popular. Not suitable really for a family and mostly older people so a limited market.

Try with 3 bed semis in the area under £325k and I'll show you a pile of houses that sold within a couple of days. Anything currently on the market is either in a tricky area or has an obvious flaw.

That's not to say the houses are worth any more than £325k, but it's a seller's market and there aren't many about.

theoretica

When I bought my home there was another property also going through the market which was extremely similar.  Estate agent advert prices were 12% apart, sale prices less than 0.3% different.  To my mind, I and the other buyer got equal value for money.  But if you focus on the EA price then you could argue I came out 12% worse, despite paying a hair less in the end.

I am not arguing that there aren't properties out there that will sell for considerably under the advert price - I am arguing that those properties are not the only great value purchases that exist.

eddddy

It's possible that some properties are over priced by 20%.

For example, a property is listed at £300k, but realistically it will not sell for more than £240k.


But psychologically, the seller is hoping for around £300k, and believes that's what their property is worth - so they're unlikely to accept an offer of £240k.

Instead, it will be a slow realisation for the seller - and the asking price might reduce over months (or years) to £280k, £270k, £260k, £255k, £250k.

Once the asking price is down to £250k, and there's still no interest, the seller might be more ready to accept an offer £240k.

sheramber

Deleted_User said:

aoleks said:

is this thread serious? even in "normal" times, 20% under is a bit of a push, to put it politely. in this market, you might want to add 10% to the asking price to even stand a chance. no one will let a FTB-er with a mortgage go and miss out on tens of thousands of pounds because there is a tiny chance of the deal falling through, most don't.

Yes, my thread is serious.It isn't the same everywhere in the country, or for every property. 20% below the asking price is not unheard of where I live, and from the research I've been doing, which I should have just stuck with instead of asking here. 

My mother has just purchased a property here for around £10k below the asking price. I'm so relieved that she didn't come here asking for advice on what to offer! 

You cannot expect specific  advice for an area  if you do not state where you are looking.

Any advice is based on the general situation

HotPantsCruiser

newsgroupmonkey_ said:

Deleted_User said:

aoleks said:

is this thread serious? even in "normal" times, 20% under is a bit of a push, to put it politely. in this market, you might want to add 10% to the asking price to even stand a chance. no one will let a FTB-er with a mortgage go and miss out on tens of thousands of pounds because there is a tiny chance of the deal falling through, most don't.

Yes, my thread is serious.It isn't the same everywhere in the country, or for every property. 20% below the asking price is not unheard of where I live, and from the research I've been doing, which I should have just stuck with instead of asking here. 

My mother has just purchased a property here for around £10k below the asking price. I'm so relieved that she didn't come here asking for advice on what to offer! 

Is the £10k 20% under value?

The problem with Googling advice on something like this is that it's a moving target. 2 years ago, we picked our place up for £10k under the asking (around 4%) because the vendor was desperate as his chain had collapsed and we were effectively FTB as had been renting for a while.

Get to know your market. First of all, install the PatMa Property Tools plugin to your browser. It's free. It's actually designed for people who are in the Buy-To-let market, but it works for anyone.

Then you can look at a property like this;

https://www.rightmove.co.uk/properties/113981948#/

What you'll now see is the history of what's going on with it.

Now you've got a lot more information about what's going on with the property. We can have a guess at what might have happened.

September - went on the market. No interest.

November - dropped the price by £20k to get more interest.

December - still no interest, so dropped by another £10k. 2 weeks later, finally sent SSTC.

BUT....

Something obviously went wrong with the purchase - either the valuation didn't meet the offer price or the buyer couldn't get a mortgage on it (or perhaps just pulled out).

So yes, this property may have an opportunity to put a cheeky bid in (although 20%, I'm afraid it's not going to happen).

You can also now use this tool to see other similar SOLD properties in the area (tick the SSTC box when you're searching).

https://www.rightmove.co.uk/property-for-sale/find.html?searchType=SALE&locationIdentifier=POSTCODE^679411&insId=1&radius=5.0&minPrice=250000&maxPrice=350000&minBedrooms=2&maxBedrooms=&displayPropertyType=bungalows&maxDaysSinceAdded=&includeSSTC=true&_includeSSTC=on&sortByPriceDescending=&primaryDisplayPropertyType=&secondaryDisplayPropertyType=&oldDisplayPropertyType=&oldPrimaryDisplayPropertyType=&newHome=&auction=false

Now, notice that the plugin has quickly given you more information in the search window alone.

As we can see, this one sold in 6 days.

https://www.rightmove.co.uk/properties/115511279#/

Now this one clearly has an advantage, being detached, but we can see the market is definitely moving.

These, btw, are for 2 bed bungalows - something that is never particularly popular. Not suitable really for a family and mostly older people so a limited market.

Try with 3 bed semis in the area under £325k and I'll show you a pile of houses that sold within a couple of days. Anything currently on the market is either in a tricky area or has an obvious flaw.

That's not to say the houses are worth any more than £325k, but it's a seller's market and there aren't many about.

This one has three double bedrooms and has reduced it`s price by 50k so far, do you think there is something wrong with it?

https://www.rightmove.co.uk/properties/113117051#/?channel=RES_BUY

HotPantsCruiser

eddddy said:

It's possible that some properties are over priced by 20%.

For example, a property is listed at £300k, but realistically it will not sell for more than £240k.


But psychologically, the seller is hoping for around £300k, and believes that's what their property is worth - so they're unlikely to accept an offer of £240k.

Instead, it will be a slow realisation for the seller - and the asking price might reduce over months (or years) to £280k, £270k, £260k, £255k, £250k.

Once the asking price is down to £250k, and there's still no interest, the seller might be more ready to accept an offer £240k.

How often do you think that happens?

peterhjohnson

Deleted_User said:

First time buying, so I'm completely new to this.
Is 20% less a common kind of offer?

It's not usually successful. Let's assume for a moment the unlikely case where your 20% under is actually a fair market price. The (deluded) seller will almost certainly reject it and the property will stay on the market, perhaps being reduced a bit as the months go by.  I did once leave such an offer on the table and after a long wait, got my offer accepted.

It is much more likely in much of the UK market now that someone will offer over asking price. It's almost certain that someone will offer more than your -20% figure

MobileSaver

Deleted_User said:

Is 20% less a common kind of offer? ... I'm more curious as to if this is a common kind of ballpark for a first offer

Put yourself in the seller's shoes...

Imagine you do end up buying a flat and then imagine it's say five years from now and you are selling that flat. You are marketing at £175,000 and I turn up as a cash buyer and offer just £140,000... would you honestly take my offer seriously and consider giving up £35,000 just like that? Do you think many sellers would seriously consider such a huge discount?

Of course there will always be exceptions but most times large discounts are given because there are large flaws with the property. On the other hand, if you are not remotely fussy about the home you buy and there are a large number of properties that are on the market in your area then you may get lucky and find a desperate seller. Ultimately though most people have specific wants/wishes and quickly find choices on the market are limited so the chances of such a seller are slim at best.