How much should we offer?

Albermarle

MrPants11 said:

michael1234 said:

IOWJJBTM2025 said:

I dont think there is a rule of thumb. There are many factors for why a person would accept an offer. They will have an estate agent who is well practiced in negotiating and trying to get the most for the house.
The sellers may want a quick sale and if you can offer this it may sway for instance.
Another factor is if houses are selling in the area - some areas have queues of people waiting for houses to come on the market and therefore the chances of accepting a low offer from the first person.
I suppose that there are things that you can do as a buyer to make yourselves attractive to a seller - proving that you can get the mortgage, have no chain etc.

I would agree with your answer to the OP's question - there are no rules here.

However, when it comes to EA's motivation, I think it is a common misconception that EA's want to sell at the highest possible price. I mean yes most are on percentage commission so will earn more the higher the property sells for but in reality they just want to sell and sell as quickly as possible. 1% of say 750K is virtually the same as 1% of 725K. Therefore their job is to gently persuade the seller to reduce (after their own ludicrous valuation was agreed in order to sign the seller up to the EA) and get the buyer to offer at least as much as the EA thinks the seller will accept.

Thanks for the comment, is it safe to assume that Estate Agents do inflate values and vendors are aware that properties won’t necessarily make the asking price? This particular property was reduced in September. With the amount of properties on the market and the amount that are being reduced our thinking is that it’s a buyers market and we should be able get value. We are in no great rush either, we can weigh up all options available, we just want to make a good decision.

There seems to have been some general reduction in asking prices as a response to a slower market.
However actual sold prices seems to be reasonably stable ( although the data is always a bit delayed)
Could be that once Xmas is over and most likely another drop in interest rates, the market could pick up a bit.
Also regionally the market seems to be under more pressure in higher priced areas ( like London and the South East) than in the cheaper parts of the country.

BikingBud

Or maybe not!

ReadySteadyPop

Albermarle said:

MrPants11 said:

michael1234 said:

IOWJJBTM2025 said:

I dont think there is a rule of thumb. There are many factors for why a person would accept an offer. They will have an estate agent who is well practiced in negotiating and trying to get the most for the house.
The sellers may want a quick sale and if you can offer this it may sway for instance.
Another factor is if houses are selling in the area - some areas have queues of people waiting for houses to come on the market and therefore the chances of accepting a low offer from the first person.
I suppose that there are things that you can do as a buyer to make yourselves attractive to a seller - proving that you can get the mortgage, have no chain etc.

I would agree with your answer to the OP's question - there are no rules here.

However, when it comes to EA's motivation, I think it is a common misconception that EA's want to sell at the highest possible price. I mean yes most are on percentage commission so will earn more the higher the property sells for but in reality they just want to sell and sell as quickly as possible. 1% of say 750K is virtually the same as 1% of 725K. Therefore their job is to gently persuade the seller to reduce (after their own ludicrous valuation was agreed in order to sign the seller up to the EA) and get the buyer to offer at least as much as the EA thinks the seller will accept.

Thanks for the comment, is it safe to assume that Estate Agents do inflate values and vendors are aware that properties won’t necessarily make the asking price? This particular property was reduced in September. With the amount of properties on the market and the amount that are being reduced our thinking is that it’s a buyers market and we should be able get value. We are in no great rush either, we can weigh up all options available, we just want to make a good decision.

There seems to have been some general reduction in asking prices as a response to a slower market.
However actual sold prices seems to be reasonably stable ( although the data is always a bit delayed)
Could be that once Xmas is over and most likely another drop in interest rates, the market could pick up a bit.
Also regionally the market seems to be under more pressure in higher priced areas ( like London and the South East) than in the cheaper parts of the country.

https://www.homebuilding.co.uk/costs-savings/house-prices/mortgage-rate-rises

I think mortgage rates will be going up, and depending on your view of the Yen carry trade it could be up by quite a bit. With new-build sales already at 15 year lows I can`t really see any sort of market "pick up" on the horizon, maybe as prices across the board adjust to the new economic reality but not before.

Bigphil1474

OP, EA's generally value a house at a marketing price. That's the price they think will attract buyers. At the £250k range of properties, that might be based on 230-250, with 250 being the top end. It could be 240-260 etc. The vendor could go with what the EA suggests or go a bit higher or a bit lower. If the property has been reduced by 10k+ then it's probably got to the lower end of the marketed value range. It's not scientific though. The EA will look at other houses in the area, what they've sold for, what other EA's have valued at etc. and plump for a figure. Give or take a bit, I'd take the marketed price as a decent starting point.

