Buying a House

bulletv1 · 20 Oct 2014 at 16:24

Hi people,

Just got a mortgage approved to buy a first house for me and my finacee. Looking at houses for £200K but would go up to 210 if we found a nice one. Just wondering if anyone has any advice that might be handy and when making an offer on the house. Do I be really tight and offer a lot less that they are asking for it it? the mortgage i've got comes with a free valuation of the property buy for surveys etc who would i go and get those with? And anything else that might help?

Zefan · 20 Oct 2014 at 16:31

I assume you mean a decision in principle? A mortgage is only "approved" upon a survey to valuate the property - the bank needs to know what they are investing in.

As for tips re: offers, it depends. Some sellers refuse to overprice their houses and as a result are often less inclined to negotiate very much as they know their price is fair.

My advice is... check online for valuation calculators, entering in last sold price and date. Use that value but take in to account any improvements done while they have owned it. Check other sold prices in the area, and check out online for any planning permission currently submitted around the area. If these things all add up and do not seem to correlate with the asking price, you have your points to negotiate on.

I'd say estate agents typically compete with others in terms of offering a high valuation to gain the seller's custom. People also tend to start off higher because they know they will get cheeky offers and want to build in negotiating room. It is likely you can work out the "real" value yourself online, and I'm willing to bet the asking price will be around 10% higher than that.

Make sure upon negotiating with your offer you state that you are a first time buyer and that you can complete quickly as you do not have a house you need to sell, aka chain free.

stuie · 20 Oct 2014 at 16:32

There no hard and fast rule.

In terms of making offers youve got to be sensible and also see the potential of the house not just what it looks like now.

Is it in a good area but in need of work? Is the work needed drastic or are you just looking at a bit of redecoration?

When i bought mine it was in an ok area but because it needed work both inside and out a lot of people weren't interested even though it was priced to sell. I knew this was happy to slap a bit of paint around and get new carpets and so put an offer in about 5k under the asking price and it was accepted that day, 5 years laters having spent around 5k tarting it up im sat on a house worth around 30k more than I paid for it and thats even through a relative lull in the housing market.

If youve found the one you want and can see a future in it theres no point getting the backs up of the people selling over the price of a second hand hatchback 5-10k now may seem like a lot but its better have the place you love and in 25 years it really is small change as long as your getting reasonable value now.

D.P. · 20 Oct 2014 at 16:34

bulletv1 said:
Hi people,

Just got a mortgage approved to buy a first house for me and my finacee. Looking at houses for £200K but would go up to 210 if we found a nice one. Just wondering if anyone has any advice that might be handy and when making an offer on the house. Do I be really tight and offer a lot less that they are asking for it it? the mortgage i've got comes with a free valuation of the property buy for surveys etc who would i go and get those with? And anything else that might help?

House prices are increasing and properties in many areas aren't sitting around long. Good houses are sometimes going for more than the asking price for example.

if you are flexible and have no urgency you can try to low ball but I wouldn't recommend doing that on a house you set your eyes on. If the owner gets another offer nearer the asking price the you wont get a second chance. Plus if your low offer is insulting they wont even other with a counter (not least the fact they wont expect to talk you up to near the value they had in mind).

Low balling works best on sellers who are desperate. This comes form 2 scenarios: 1) a really bade house that needs a lot of work such that no one is interested 2) someone who urgently needs to sell due to loss of job, relocating with job, in a mortgage chain, or previous buyer fell through.

A regular house and seller wont be under such pressure to accept low offers. Typically you can cut a few percent.

Zefan · 20 Oct 2014 at 16:36

stuie said:
5 years laters having spent around 5k tarting it up im sat on a house worth around 30k more than I paid for it and thats even through a relative lull in the housing market.

A relative lull? Depending on when you bought it in 2009 you could be looking at almost a 10% (average) rise in house prices compared with when you bought it!

:Edit: I got my maths wrong, it could be nearly 30%

stuie · 20 Oct 2014 at 16:38

Zefan said:
A relative lull? Depending on when you bought it in 2009 you could be looking at almost a 10% (average) rise in house prices compared with when you bought it!

