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Asking price is 400k, what should be our opening offer?

(45 Posts)
NorkyButNice Sun 05-Jul-09 21:25:56

DH and I are buying our first house and we're putting in an offer tomorrow - first time buyers and no idea what we're doing...we've got a mortgage agreement in principle from the bank, so just need to work out what offer to make.

The house is on for 400K, only been on for a month and they've turned down one offer already (well unde asking price).

They are keen to move soon as she is due to have a baby in October, otherwise they'll take it off the market and stay till the baby is born and a few months.

It's priced higher than anything equivalent in the road but has a loft conversion and an extension so not necessarily comparable.

Where to start with the offer? Really don't want to lose the house, but obviously don't want to pay more than we have to. Any tips?

goldenpeach Sun 05-Jul-09 21:39:04

Check its value in zoopla. For each road there is a ceiling, so no matter how much they have spent, their house cannot sell for a fantasy price, so there is so much they can get for all their extra extensions. There is also a saying, never buy the most expensive house in a 'cheap' location. So it depends where it is, too. Since you're buying with mortgage, bear in mind that surveyors value at the lower end at the moment.

I wonder if the refused offer was 350K. It makes think of this house priced at 410. We offered 350, we got refused as they wanted 390, months later the EA came back and said, it's yours for 365 if you offer that. We didn't want it anymore but I was really angry about it.

NorkyButNice Sun 05-Jul-09 22:07:31

Ok now I'm really confused!

Zoopla reckons the house is only worth 260k based on the fact that the owner paid 250 for it 4 years ago.

Other houses on the street sold for 370 last year but it thinks they would now have dropped in value by 50k.

It is the biggest house on the road, I hadn't realised this was bad!

risingstar Sun 05-Jul-09 23:02:52

without knowing the specifics a couple of warning flags.

It would be surprising if this house was worth 150k more now than it was 4 years ago. Unless they bought it really cheap and have spent a fortune on it. Even then, there would have to be gold in the cellar to make it worth it.

It sounds to me like they are really not that bothered about moving- this means that they may well have an unrealistic price in their heads that they are not going to shift from.

This does not make the house worth that figure. you have to be really hard nosed and realistic here. If you pay over the odds for it and need to sell you are well and truly stuck.try very very hard to detach yourself emotionally from this pile of bricks and mortar. I would be tempted to work it out as roughly- what is the next nearest comparable in street- £320? add to that the cost of the extension/ loft conversion- if this is useful space to you and do not shift above that. so probably £360.

I dont want to rain on your parade but buying a house involves 2 parties with different motivations and different realities. Just dont kid yourself that their asking price is necessarily based on any reality other than their own!!!!

poopscoop Sun 05-Jul-09 23:29:50

can you link so we can see whether it looks more 260 than 400?

NorkyButNice Mon 06-Jul-09 07:47:55

Ooh not sure about linking - I'm so paranoia about someone else swooping in and snapping it up before me.

Anyway, the 260k is ridiculous, it's a 4 bed house over 4 floors in London, 3 minutes walk from train station (15 minutes into central London). 2 bathrooms, downstairs toilet, 25ft living room, 20ft kitchen/diner with French doors to garden, playroom (also with French doors), office and a 70ft garden.

If I could get that for 260k I'd be happy grin

By a huge coincidence an agent who showed me another house actually sold this place to the current owner 4 years ago. She said it was in reasonable condition then (at 250k) but they have obviously spent a lot on it.

The house right next door is on for 335k, it hasn't had any modifications or been decorated since the 70s.

NorkyButNice Mon 06-Jul-09 09:50:53

shameless bump for anyone who can provide advice before I phone them in half an hour!

Fruitysunshine Mon 06-Jul-09 10:05:25

There is usually a 10% markup built into an asking price so start with removing 10% plus any obviously remedial works that need doing.

So if they are asking £400k, that takes it down to £360k. Assuming there are no other works that need doing if it were us we would be starting there. Anything is only worth what somebody is prepared to pay for it.

Whatever you decide to do - good luck! You could qualify your offer with "good position, can exchange and complete immediately..." blah blah blah. All of this has to be weighed up by the vendor, it is all about them deciding what they really want and what they are prepared to sacrafice in obtaining it.

NorkyButNice Mon 06-Jul-09 10:19:42

Thanks for the advice!

We are in a good position - we can move anytime really, and have financing agreed. God, I'm so nervous - wish I had a better idea of what I was doing.

Do they ever just accept your first offer or is it guaranteed we're going to go back and forwards? Should I start lower than the 360 to try and end up there?

Fruitysunshine Mon 06-Jul-09 10:24:59

The vendor will usually accept the first offer it it is asking price!

However, IME (as buyer and seller), the first offer is rarely accepted and is just an opener to find out the real position of everyone. You also don't want to insult the vendor. They are paying an estate agent to sell their property and for their advice and guidance so if an agent has advised them on the price then they will be looking for the best they can get for it, because they will need that to fund their next move.

