90% of Asking Price Offers

RHemmings

There are a lot of properties that are out of my budget but within my budget if I make an offer of 90% asking price. 

In many walks of life where offers and haggling are possible (in general), offering 90% of an asking price is entirely reasonable. (In some situations it would be a laughably high, rather than low, opening bid.) 

What do people think of my strategy of offering 90% when I feel a property is overpriced? And not bothering if I feel a property is so overpriced that 90% of asking is still too much.

Advice about haggling, and anecdotes would be greatly appreciated as well. 

Herzlos

You should offer what you feel a property is worth, and the seller can decide if they want to accept it or not. There really aren't any rules.

TheJP

So are you searching for properties 10% outside of your budget and hoping you can justify offering 10% below or are all the properties in your area overpriced by 10%?

Sounds like you are seeking reassurance to offer 10% below asking price. Go do your homework on comparable local  properties that have sold recently and determine if the price is reflective of the area market, then offer, if agreed get a survey that also has a valuation so you know if the property is reflective of the 90% asking price tag you are set on and if factoring in any issues is still reflective of either the 90% valuation or higher. If its higher then you know when you fix the things you'll now have a 90+ % valuation house.

Most of the above and your strategy will be determined by many factors,

• The position of the sellers (desperate/need the asking price/making a big profit on 10% below asking
• The popularity of the area and the house, could go for 10% over. How's that strategy looking in a popular area...
• Your status, FTB or chain or cash buyer etc
• Your ability to secure finances, it sounds like 10% below on these properties is your max budget. 

In conclusion you are a red flag buyer to me, offering 10% lower at your maximum budget. For me you would likely be asking for a reduction if a light bulb is broken.

I suggest looking at properties that are within your budget and give you leeway to factor in any work that may be needed reflective of price/ongoing maintenance of a property.

rigolith

Prices are falling, the market is not great for sellers. 10% below isn't unreasonable.

You just need to find a seller in the right position. Needing to sell, able to take less.

Some of them will be over priced and just need to accept that if they want to sell.

TheJP

rigolith said:

Prices are falling, the market is not great for sellers. 10% below isn't unreasonable.

You just need to find a seller in the right position. Needing to sell, able to take less.

Some of them will be over priced and just need to accept that if they want to sell.

Not in all areas, some areas are seeing over asking in offers. My house in the thick of the rise of interest rates has been valued almost £100k what i paid 2 years ago (for mortgage purposes)

The key is how comparable local prices are in the area, the market isn't necessarily reflective of the whole country. 

The OP's strategy is a flat 10% below on all properties within their area, because they think its over priced. What's this based on? Is it based on local market or a finger in the air based on their budget?

TisMeBill

If it may get you a property you couldn’t otherwise afford, I don’t see any reason not to try 10% below asking price, the vendor may say no, but it doesn’t cost you anything. We listed a property in April for £525k, but estate agent told us to expect £500k so 5% below asking price, back in April I would not have accepted 10% below, but if the house was still on the market now with the way things are going, I probably would take an offer 10% below asking price.

Bigphil1474

OP, of course you can. A mate of mine put a cheeky offer in on a house a couple of months ago which was 25% below asking price, and they said yes. He was shocked, but happy. As always, depends on the house and the sellers circumstances. Bear in mind, the estate agent price is based on their quick assessment of the property and knowledge of the location. If the house has problems that aren't apparent until a survey is done, it probably will be over priced. 
In the current market, I'd be looking at that sort of margin on houses that have been listed a while, or any vacant properties. The sellers can only say no.

RHemmings

TheJP said:

So are you searching for properties 10% outside of your budget and hoping you can justify offering 10% below or are all the properties in your area overpriced by 10%?

No. I'm searching for properties that either:

1: I can afford now

or: 

2: I can afford in a few months when I will have more cash. 

Sometimes that means that I find properties that I can't afford now, but could afford with a 90% offer. 

TheJP said:

Sounds like you are seeking reassurance to offer 10% below asking price. Go do your homework on comparable local  properties that have sold recently and determine if the price is reflective of the area market, then offer, if agreed get a survey that also has a valuation so you know if the property is reflective of the 90% asking price tag you are set on and if factoring in any issues is still reflective of either the 90% valuation or higher. If its higher then you know when you fix the things you'll now have a 90+ % valuation house.

No, I just want to know is a 10% offer is, generally, a normal thing that happens all the time. Which I suspect it is, but when I've mentioned 90% offers to estate agents, they have been utterly disinterested. 