:Edit: I got my maths wrong, it could be nearly 30%

It was august 2009

10% average over 5 years is a relative lull of under 2% a year on a house thats gone from £160,000 to around £190,000

As for 30% not sure where you got those figures from, central london maybe but outside the capital less so

Zefan · 20 Oct 2014 at 16:45

stuie said:
It was august 2009

10% average over 5 years is a relative lull of under 2% a year on a house thats gone from £160,000 to around £190,000

As for 30% not sure where you got those figures from, central london maybe but outside the capital less so

Managed to find this article which has a pretty graph http://www.bbc.co.uk/news/10620450 Obviously London (and the south east in general) has a skewing effect on the national statistics so I may be wrong dependent on your area but I'm pretty certain the rising market is responsible for the majority of your 18% rise in value.

http://www.nationwide.co.uk/about/house-price-index/house-price-calculator

That calculator seems to suggest a 17.5% rise after plumbing in the sold price & date.

balky12 · 20 Oct 2014 at 16:48

stuie said:
It was august 2009

10% average over 5 years is a relative lull of under 2% a year on a house thats gone from £160,000 to around £190,000

As for 30% not sure where you got those figures from, central london maybe but outside the capital less so

By my maths it's double that. 4% rise year on year. ~20% rise in house price in 5 years.

PapaLazaru · 20 Oct 2014 at 16:51

stuie said:
As for 30% not sure where you got those figures from, central london maybe but outside the capital less so

My house in Reading has been valued at 25% more than when I bought it 18 months ago.

For the OP, it really depends, but if you find that house you have been looking for I would suggest not mucking about and risking losing it. Just go for it at asking if you really want it.

bulletv1 · 20 Oct 2014 at 17:22

Zefan said:
I assume you mean a decision in principle? A mortgage is only "approved" upon a survey to valuate the property - the bank needs to know what they are investing in.

Yeah that's what i mean. Well the houses i'm looking at are ones with decent size gardens and 3+ bedrooms and i get what is said in other posts about places that might need some work as I've got £30k set aside for any issues and kitting out the house how we would like it.

So might knock a few % off their asking price if we like the place and see how it goes from there.

Thanks for the tips people

[TW]Fox · 20 Oct 2014 at 17:27

PapaLazaru said:
My house in Reading has been valued at 25% more than when I bought it 18 months ago.

Why do people always think this is amazing? It's not - unless you wish to stop owning a house or you wish to buy a smaller or less valuable house you don't win when prices appreciate - because your next house has appreciated as well, so is even more expensive than it was. As you generally upgrade as you go it means it will cost you more money to do so than it would had the market grown 0%.

Very few people actually 'win' with property price appreciation - generally only those who bought for investment purposes or are exiting the market entirely.

Mynight · 20 Oct 2014 at 17:32

An awful lot of people who own a house are asset rich but cash poor. My house in reading is up 38% from 2 years ago but it's sod all use to me as its a rental. I could up the price but tenants a good one currently.

D.P. · 20 Oct 2014 at 17:41

[TW]Fox;27083306 said:
Why do people always think this is amazing? It's not - unless you wish to stop owning a house or you wish to buy a smaller or less valuable house you don't win when prices appreciate - because your next house has appreciated as well, so is even more expensive than it was. As you generally upgrade as you go it means it will cost you more money to do so than it would had the market grown 0%.

Very few people actually 'win' with property price appreciation - generally only those who bought for investment purposes or are exiting the market entirely.

Indeed, it is pointless unless you sell up and live in a caravan.

So you 200K first home is now worth 250K, you still have that 180K mortgage to pay off. And if you want to upgrade to that dream house that you saw that was originally 500K, well now it is worth 625K so despite your 25% increase you ill have to find another 75K compared to if house prices remained stagnant.

radderfire · 20 Oct 2014 at 17:47

bulletv1 said:
Hi people,

Just got a mortgage approved to buy a first house for me and my finacee. Looking at houses for £200K but would go up to 210 if we found a nice one. Just wondering if anyone has any advice that might be handy and when making an offer on the house. Do I be really tight and offer a lot less that they are asking for it it? the mortgage i've got comes with a free valuation of the property buy for surveys etc who would i go and get those with? And anything else that might help?