I am in Surrey and our location has held its prices extremely well during the last year and are even creeping back up but I have no idea about London at all. What does your partner think you should start at? Why not go in at your lowest and see what happens? Occasionally their estate agent may guide you as to what they are prepared to accept for a quick sale - IF they are looking for a quick sale.

It is nerve wracking - but it is ultimately business so do not get emotionally involved until it is all signed and sealed!

thehairybabysmum Mon 06-Jul-09 10:26:36

When we moved, there were two houses on same street, the best one was overpriced (IMO),. so we worked out what we thought the cost of renovating house 2 up to house 1 standard and size (included loft conversion) and then offered that on house 1.

I told EA my offer, plus reasoning and said that i was going to offer on house 2 if house 1 didnt accept this price. House 1 turned downed our offer. We thten offered on house 2, got 10k off and agreed to proceed.

House 1 came back to us with 5 days saying actually they would accept our offer after all which i then turned down as we were proceeding with house 2.

2 yrs later we have completely done up house 2 and is actaully better than house 1 as we have done what we want.

Merrylegs Mon 06-Jul-09 10:28:14

Well, first of all you should look at your position. You say you are a first time buyer so you have nothing to sell and a mortgage agreed and ready to go, You are like gold dust! Any seller would be weeping with joy to get an offer from you if they are really keen to sell, so you need to keep reminding them of that.

I would think abut the absolute max you are prepared to spend. If 360 is the max, then you should def. start lower.

Also, remember 4 years ago houses were worth more than they are now. A 250k house then would be 220k now. So even allowing for the work, you should take 30k off immediately.

Fruitysunshine Mon 06-Jul-09 11:34:18

Keep us posted as to how you get on!

HerHonesty Mon 06-Jul-09 13:35:38

well unless you are in a very grotty area of london, i would say 260k was fairly unrealistic for a 4 bed period house in good nick. start at 15% under and expect move up to 10% under.

Fimbo Mon 06-Jul-09 14:29:13

Have you put in your offer Norky?

Good Luck! smile

HeadFairy Mon 06-Jul-09 14:35:05

Norky... as a guide, we were going to buy a place in Surrey on at £399k, we started bidding at £355k and eventually worked up to £372,500 which they accepted. Unfortunately their circumstances changed so they had to take it off the market.

We're still looking around that price bracket, so we're thinking if the asking is around £400k then we'd like to buy for about £365-370.

We've sold our London flat which was on at £435k for £380k

I hope that helps with regards to asking prices and selling prices. I always say a property is only worth what someone will pay for it.

BTW, that sounds a lot of house for £400k in London, whereabouts is it if you don't mind me asking?

NorkyButNice Mon 06-Jul-09 15:42:07

We offered 360 a few hours ago. I've been pacing the floor since!

The house is in South East London - I'll post the link when it's all sorted either way, I promise! It's not a glamorous area so you do get a bit more for your money, but the local school is good, transport links are excellent, and there seems to be a great sense of community there which is lacking where we are at the moment (just 10 minutes up the road!).

HeadFairy Mon 06-Jul-09 15:49:50

good luck! I my experience no one accepts the first off just because it's the first offer and it would seem a bit feeble to do so, so we've made our first offers a bit on the low side, but made it clear to the selling agent that we can move, but that's where we're starting from.

SE London too far for my commute to West London, but shame, sounds like you can get a lot for you money there!

goldenpeach Mon 06-Jul-09 17:10:59

My DP followed property prices both in bromley and in walthamstow (both london areas for those who don't know the capital). Well, the prices have crashed there. What sold for 300 and over is now struggling to get 250.

So that valuation is right, just add value of extra space they built and that is the true value (like extra bedroom and first floor space). You can do that on zoopla and readjust the price, my DP says.

Another thing is that for a first time buyer you have quite a bit of cash, not many like you around there! The most likely competition is from a chained offer.

poopscoop Tue 07-Jul-09 08:07:04

any news yet norky?

NorkyButNice Tue 07-Jul-09 11:12:06

360 was rejected - they're thinking about an increased offer.

My nerves are not holding up well!

Fimbo Tue 07-Jul-09 11:13:34

I presume you have increased your offer?

Good luck Norky!

inscotland Tue 07-Jul-09 11:16:57

good luck!

NorkyButNice Tue 07-Jul-09 11:40:37

Hmmm. Ok, increased offer also rejected.

They'll only take it off the market if we offer 395 as it's only been for sale for a month and they have more viewings lined up later this week (fair enough I guess).

Don't know whether to come back with another lower offer but think that would be a waste of time.

Fimbo Tue 07-Jul-09 11:45:22

Tricky.

I guess it depends on how much you want it. But it is not to say that the other viewers are in such a good position as you.

Perhaps you need to hold your nerve for a while.

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