You then have to consider the vendor factors - are they in a rush to sell - good for a low offer, are they in no rush to sell - bad for a low offer, are they deluded into thinking their pride and joy house is a palace - bad for everything. Then there's local competition - loads of similar houses at similar prices etc. helps the buyer, more buyers than sellers, doesn't help buyers. 

Personally, unless the house is a dream house, I'd be looking to offer anything up to 10% below the marketed price depending on the other factors and go up from there. I wouldn't offer above the marketed price out of principle. If it was originally up at £250k then reduced to £240k, I'd maybe offer £220k ish and see what happens. Ultimately, if you need a mortgage and the lender doesn't value the house at the price you are paying, then you're doomed anyway.

Herzlos

You can always ask the EA what sort of figure the seller is likely to accept. They won't be able to tell you something direct like "The seller wants £a" but if you ask if "£b is likely to accepted" or "am I wasting my time with £b?" they should be able to give you an idea. 

Beyond that there are too many variables, so you really just need to find somewhere you like, make an offer you think is fair and can afford, and get the conversation started. 

You do have the advantage of no chain, which some sellers prefer. We lost a house to a lower bidder because we had a chain and the seller didn't want to wait. 

Albermarle

ReadySteadyPop said:

Albermarle said:

MrPants11 said:

michael1234 said:

IOWJJBTM2025 said:

I dont think there is a rule of thumb. There are many factors for why a person would accept an offer. They will have an estate agent who is well practiced in negotiating and trying to get the most for the house.
The sellers may want a quick sale and if you can offer this it may sway for instance.
Another factor is if houses are selling in the area - some areas have queues of people waiting for houses to come on the market and therefore the chances of accepting a low offer from the first person.
I suppose that there are things that you can do as a buyer to make yourselves attractive to a seller - proving that you can get the mortgage, have no chain etc.

I would agree with your answer to the OP's question - there are no rules here.

However, when it comes to EA's motivation, I think it is a common misconception that EA's want to sell at the highest possible price. I mean yes most are on percentage commission so will earn more the higher the property sells for but in reality they just want to sell and sell as quickly as possible. 1% of say 750K is virtually the same as 1% of 725K. Therefore their job is to gently persuade the seller to reduce (after their own ludicrous valuation was agreed in order to sign the seller up to the EA) and get the buyer to offer at least as much as the EA thinks the seller will accept.

Thanks for the comment, is it safe to assume that Estate Agents do inflate values and vendors are aware that properties won’t necessarily make the asking price? This particular property was reduced in September. With the amount of properties on the market and the amount that are being reduced our thinking is that it’s a buyers market and we should be able get value. We are in no great rush either, we can weigh up all options available, we just want to make a good decision.

There seems to have been some general reduction in asking prices as a response to a slower market.
However actual sold prices seems to be reasonably stable ( although the data is always a bit delayed)
Could be that once Xmas is over and most likely another drop in interest rates, the market could pick up a bit.
Also regionally the market seems to be under more pressure in higher priced areas ( like London and the South East) than in the cheaper parts of the country.

https://www.homebuilding.co.uk/costs-savings/house-prices/mortgage-rate-rises

I think mortgage rates will be going up, and depending on your view of the Yen carry trade it could be up by quite a bit. With new-build sales already at 15 year lows I can`t really see any sort of market "pick up" on the horizon, maybe as prices across the board adjust to the new economic reality but not before.

Central banks poised to cut interest rates before Christmas

It seems the OBR is predicting a short term drop in the BoE rate and then in 4 years time rising back to where it is in now.
At the same time it is predicting that the 10 year gilt yield will rise 1% over the same period, putting some pressure on mortgage rates, despite relative stability in the BoE rate. However the graph they show has 10 year gilt yields already at 5% going into 2026, whilst today they are actually 4.5%.

So maybe the best guess is some stability, but in 4 years anything can happen.

MrPants11

Thanks for all of your comments. It’s wonderful to have such a supportive community.

We have an update, offer accepted. Asking price was £2600000, first offer rejected at £235000, raised to £242500 and settled on the vendors counter offer of £245000.

Lessons learned, do your research, and don’t be scared to put a low offer in to set expectations for the vendor. 

Again, thanks for your help.

Albermarle

Nearly 6% off, so a good result.
Probably as a newbie to house buying, you should continue to look at the forum. There are lots of threads about conveyancing issues, worrying surveys etc .