Phil Spencer of Location, Location, Location fame has a book called "How to Buy Your First Home" that might be worth a read.

My advice for any negotiation is to always be polite yet be really tight with your first offer as it is only by offering less that you find what is truly the best price. Surely it's a buyer's market at the moment too.

Rgds

Zefan · 20 Oct 2014 at 18:01

bulletv1 said:
Yeah that's what i mean. Well the houses i'm looking at are ones with decent size gardens and 3+ bedrooms and i get what is said in other posts about places that might need some work as I've got £30k set aside for any issues and kitting out the house how we would like it.

So might knock a few % off their asking price if we like the place and see how it goes from there.

Thanks for the tips people

Why set 30k aside when you could stick lots of it in to your deposit? Doesn't make much financial sense to me unless you're planning on doing major work such as an extension. Also no, don't just knock percentage points off the price if you like it! Have a reason!

bulletv1 · 20 Oct 2014 at 18:24

Zefan said:
Why set 30k aside when you could stick lots of it in to your deposit? Doesn't make much financial sense to me unless you're planning on doing major work such as an extension. Also no, don't just knock percentage points off the price if you like it! Have a reason!

I'm putting £100k down and would like keep the other £30k for "just in case" funds and getting married etc.

The_Abyss · 21 Oct 2014 at 00:24

I've started to lose count of the houses I've bought and sold (it really isn't that many - 9 or 10 now) but a few things I've learned along the way:

- don't be scared to make a silly offer if it is the amount you're prepared to pay. £30,000 off a £300,000 house sounds like a fortune, but it is just 10%
- if you really want to buy then personalise the deal. Talk to the vendors and try and empathise with what makes them tick (dream house, want to raise kids here just like you did etc). Silly stuff, but if it comes down to you and another buyer, you'll get the nod
- keep back more cash than you need, provided it doesn't compromise your mortgage rate. You'll be able to overpay it back anyway and the spare cash comes in useful for unforeseen bills or discretionary expenditure once you're in
- always, always go back and see the house again more than one time, at different times of the day. Replicate you living there, and try to spend more time thinking about it than buying a car. Most people don't
- unless it truly is the dream house, don't get emotional about it. Yes, the house might have a few things you want, more than the last house you saw, but houses are generally everywhere and most are very similar in the same area. Another one will come up before long - if you don't need to move straight away then take your time
- enjoy it

bulletv1 · 20 Jan 2015 at 16:06

Well now just waiting to exchange contracts. put 90K down on a house for 177k. Got to spend some money renovating but should be fun.

radderfire · 20 Jan 2015 at 17:12

bulletv1 said:
Well now just waiting to exchange contracts. put 90K down on a house for 177k. Got to spend some money renovating but should be fun.

Great, I hope all goes well. Are you any good at renovating?

Ev0 · 20 Jan 2015 at 17:26

[TW]Fox;27083306 said:
Why do people always think this is amazing? It's not - unless you wish to stop owning a house or you wish to buy a smaller or less valuable house you don't win when prices appreciate - because your next house has appreciated as well, so is even more expensive than it was. As you generally upgrade as you go it means it will cost you more money to do so than it would had the market grown 0%.

Very few people actually 'win' with property price appreciation - generally only those who bought for investment purposes or are exiting the market entirely.

Exactly, we sold our last house at a 'loss' due to lower prices, about 7.5% drop I think. But the house we were buying had a higher percentage drop off a higher value which made it 'cheaper' to buy than if we'd bought it originally, which we couldn't have afforded. Yeah you've still lost money but have been able to buy something that was previously out of reach.

One thing though that price increases are handy for is bumping up the LTV when it comes to mortgage deals, allows you to get a better rate come remortgage.

For instance we bought with a 90% LTV on this place, however due to increases in the last 18 months plus the small amount of capital we've paid off our LTV now is more likely nearer 70%, which will in turn give me a better rate that I can use to keep my payments the same but knock a few more years off the term.