I sold a house as an executor just over a year ago, priced at 250k, and accepted 245k. The same house is back up for sale now at offers OVER 275k, and from looking at the pictures, they haven't even changed the carpets. Chancers.
Tips for making an offer on a property?
- Thread starter inferno
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If you don't ask you don't get! The estate agent should be passing over all offer regardless of value. If you actually want a cheeky offer to be accepted you need to back it up with cash money ready to go in the bank.
He said the property has been on the market for months, so it seems unlikely that it would go for more than the asking price unless it has been reduced during that period.
Again depends on the area / market conditions; that's only a ~12% increase in asking price above sale price in over a year, and in some areas prices are increasing by over 12% a year. Somewhere like Luton they'd be foolish putting it on under £275k assuming previous sale was average price for that type of house.
Edit: to answer the original question, I don't think there is any rule of thumb in terms of percentages or whatever. In your shoes I would first of all figure out how much the house is worth relative to its peers i.e. Based on sold and asking prices for comprable properties. Then given the fact it has been on the market for a while and your FTB card make an offer slightly under whichever is lowest out of that level and the actual asking price.
It may also be worth considering what alternatives you have available; if you are struggling to find suitable properties then I would be more inclined to bid closer to the asking price to close the sale and avoid missing out. If it is just the first choice out of a long list then it doesn't really matter so much if you get a flat rejection, at least you know where you stand then.
Of course the vendor's position matters too in terms of whether FTB appeals. Personally in our situation I would be more inclined to accept an offer under asking price from a chain-free buyer but given local market conditions I wouldn't be expecting a massive discount.
I actually think the likelihood is that it is more likely the second bid a buyer makes that will determine whether I consider them a time-waster than the first. I don't think I would ever reject a buyer out of hand based on a first bid - I would just tell the agent no and then see if a sensible bid is made. SO e.g. Say we market our property at £310k a fair rate for this type of house, on the cheaper end of the scale due to poor decor. A bid comes in for £275k, I reject it relaying my expectations to the agent i.e. All houses of this type sold lately have gone for £300k+. Then the buyer comes back upping their bid to say £282k. To me that implies they probably aren't going to get up to an acceptable level so I'll tell the agent to get rid of them until they want to make sensible offers. Alternatively if they were just chancing their arm and came back with a more realistic bid at £295k or thereabouts then it might be worth entering into a negotiation there and then.
As I said originally though - there is no rule of thumb.
Finally one of the issues I suppose is that there is an expectation in the market that people should/will bid under the asking price and hence some vendors feel they should price their property at the high end so that the 'I'm going to bid x% under asking price' brigade will be coming in higher than if the property was priced lower to begin with. This then becomes a bit of a vicious circle because sellers price high on the expectation that buyers will seek to grab a bargain, and conversely buyers will bid low because they expect property to be 'overpriced'.
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Soldato
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This thread really gets my goat.
First, when an estate agent values a house it is totally arbitrary. And they do say to sellers to put it on the market for 5 to 10% more than they want to get for it.
Second, the issue becomes circular. If everyone puts their houses on for 5 to 10% more then this pushes up prices as the next person who comes along needs to price their house higher in the first place to be able to move up the chain.
It also shows why house prices will never fall in nominal terms even in a recession. People just hold on to their assets in a market slowdown. They can't reduce prices because the chain above isn't doing it.
The whole system needs a huge downwards adjustment but it just can't happen on its own it needs a seed. I think interest rate hike should do it, but it won't happen. Too many vested interests and political suicide.
First, when an estate agent values a house it is totally arbitrary. And they do say to sellers to put it on the market for 5 to 10% more than they want to get for it.
Second, the issue becomes circular. If everyone puts their houses on for 5 to 10% more then this pushes up prices as the next person who comes along needs to price their house higher in the first place to be able to move up the chain.
It also shows why house prices will never fall in nominal terms even in a recession. People just hold on to their assets in a market slowdown. They can't reduce prices because the chain above isn't doing it.
