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

HotPantsCruiser

newsgroupmonkey_ said:

brasso said:

lookstraightahead said:

Yes I think it's perfectly possible. I've bought this year for 10% below asking  (in a desirable area, etc etc). We were in a really good position with a low LTV and no chain.

the problem is anyone who has recently paid a 'high' amount for a property really doesn't want to think they could have bought it for less. That won't rest easy with them. I remember going on a cruise once and we met up with about four couples and everyone had paid different amounts and we had paid the most. I tried to justify it to myself by saying it was probably the last cabin / cabin was better. I had been told "all cabins with balconies sell out quickly" and I hadn't even questioned it. 

We're fed information mainly by estate agents and get sucked into the hype when buying property. We're emotionally invested and feel good about our houses being worth more rather than less. You only have to see how much we are willing to pay for certain brands of food, clothing etc purely because it's marketed in that way. Estate agents are brilliant at building up momentum - they're sales people after all). 

20% is a lot but a good starting point. If it doesn't work out it's best to have the strength to move on (rather than using words like "dream" or "forever" home).

I believe the market will correct soon. Once sellers realise they're not selling so quickly. Even as a homeowner I can't wait for this, as it's really taking the proverbial. 

It's also worth considering however that once a figure is put in a vendor's head, they've often spent it as though it was their cash. They feel wealthier than they thought they were. So that hyped up price becomes psychologically the norm and a 20% 'discount' is a 'loss' (you can see this in the term 'undervalued' as though the value has come down)

Off to buy 285 toilet rolls ....

You don’t say what or where you bought, which makes it hard to make sense of this, but popular sales psychology aside, you aren’t buying a normal sort of property where I am, in the SE. If a seller and agent accept 10% below asking price in a good area then the property was simply wrongly priced to start with. Where we’re looking, there are more buyers than sellers, and nothing in the bracket we’re looking at (roughly 550-650k) is selling below asking price except for houses that have been on the market for several months. And the reason they’ve been on that long is nearly always that the seller (usually a builder or probate seller) is taking a punt. Eventually they get fed up and drop the price or accept a lower offer that matches realistic current market value.

Or as we're finding, there's something actually wrong with them!

Too much flat roof, non-standard construction and the like.

HotPantsCruiser said:

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

That was overpriced in the first place - it's clearly probate (see brasso's point above).

That would actually be right up our street if it actually had a garden!

It's the weirdest place ever. Is sat on a huge plot (we checked - the actual outside is all owned by the property) but has a teeny tiny courtyard garden. It's like "if you could pick the house up and move it to the middle of the plot", it would be grand!

How much would you pay for it?

Wanderingpomm

If you were in bristol you’d need to offer close to the asking price as most are going for higher than advertised. You might get a couple of grand off if you are lucky. It really depends on where you are and the market, if it worth the full asking price?

newsgroupmonkey_

HotPantsCruiser said:

newsgroupmonkey_ said:

brasso said:

lookstraightahead said:

Yes I think it's perfectly possible. I've bought this year for 10% below asking  (in a desirable area, etc etc). We were in a really good position with a low LTV and no chain.

the problem is anyone who has recently paid a 'high' amount for a property really doesn't want to think they could have bought it for less. That won't rest easy with them. I remember going on a cruise once and we met up with about four couples and everyone had paid different amounts and we had paid the most. I tried to justify it to myself by saying it was probably the last cabin / cabin was better. I had been told "all cabins with balconies sell out quickly" and I hadn't even questioned it. 

We're fed information mainly by estate agents and get sucked into the hype when buying property. We're emotionally invested and feel good about our houses being worth more rather than less. You only have to see how much we are willing to pay for certain brands of food, clothing etc purely because it's marketed in that way. Estate agents are brilliant at building up momentum - they're sales people after all). 

20% is a lot but a good starting point. If it doesn't work out it's best to have the strength to move on (rather than using words like "dream" or "forever" home).

I believe the market will correct soon. Once sellers realise they're not selling so quickly. Even as a homeowner I can't wait for this, as it's really taking the proverbial. 

It's also worth considering however that once a figure is put in a vendor's head, they've often spent it as though it was their cash. They feel wealthier than they thought they were. So that hyped up price becomes psychologically the norm and a 20% 'discount' is a 'loss' (you can see this in the term 'undervalued' as though the value has come down)

Off to buy 285 toilet rolls ....

You don’t say what or where you bought, which makes it hard to make sense of this, but popular sales psychology aside, you aren’t buying a normal sort of property where I am, in the SE. If a seller and agent accept 10% below asking price in a good area then the property was simply wrongly priced to start with. Where we’re looking, there are more buyers than sellers, and nothing in the bracket we’re looking at (roughly 550-650k) is selling below asking price except for houses that have been on the market for several months. And the reason they’ve been on that long is nearly always that the seller (usually a builder or probate seller) is taking a punt. Eventually they get fed up and drop the price or accept a lower offer that matches realistic current market value.

Or as we're finding, there's something actually wrong with them!

Too much flat roof, non-standard construction and the like.

HotPantsCruiser said:

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

That was overpriced in the first place - it's clearly probate (see brasso's point above).

That would actually be right up our street if it actually had a garden!

It's the weirdest place ever. Is sat on a huge plot (we checked - the actual outside is all owned by the property) but has a teeny tiny courtyard garden. It's like "if you could pick the house up and move it to the middle of the plot", it would be grand!

How much would you pay for it?

I wouldn't, as above. I'm sure it will suit someone older who wants light maintenance.

It's a shame. I'd happily pay £350k for that with a decent size garden near the coast. Selsey is full of older folk, which suits us (we like peace and quiet and have no interest in towns and cities).

