Offering below asking - is this always applicable to all locations?

bobster2

Houses sell on average for 3-5% below asking price. This is of course an average - some sell for more, some sell for less.

But in light of this average - offering a little below asking is clearly not an unreasonable thing to do. Similarly, it's entirely reasonable and very common for sellers to set their asking price a little higher than they are ultimately willing to accept.

First time sellers (FTS) can be just as awkward to deal with as FTBs. E.g. those that set an asking price and get personally offended when someone offers a little less than that.

TheJP

Myci85 said:

TheJP said:

Myci85 said:

Wow, always so much negativity on these boards towards FTB. I think a lot of people forget that they too were once a first time buyer, and it's a process you inevitably have to learn about as you go along. Better to ask questions when learning about something than not. It's like when people are impatient and rude to learner drivers - we all have to start somewhere!

OP, as you look at a few houses, and see some selling, you'll start to get a feel for how fast properties you're looking at are selling, and hence how likely lower offers are to be accepted. Also, there's nothing wrong with testing the waters out if you like a place and making an offer to see the response. I set my rightmove search to include properties a little over budget, I wouldn't go and view these properties if they were new to market unless only slightly above my top budget. But if they had sat on the market for a while, it's worth a try. 

All backed up by experience of which the posters on the forum have bought and sold properties. I did my research as an FTB, looked at other properties and offered the asking price because we wanted the house, it was in good condition and comparable to other similar properties. 

I would argue that asking people who are more experienced than you is a form of research. I'm a FTB and have learnt an awful lot from people on these forums. 

Thats exactly my point, a good FTB does their research and realises that expectations need to be realistic and managed well. Unfortunately there are more FTBs out there that dont do any of that but come with a sense of entitlement.

Bigphil1474

People keep saying it's an asking price. It isn't. It's a marketed price. EA's will set the marketed price in a range from below their estimated value of the property to above the estimated value based on a variety of factors which will determine how quick it will sell - they don't get their money until it's sold. Sometimes a price above real value will give the seller some wiggle room to come down and still achieve the price they need, and sometimes a below value price will drum up lots of interest and lead to multiple offers pushing the price up. I doubt many properties actually get marketed at the exact price the property is worth even if you could objectively measure that anyway. The closest you can get is probably a RICS surveyor valuation, but even then they have a degree of guess work.

OP, on the basis that you can't just look at a properties listing and know what it's worth, you need to research the area and try and work out whether the marketed price is on the high or low side, factor in what you can afford, and make an offer which you think may get you the property, or at least get the negotiations going, without over extending yourself. If you really love a house, you'd probably offer closer to the MP, but if you aren't too bothered, then a cheeky offer might be more appropriate. You aren't going to upset anyone - when we sold our house earlier this year, we didn't start booing when we got a lowball offer, we just politely refused it and moved on.

peterhjohnson

You should definitely consider property listed at prices above your top limit. You shoul also take the time to get to know your market segment well. When I was FTB I offered 17% under asking for a house that was overpriced and after a lot of argy bargy, I got it at my (sensible) price, probably because no one else was cheeky enough to battle the initially delusional seller
Now older and wiser, I realise how brash and lucky I was but I'd still look 10% over my limit 😀

RHemmings

peterhjohnson said:

You should definitely consider property listed at prices above your top limit. You shoul also take the time to get to know your market segment well. When I was FTB I offered 17% under asking for a house that was overpriced and after a lot of argy bargy, I got it at my (sensible) price, probably because no one else was cheeky enough to battle the initially delusional seller
Now older and wiser, I realise how brash and lucky I was but I'd still look 10% over my limit 😀

I'd like to hear more details of the argy bargy. I think it would help a lot of people, including possibly the OP here, to know what your process was in bargaining and how the seller reacted. Is there a thread where you have described the process already? 

Albermarle

Sometimes a price above real value will give the seller some wiggle room to come down and still achieve the price they need, and sometimes a below value price will drum up lots of interest and lead to multiple offers pushing the price up

A good example is recently a family member was interested in a property .

It was a pretty standard 3 bed 1970's semi, seemed in ok condition but needed updating.