The whole system needs a huge downwards adjustment but it just can't happen on its own it needs a seed. I think interest rate hike should do it, but it won't happen. Too many vested interests and political suicide.
Caporegime
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I would only do this if you don't really love the house.
I have low balled and been told they have had higher offers, etc. Had them rejected and then it looks mental to go in with a much higher offer so you go low again and it's rejected, then your told it's sold as it took you weeks to get near the ballpark they were looking for.
When it came to the house I saw and I really liked. The only one I really liked in 2 YEARS of looking. Valued at X amount and they said looking for offers in the region of X. I knew lots of people would be interested and would offer X. So I sat down with the buyer and he said he wanted X plus £7.5K. I told him I could do X plus £5K but no more. He pretty much said at that point he was happy with that and he would still need to discuss with his partner but he said I'm sure sh would be fine with it and we shook hands.
I knew going in low would essentially have made him look at other offers. It's in an area where houses tend to be sold within 2 weeks if valued and presented well. The price I paid for it is also the same price he bought it for 9 years earlier and during that 9 years they have made various improvements to the property. They made an open plan kitchen and dining room all with approved planning permission, etc. They completely landscaped the garden including adding decking, greenhouse, trees, monoblock, raised levels and lower levels, etc. They also replaced some radiators, flooring, fireplace, new appliances and kitchen, etc since they bought so have spent quite a bit of money on it.
Could I have got it for £5K cheaper? Possibly. Would £5K have been worth saving to risk losing this house? Definitely not.
it depends entirely on the house, the market and how quickly sales happen in the local area as well as the value of homes in that area. If our going to low ball in a decent area with plenty of interest, you will be told to stop wasting everyones time. If it's been on the market for 3+ months, then sure go in with a low offer and walk away as it's obviously not selling for a reason.
Caporegime
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Values are based on the condition and size of the home and what similar homes have sold for in the area. They don't want a house sitting on their books for 2 years by overvaluing it and asking for too much. They want a quick turnover and onto the next one. They want lots of sales rather than very little sales but higher ones.
So when you look at the home on the ad the first thing you want to do is look at what houses around it are going for and how much they are being advertised for.
I could pretty much put up a very accurate valuation on a property in an area with lots of movement. So long as it doesn't have a leaking roof, etc which is why valuations come with a "you may want to get it checked by an expert" at your own cost. They just do a quick look around without delving very deep.
Soldato
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We offered 10% below asking price and within 30-40 minutes had negotiated a price of 5% off list with us and the vendor happy. They refused the first offer instantly and we then increased it slightly, they refused again but offered an amount they would be happy with.
We thought if we offered 10% below they might have been offended but if someone really wants to sell their house they're not going to instantly say no and refuse any further offers. If they are, then they aren't the type of people you want to be trying to buy a house off as no doubt there will be other issues down the line if they are that arsey upfront.
We thought if we offered 10% below they might have been offended but if someone really wants to sell their house they're not going to instantly say no and refuse any further offers. If they are, then they aren't the type of people you want to be trying to buy a house off as no doubt there will be other issues down the line if they are that arsey upfront.
Caporegime
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depends on the value of the property tbh.
If the home was valued at £780K for instance and you came in with an offer of £700K then you would be told swiftly to stop wasting everyone's time. Especially if it's a sought after area.
Also you take the risk of if you offer 10% less and someone else offers 5% less an hour later they decide to go with that other person and you lose the house. You have to know the local market and be in a good position to low ball.
I offered below asking on a property and even told the agent to tell them the breakdown of why I was offering less (boiler, rewire, no insulation in extension, , 2 new external doors and a number of blown panes in the windows) and the owner told the agent that she was so insulted with my offer that she would never speak to me again! Ironically, it sold for less than I offered 2 years later...
Soldato
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Well the initial offer was £60k under asking so it can work even towards that end of the market.