EDIT: Ha ha, just showed it the wife again. She's starting to fall in love with the property, even though it has little private outdoor space.

london21

Cash buyer can be advantageous if auction property. 
Estate agent won't make much difference. 
Properties going for above asking, sellers market at present. 

HotPantsCruiser

jimbog said:

lookstraightahead said:

It's also worth considering however that once a figure is put in a vendor's head, they've often spent it as though it was their cash. They feel wealthier than they thought they were. So that hyped up price becomes psychologically the norm and a 20% 'discount' is a 'loss' 

A buyer can turn this to their advantage. Seller asks £10,000 for a car. Buyer's friend goes to see it and makes out they're interested, but scoffs and says to the seller that it's worth only £7,000 max. Buyer goes along and offers a 'take it or leave it'  £8,000. Buyer far more likely to get the car at that price

'Loss aversion' is an interesting phenomena 
https://thedecisionlab.com/biases/loss-aversion/

Unlikely to work with houses though if there is a line of people offering over asking price?

brasso

HotPantsCruiser said:

jimbog said:

lookstraightahead said:

It's also worth considering however that once a figure is put in a vendor's head, they've often spent it as though it was their cash. They feel wealthier than they thought they were. So that hyped up price becomes psychologically the norm and a 20% 'discount' is a 'loss' 

A buyer can turn this to their advantage. Seller asks £10,000 for a car. Buyer's friend goes to see it and makes out they're interested, but scoffs and says to the seller that it's worth only £7,000 max. Buyer goes along and offers a 'take it or leave it'  £8,000. Buyer far more likely to get the car at that price

'Loss aversion' is an interesting phenomena 
https://thedecisionlab.com/biases/loss-aversion/

Unlikely to work with houses though if there is a line of people offering over asking price?

That sort of cod sales psychology may well work with goods bought and sold under time pressure but I don’t put properly in that bracket. With many weeks, even months, between offer and exchange, there’s ample time to review your decision and canvass opinion.

retepetsir

Deleted_User said:

Alderbank said:

comeandgo said:

If you came in at 20% under and first time buyer I’d think you had no clue about house buying so would have nothing to do with you.  Don’t make yourself look stupid.

It's possible to compare EA's advertised asking prices with the actual sale prices, which are in the public domain.

The magazine City A.M. recently (October) carried out exactly that exercise.
The results are interesting. The average UK property sold for 13% under. That was distorted by the figures from Scotland which were only 4% (we have a different, some say better, system here).
Most areas in England were about 20% under.

Region	Average Asking Price	Average Sold Price	Difference (%)	Difference (£)
Scotland	£184,149	£177,166	-4%	£6,983
Yorkshire and The Humber	£210,728	£180,324	-14%	£30,404
East of England	£384,561	£312,076	-19%	£72,486
North West	£230,045	£185,171	-20%	£44,874
West Midlands region	£277,229	£220,759	-20%	£56,470
North East	£183,006	£144,935	-21%	£38,071
East Midlands	£271,891	£214,169	-21%	£57,722
Wales	£238,770	£187,960	-21%	£50,810
South East	£459,999	£354,278	-23%	£105,721
South West	£364,958	£277,178	-24%	£87,780
London	£833,994	£494,673	-41%	£339,321
Britain	£296,950	£258,464	-13%	£38,486

Thank you!

I am buying in the South East, so perhaps.. I might not be being so stupid?

Good luck. We purchased in the SE in early 2021 - we paid full asking price, and also had a full asking price offer on our property we sold from a cash buyer. Most properties round here seem to go at the full price or even over...

user1168934

retepetsir said:

Deleted_User said:

Alderbank said:

comeandgo said:

If you came in at 20% under and first time buyer I’d think you had no clue about house buying so would have nothing to do with you.  Don’t make yourself look stupid.

It's possible to compare EA's advertised asking prices with the actual sale prices, which are in the public domain.

The magazine City A.M. recently (October) carried out exactly that exercise.
The results are interesting. The average UK property sold for 13% under. That was distorted by the figures from Scotland which were only 4% (we have a different, some say better, system here).
Most areas in England were about 20% under.

Region	Average Asking Price	Average Sold Price	Difference (%)	Difference (£)
Scotland	£184,149	£177,166	-4%	£6,983
Yorkshire and The Humber	£210,728	£180,324	-14%	£30,404
East of England	£384,561	£312,076	-19%	£72,486
North West	£230,045	£185,171	-20%	£44,874
West Midlands region	£277,229	£220,759	-20%	£56,470
North East	£183,006	£144,935	-21%	£38,071
East Midlands	£271,891	£214,169	-21%	£57,722
Wales	£238,770	£187,960	-21%	£50,810
South East	£459,999	£354,278	-23%	£105,721
South West	£364,958	£277,178	-24%	£87,780
London	£833,994	£494,673	-41%	£339,321
Britain	£296,950	£258,464	-13%	£38,486

Thank you!

I am buying in the South East, so perhaps.. I might not be being so stupid?

Good luck. We purchased in the SE in early 2021 - we paid full asking price, and also had a full asking price offer on our property we sold from a cash buyer. Most properties round here seem to go at the full price or even over...

Same here. Recently bought in south east, paid over the asking price.

peterhjohnson

HotPantsCruiser said:

How likely is it though that their lender will agree, especially now that interest rates are rising?

It may not matter. Some buyers have enough cash and desperation that the lenders attitude is not a deal-breaker. Lenders are unlikely to say "No" but they may not lend quite as much as the buyer wanted.

The main issue in the market at the moment is that it is (or maybe was) a "sellers market"

judyf_1961

Yes, offer less as you are in a good position and can move quickly, depending of course on how good the solicitors are.  Stand your ground.