I am doing my homework on comparable local properties, but I haven't been searching long enough that properties that I know the original asking price of appear in the land registry. 

TheJP said:

In conclusion you are a red flag buyer to me, offering 10% lower at your maximum budget. For me you would likely be asking for a reduction if a light bulb is broken.

I'm sorry, but I read this and think 'where on earth did that come from'. I'm not going to be asking for a reduction light bulb is broken or anything like that. But, I am likely to negotiate on the price if I think that the asking price is a bit high or if a property is slightly outside my budget. I don't believe that is in any way unusual, but given what I see from estate agents at the moment, I noted a lack of interest. 

If you reply to my posts, please reply to what I post in them. Please don't jump to weird conclusions and respond to those. 

RHemmings

rigolith said:

Prices are falling, the market is not great for sellers. 10% below isn't unreasonable.

You just need to find a seller in the right position. Needing to sell, able to take less.

Some of them will be over priced and just need to accept that if they want to sell.

Thanks.

TisMeBill said:

If it may get you a property you couldn’t otherwise afford, I don’t see any reason not to try 10% below asking price, the vendor may say no, but it doesn’t cost you anything. We listed a property in April for £525k, but estate agent told us to expect £500k so 5% below asking price, back in April I would not have accepted 10% below, but if the house was still on the market now with the way things are going, I probably would take an offer 10% below asking price.

Thank you. Your experience from the seller point of view is very useful. 

TheJP said:

rigolith said:

Prices are falling, the market is not great for sellers. 10% below isn't unreasonable.

You just need to find a seller in the right position. Needing to sell, able to take less.

Some of them will be over priced and just need to accept that if they want to sell.

The OP's strategy is a flat 10% below on all properties within their area, because they think its over priced. What's this based on? Is it based on local market or a finger in the air based on their budget?

No, this isn't my strategy at all. This 'strategy' is completely made up by you and I'm not doing anything remotely like that. 

Bigphil1474 said:

OP, of course you can. A mate of mine put a cheeky offer in on a house a couple of months ago which was 25% below asking price, and they said yes. He was shocked, but happy. As always, depends on the house and the sellers circumstances. Bear in mind, the estate agent price is based on their quick assessment of the property and knowledge of the location. If the house has problems that aren't apparent until a survey is done, it probably will be over priced. 
In the current market, I'd be looking at that sort of margin on houses that have been listed a while, or any vacant properties. The sellers can only say no.

Thanks for this. I'm looking at one property in general, but it's just had its price reduced by 10K, and the estate agent says that she believes it will sell quickly at the new price. If it is still there (and I am still looking - viewing on Saturday and other viewings requested) in some weeks time, then I plan to formally put in a 90% offer on this property. The property I'm looking at on Saturday is within my budget and I would probably offer asking, but I suspect it has nowhere to charge an electric car. In which case: no offer at all. 

Flugelhorn

Not being the slightest bit interested in electric cars, I am bemused by the essential criteria but hey we all look for different things

I have in the past offered 94% and 95% and after much huffing and puffing and mutterings about feeling miffed and slightly insulted  from the vendors they were both accepted - took a bit of time in both cases. In both cases the agent knew we  could pay the full whack but just felt that we were offering what we felt it was worth.

RHemmings

Flugelhorn said:

Not being the slightest bit interested in electric cars, I am bemused by the essential criteria but hey we all look for different things

I have in the past offered 94% and 95% and after much huffing and puffing and mutterings about feeling miffed and slightly insulted  from the vendors they were both accepted - took a bit of time in both cases. In both cases the agent knew we  could pay the full whack but just felt that we were offering what we felt it was worth.

I have decided that I will not have another petrol or diesel car ever again. I also suspect that in future decades the inability to charge electric cars will affect property prices as there will be an increasing number of people who want to charge at home. I hope to have solar cells as well, and a car battery is one place to put excess solar energy during times when I'm producing more than I am consuming. However, in discussing this I'm concerned that I'm skirting close to the banned 'debate house prices and/or the economy'.

I wasn't really thinking of 95% offers, but after working out the numbers, that gets me past the next round £10,000 up. So, I should have that in mind. 

Also, not related to your post, I checked the price graphs for houses around me, and they are dropping. As I'm buying a place to live, hopefully for a long time, I'm not too concerned about house prices dropping now. But, if it makes negotiation easier, then that helps me.