And we knew how many people had viewed, how many were interested, if we were in the best position (FTB) so it wasn't just a stab in the dark.
Soldato
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At the end of the day how long is a piece of string. I'm considering a house which is on the market now for 150k. Saw it has been on the market for over a year and spoke to the agent as I know them professionally and they said it started at 185k! . You can bet they would have originally not accepted 160k but now they'd be likely forced to accept something like 140k.
Plus agents typically price it at x on the basis they are expecting it to sell for x minus y. So if you go straight in for the lower offer it might be what they've expected to get anyway.
Plus agents typically price it at x on the basis they are expecting it to sell for x minus y. So if you go straight in for the lower offer it might be what they've expected to get anyway.
Caporegime
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If it's been on the market for over a year then it would be stupid not to low ball tbh. You also need to take the sellers position into account, are they desperate to sell or can they wait it out for better offers. Sometimes they may be losing money every month and need to sell before they start defaulting on debts.
it's the same with buying a car privately, they are usually priced slightly higher than what they would accept. sometimes the person is desperate to sell as they have just been made redundant. in that situation you know you can get it for a steal.
it's the same with buying a car privately, they are usually priced slightly higher than what they would accept. sometimes the person is desperate to sell as they have just been made redundant. in that situation you know you can get it for a steal.
Or alternatively British people need to get over the idea of owning property and just accept renting. And the government needs to introduce stricter regulations on rentals. You go to the contient and the idea of buying a house seems quite at odds with society unless you have some specific circumstances or are particular well paid.
Don't be so certain. Think of it form the sellers perspective that they expected 185K, they ave already massively reduced the selling price, they will be really unhappy to sell for much less and indeed if they do want a sale then they have liked put in their lowest acceptable price. Of ocurse they might be desperate with a double mortgae going on but a house that has seen several reductions may mean the price has hit the floor.
The house I purchased was like that, the seller had a previous offer at 450K fall through, they put it n the market again went through several price reduction and then had a firm price,. The listing clearly stated no offers below asking price, we tried to put in an offer only a few % less but it was kicked back immediately. Probably ended up costing us a bit because in the US you have a 2nd negotiation after the agreed price to discuss deduction for required work to the house, e.g if the AC or water boiler needs repair then you can ask sellers to do that or pay you the costs. Often that is about 5-8K, we asked for 5K and they said screw you, take $300 or the offer is withdrawn. These people were also very desperate, moved out 8 months a go, purchased a 2nd house so had 2 mortgages, were thinking of having to rent out this house. But at the end of the day there is no reason why a seller should screw themselves out of thousands just because a buyer doesn't want to pay the going rate.
Ridiculous, the sellers might simply not want to sell for less than the market value. That doesn't make them weird, it makes them sensible. Only desperate sellers will happily loose serious cash. Many sellers may well be but plenty of them are in no rush to sell. Someone might just simply be looking to downsize, or gauge market conditions.
Soldato
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^^ market value is what people are able or willing to pay. Sellers can be very unrealistic. Nothing worse than a speculative seller who isn't committed to the sale. Walk away from them as it will end in tears.
And if you rented for life what would happen when you retire and you still need to meet almost full working age living costs? Genuine question.
And if you rented for life what would happen when you retire and you still need to meet almost full working age living costs? Genuine question.
Caporegime
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the money they saved by renting should have went into a pension or an investment, etc to see them through their retirement. rather than blowing the extra cash on leasing a brand new porsche every 3 years.
the problem with renting is, it doesn't work in the UK. in other european countries they have an abundance of property so it's cheap to rent. take spain for example their is literally thousands of empty homes.
the empty homes in the UK have been bought as investments. more taxes on investment properties need to be introduced to stop people from sitting on houses for decades.
The seller was a crazy person and I'd be worried about what else was wrong with the property. Dodged a bullet there!
It's all a big game which relies on differing attitudes to risk to work.
Pension and retirement funds.