First Time Buyer - What offer to put in?

Skyhigh

Any advice appreciated

I'm looking at buying a property with my partner, we think we've found the one we like. [5 year old, 3 bed semi-detached @ £129,995]
- I live in a 'cheap'/deprived area, this also means that stamp duty is set at £150k.

Apparently the house has been reduced 'for a quick sale' although the estate agent wouldn't tell us its original price, nor can I find it online.
Houses of the same build (exactly the same layout, etc) on the estate are also for sale at £129,995 - so to me it seems like its the average price.

The vendor mentioned that they wanted to move closer to the city where they both work, so surely that shows that they have a reason to move - rather than just wanting a different house. Also they mentioned that they had seen a few nice properties but couldn't make an offer or commit to them until they had an offer on their own property....a good sign surely?


Being a first time buyer, therefore no chain and almost immediate funds, along with a 10% deposit available and the current 'state' (and fear) of the house market, we don't want to go in at the asking price.
Plus there are quite a few houses for sale in the area, since everyone jumped in before the HIP's (the house we like, went on the market 4 days before HIP's for 3 bed properties!) - so the markets not moving too fast. It's been on the market since 6th Sept 2007 (so 4 months).


So the debate.
My partner and a few others think we should offer at about £125k.
I on the other hand, and most of the mortgage advisers and friends I've spoken to say to go in low - since you can always go UP and they can't exactly "ban" you from trying to buy their house.

What do you think would be a realistic offer? £122k? £127k? £114k? £119k?

From looking at nethouseprices.com I found that they bought the house new in 2004 for £109,995 - so they're looking for £20k profit on their house over 3/4 years.



Mortgages:
So many products at so many places (each bank/society seems to have 40+ variations).

I've used Fool and various other sites and it seems that Abbey give one of the best rates for simple repayment + interest.

Are there any market-leaders I've missed out on that offer good terms for 2/3/5 year fixed rate of variable?
Someone said that Abbey or another bank offer a variable/tracker at 0.5% above base rate - but I can't see any products like that, only 1.5%.

So far I've been to Skipton, YBS, HSBC (my own bank, not helpful), Bank of Scotland and Abbey for 'Key Facts' documents. All have offered me various amounts at different rates (usually based on borrowing £116k, 25 year term, straight forward repayment+interest), but Abbey still seems to come out on top with their 2 year fixed rate......

I've looked into 'graduate mortgage', but they all seem to be just like the other 'offer' mortgages - they lure you in with a nice offer, such as cash back or similar, but then stuff you on the APR/Rates/Interest/Product_charges for the rest of the term (or a good 2 to 5 years of the term). Therefore, costing more overall.


:!:

emmamc252

i've just had the same predicament as yourself, we;ve now had our offer accepted. personally i would say go low and be prepared to wait. we are ftbs too and to be honest the whole process of haggling was really quite scary to me, and in all honesty it was very stressfull but now i;m really glad that we perseveered. in our case the house we wanted was up for 230 originally and after 8 weeks they dropped the asking price to 223. we went in with an initial offer of 200k which they said they would not consider, we expected this. we then waited about 5 weeks, we then upped our offer to 208, they took 4 days to think about it but hten accepted. its not a huge percentage off like some people on here clain to get but its roughly 10 percent off the original or about 7 off this. like i said we did get really stressed out but its worth it now. at the same time we put in offer on another one that we liked but not quite as much, it was up for 230 and we put in 200, said no way and then came back with 25, then 210 and then about a week ago phoned and said ok, 200 but we had already got the other by then. so people are dropping, might just have to wawit it out. if you look at my other posts, i did one having a moan saying why are people not willing to drop, given time they both dropped to what they swore they never would!

good luck and don't panic!!!!

Skyhigh

Thank for the reply, I guess that sums up the entire process we're going through - scary.

An average I've picked up on is that people usually offer 90% of the asking price, most people say "knock at least 10 to 15% off the asking price with your offer".

So on £129k that would be about £116k....hmmm.


My main motivation is: "for every £1 I can knock off the actual value, it saves me over £1.20 in mortgage interest payments so I save not £1, but about £2.20".
So even getting £1k off saves you £2k+.

:!:

ginvzt

Skyhigh wrote: »

Any advice appreciated

I'm looking at buying a property with my partner, we think we've found the one we like. [5 year old, 3 bed semi-detached @ £129,995]
- I live in a 'cheap'/deprived area, this also means that stamp duty is set at £150k.