Asking price was £600K ( South East) but seemingly no interest and was dropped to £550K. Within 3 days - three offers, all proceedable. Two below asking and one at asking ( according to EA) . Final round of bids invited - sold for around £575k. So reducing the asking price resulted in a sales price probably close to what they wanted in the first place.

eurobabe

Have a look a properties just out of your price bracket as prices do drop if not enough viewings. Also do your research on similar properties what they sell for and are in for. If you do get accepted on a lower offer do realise that from then all the way until the sale goes through another buyer could be accepted with a higher offer and you could lose your dream property.
We found a property we really liked that was sold STC but that fell through, we viewed a day after it came back in the market and then had a full price offer accepted. I was very tempted to put in a lower offer but the agent said they'd had alot of interest and previous buyer had a full price offer accepted. I later found out after our offer was accepted they'd had 14 viewings in 2 weeks, so happy we secured the home.
Understand you want a bargain like everyone but sometimes homes are priced well and you're up against with competition from other buyers.

annetheman

Hmmm I've never heard of any 'recommended' %age below asking to start at - my experience is purely anecdotal:

I've offered in Jan and Feb in London on 2 properties - both offers were accepted (I had to pull out of the Jan one) below asking, £5k below on the Jan one and £25k below on the Feb one.

I put the feelers on an offer in London £25k below and that was going to be rejected and countered for £10k below (apparently).

In March, my dad (cash buyer no chain) then had his offer rejected £15k below asking in Surrey. 

I think a lot of it has to do with the sellers, rather than region. How motivated are they to sell - are they 'desperate', are they not really bothered either way if they sell or stay - for whatever reasons.

So for the Surrey rejected, that person was buying another property, so I guess they had a 'threshold' so they could afford something within a certain budget.

For the London rejected, that person was selling their dead husband's probate investment house, no motivation to move quickly.

For the London accepted, both landlords with empty BTLs, wanted to get rid quick (actually that was the reason for the first collapse!).

So I'd try to guage as much from the EA's info on the seller's position to try to work out if an offer below is even agreeable, then the amount below might be much more based on condition of the house, compromises with it etc.

BikingBud

annetheman said:

Hmmm I've never heard of any 'recommended' %age below asking to start at - my experience is purely anecdotal:

I've offered in Jan and Feb in London on 2 properties - both offers were accepted (I had to pull out of the Jan one) below asking, £5k below on the Jan one and £25k below on the Feb one.

I put the feelers on an offer in London £25k below and that was going to be rejected and countered for £10k below (apparently).

In March, my dad (cash buyer no chain) then had his offer rejected £15k below asking in Surrey. 

I think a lot of it has to do with the sellers, rather than region. How motivated are they to sell - are they 'desperate', are they not really bothered either way if they sell or stay - for whatever reasons.

So for the Surrey rejected, that person was buying another property, so I guess they had a 'threshold' so they could afford something within a certain budget.

For the London rejected, that person was selling their dead husband's probate investment house, no motivation to move quickly.

For the London accepted, both landlords with empty BTLs, wanted to get rid quick (actually that was the reason for the first collapse!).

So I'd try to guage as much from the EA's info on the seller's position to try to work out if an offer below is even agreeable, then the amount below might be much more based on condition of the house, compromises with it etc.

In the same manner stating £5k below, £25k below are meaningless, especially as the prices in the SE are so much higher than elsewhere in the UK where £25k may be a significant percentage.

BikingBud

youth_leader said:

If you have a definite area and style of property in mind and know the postcode, you can see the past sale prices on RightMove.  

If you do offer less than asking because you feel it is overpriced, you can then justify it. 

If you offer under the asking price what reason would you give?  As a vendor I would expect the EA to price my house according to its condition, so would not offer a buyer a reduction for a new bathroom/kitchen, that is personal choice.  It is difficult because it is only when you have offered and had a survey you know the facts.

Why does it need to be justified? And to whom? 

On the flip side many owners put in that new bathroom and kitchen expecting it to increase the value but are frequently shocked to see the expense they committed in installing their own weird choices makes no difference.

And as to your last point that counters much feedback that we see on here where people often get grief for suggesting that problems found at survey are grounds for price reduction.

It seems nothing will ever be correct and at the end of the day you need to satisfy your self that your are getting VFM. Offer why you are comfortable with.