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Rules about offers on buying houses - how low to start in this market? Any advice?

(9 Posts)
mrszimmerman Mon 27-Jun-11 14:25:25

Say we were looking at a house which is on sale at 270,000 and they had had no offers and not that many viewings in a month in a pretty good area would you start at 220? Is that rude?
My friend who is a demon property buyer/seller says to start at 220, dh says start at 245.
Just wondered if there are rules for this market.
I worry we'll pay too much and then the Greek economy will bring us all down another big leap and the house will be worth less than we paid for it.
Any thoughts welcome about how you decide where to pitch yr first bid to sellers who are keen to sell and have no other offers nor much interest.

ThunderboltKid Mon 27-Jun-11 15:23:19

My flat with on at £270k in a similar market. If you'd started at that, not only would I have laughed, but I would fine it hard to take any further offer seriously.

They may take £250k - I made it clear to our agents that I wouldn't, and in the end took £263k.

It all comes down to how much you like the property and can you get anything else/better for the price you are offering.

lalalonglegs Mon 27-Jun-11 15:23:27

By all means pitch in at #220 but I think you will need to give them reasons for that price - is that what similar houses have been selling for, for example? I don't think most sellers are that interested in helping you to short the market so they're not going to care whether prices might go down in a certain number of months' time, they want to know about the here and now.

My guess is that they are hoping to get around #250 stamp duty threshold. But, if they are really keen to move and the house has had no interest, they may well be willing to go lower.

Good luck.

mylovelymonster Mon 27-Jun-11 15:25:59

Well, figure out how much you are comfortable in paying, factoring in interest rate rises for any mortgage you may have, and precedented sold prices for similar properties in the area, then figure out how much of your finances you need to spend on the property improving it or updating so you leave yourself a modest fund to do so.
If there have been no offers then you are testing an unknown area, and if it were me I would go with your friend's advice to start with (she buys/sells? knows the local market fairly well?).
It really depends on the situation of the sellers. It's not being rude to offer. It's not an RRP. It's a business/financial transaction, so go in with a professional manner - finances all sorted? solicitor ready to instruct?

Don't be manipulated by the agent. Any offer you make, put it and your situation in a letter and give to the agent, and a copy directly through vendors letterbox for their personal consideration.
Beware if, upon putting your offer forward, the agent miraculously comes up with another offer from 'someone else' for you to bid against. Don't be drawn into a bidding war. Best and final offers regardless of any other interest.

Time to get tough! grin

Best of luck securing your next home.

CherylWillBounceBack Mon 27-Jun-11 15:56:36

If the offer you're making doesn't embarass you, then it's not low enough.

fapl Mon 27-Jun-11 15:58:31

I think it depends on how realistically priced it is to begin with, and how much you want it. Are you prepared to walk away and keep looking? We made an offer of £240k indicating we would go higher but not above stamp duty on a house last year that had been on at £300k. We were declined, the house eventually sold 6 months later for £245K. Another house we have been looking at has been on at £275, they just dropped their price this week to £249 and the EA has indicated they might accept £220-230. Both these properties were on at unrealistic asking prices.

The flipside is you might have a vendor who has priced realistically because they are not being greedy and don't want to play games, woh would laugh at you offering that low, and even if you increase your offer if there is someone offering the same amount, the vendor will be inclined to go with the other person just because they think you are playing games.

tyler80 Thu 30-Jun-11 17:49:06

I was in two minds about opening offers on the house we are buying. Mainly because our max was a good percentage below the asking price so didn't want to offend by our initial offer being really really low.

In the end went with initial offer 15% below asking and then had second offer accepted at 12% under asking.

I don't know whether it made a difference but the EA asked after the second offer if it was my max and I listed the reasons why we were offering what we were, e.g. identical house sold last year for just a touch more but this one had no driveway and needed work doing etc etc.

SparklePrincess Thu 30-Jun-11 18:58:01

I got offered a 24% drop on my already competitively priced property. Im all for trying your luck but that takes the p* angry

plupervert Thu 30-Jun-11 19:09:43

If your friend knows this area, let her advise you. That is far better than trying to "read" a market which is not a proper market. There is no transparency, and there is so little volume that the last comparable sale in an area may have been 6 months ago, or of a very different house (e.g. extension/no extension, refurbished kitchen/no refurbished condition, new flooring/70s flooring, length of garden in a wedge-shaped street...) A recently high-priced sale may have been the result of a distressed buyer (people having a baby, or people desperate to get into school catchment area before application deadline), or a low-priced sale could have been the result of a distressed seller (e.g. divorcing couple, elderly person going into a home and needing to pay fees).

With no transparency, prices are seemingly set at whim, and there can't be any "insult" at an offer, because it's far from evident what asking prices should be.

By contrast, it should be very clear to you and all other potential buyers what price you can and will pay, because you will be the ones paying it back. If you are about to go off work on maternity leave, price that in. If you are worried about Greece, price that in. If you see that properties in this area are not moving, and that asking prices are near 2007 levels, people are reluctant to buy at these levels, and you should price that in, too.

Houses are only worth what people will pay for them, not what vendors "need" to sell them at. Of course, the reverse of that is that if the owners are not distressed sellers, they can hold out as long as they like, or can stand it.

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