Apparently the house has been reduced 'for a quick sale' although the estate agent wouldn't tell us its original price, nor can I find it online.

<...>

From looking at nethouseprices.com I found that they bought the house new in 2004 for £109,995 - so they're looking for £20k profit on their house over 3/4 years.
:!:

Have you checked property snake? They show how much houses were reduced.

Btw, if it was bought new in 2004, it is not 5 years old.

sodamhall1

Have you looked at direct line for your mortgage? They currently have a 2year fixed at 5.79% with a £499 fee added to mortgage, no higher lending charge as long as you borrow 90% witch I understand you are.
I would offer £119,500 by the way and expect to pay about £123,500

poppy10_2

£117k, let them bargain you up to £120k max.

dbuk44

sodamhall1 wrote: »

Have you looked at direct line for your mortgage? They currently have a 2year fixed at 5.79% with a £499 fee added to mortgage, no higher lending charge as long as you borrow 90% witch I understand you are.

Strongly suggest you follow Martins guide for obtaining best rate.
Cursory glance at best rate tables found:

5.64% fixed rate until 31/01/201
Arrangement fee £399
LTV 95%
No higher lending charge (paid by lender)
http://www.postoffice.co.uk/portal/po/content1?catId=58200695&mediaId=59100695

Skyhigh

My mistake, the house is about 4 years old - although to me theres not much difference since I've never lived in a 'new' (ish) home, my family home is a 1930's semi
[Sockets that are flush to the wall are still a thing I've admired in new houses ]


I'll have a look at the mortgage guide, I've downloaded it already but have to get on with reading through it (probably during lunch today).

Although it may be the best rate, I'm not sure how I feel about a mortgage with the Post Office, although it's very secure - I'd still like to go in and talk to someone about everything, just to allay any of my fears/concerns. So far it all seems like it over the phone only.

I've looked at property snake on and off for the past 6 months, unfortunately there aren't many properties that show up in my area. Seeing as I live almost in the middle of nowhere.


Assuming that an offer is eventually accepted (either on this house, or another), whats the average time for completion?

I know it can depend on the entire chain - but a general average seems to be 2-3 months (minimum of 6 weeks just for completion of exchange).
During this period, I can see myself using this site even more for gas/electric/broadband/call deals, etc.
Better to start off on a good MSE based footing with the new house

:!:

Jerryuk

Logically, given that there are other similar properties available and the market is seemingly falling I would go in way low and be prepared to wait. (I'm assuming you have no serious need to buy right now). I'd perhaps go in at 112k as an initial offer (many people will reject the first offer automatically) and work up from there - what have you got to lose (assuming you don't have your heart set on this specific property)? If it's true that many fixed-rate deals are due to end soon and new deals are hard to find you might find they are utterly desperate to sell a.s.a.p.

Remember that what they paid for it is irrelevant to you: It's only worth what they can sell it for. It will no doubt be in the front of their minds when they consider your offer however, hence the need to play the waiting game.

Jerry

firesidemaid

i would say an average time to sale is 3-4 months, perhaps longer if you are in a long chain. you don't always exchange early - you can even sometimes exchange and complete on same day.

don't add fees to the mortgage, as you will just pay interest on them - make your mortgage loan the lowest it can possibly be and see if you have the option of overpaying (eg. 10% per year) so you can pay it off quicker and pay less interest.

your journey will be stressful at times and you will learn a lot along the way - good luck x

RedTomato

Does this house have any features that make it better than the other houses on the estate now on for the same price? It means nothing that the house is "reduced" if it is now the same price as similar ones, just means that they put it on too high in the first place.

Offering £125 sounds far too much if there are several houses languishing at the same price. Would any of these houses on the estate be OK for you? Why not offer £100k on several and see which will come down most? We are now in a buyer's market with many first time buyers struggling to get enough deposit for a reasonable mortgage - or second time buyers for that matter if they've gone too far on the equity release, so you are in a strong position. Don't be embarrased to offer low, you're going to live with this debt for many years!

Where in the UK are you? Stats for certain areas will show little growth since 2004.

If these people are buying elsewhere, they can also try to get a discount on the house they are buying to even things up.

As for the buyers telling you why they want to move. Who knows if it is true or not? Just drive by there a few times at night and at the weekends and see how it's looking/sounding.