To offer 60k below asking price

[CanStopWillStop]

Just want to do a general litmus test: A house I'm interested in buying is listed at 'offers over £500,000'. It's a probate property and I am told the inheritors want a quick sale.

The house was valued at £440,000 in 2021 and it needs full modernisation. It's been on the market for three months. A lot has changed in the housing market this year.

With everything going on in the market right now, is it unreasonable to offer at 12% below (£440k)? I would only go as high as £460k based on the work that needs doing to make it liveable, and so want to leave negotiation room. But I'm not sure if I'm wasting my time even putting in an offer on a 'offers over' house, incase it's CF territory lol.

Also if you're an estate agent with any knowledge on this, would be greatly appreciated!

If the £440k was the price put down when it was transferred it could have been a deliberately low valuation agreed between the two people to manage tax implications

Not really, since that's tax fraud. The value be "bottom end of range" etc but should not be deliberately undervalued by a material amount.

Sorry wrong post copied, but you get my drift.

I declined it and refused to take any more offers from that buyer (when they later raised their offer).

You can only do that if you have other buyers. A friend tried to do this and ended up selling to that buyer 6 months later because they simply had no one else offering. They were wrong in their view of the property value. My sister had a similar experience as a buyer, she persisted and waited and got her house for 60k under asking.

Its not currently a sellers market. Sellers often think their homes are worth more than the market is willing to pay.

House value. using the nationwide house price calculator the results depend on what part of 2021 the house was valued and where the house is. You could be looking at 8% increase on 440k if valued autumn 2021 and up north OR a 23% increase on 440k if valued spring 2021 and south west. The calculator won’t take into consideration the recent dip

Either way it’s worth an offer

Bear in mind for the estate agent, they always make more commission selling more properties quickly, than spending ages trying to get the absolute highest possible value on one house.

Eg at commission 2%

• sell one house for 500k = 10k commission
• sell two houses, one for 440k and another for 360k = 16k

If a lower price means they can sell the house fast and move on to the next sale, the estate agent always wants a quick deal.

Or the £440k may have been the probate value which is usually lower than the market value.

(I have no idea why - it just is.)

We put in a very low offer (about 20-30% under the asking price) for a house because it needed so much work done to it and the sellers were asking a similar price to identical properties on the same street in a good condition. They refused our initial offer and our 'this is really too much but we want the house' offer so we bought another house. It remained on the market for another six months before they sold it for less than our initial offer. They were asking for far more than the market could support.

Because that's not the OP's actual max budget; it's the max she wants to pay for this house that needs lots of work.
If she tells them she's on a tight budget, the EA isn't likely to phone her with new houses that come on the market.

We bought a probate property last year and the person who had been left it in the will held out for every last penny as it wasn’t costing them anything. I mean, they wanted extra money for the carpets and curtains which were at least 40 years old and when we politely declined (the place was a major refurbishment project), they ripped them out and poured paint over them so we couldn’t use them. Grief does strange things to people.

They also refused to reduce the price after the survey picked up a couple of issues and refused to let us do a further specialist survey advised by the surveyor.

We were very upfront with the agent and started with what the house would be worth in a finished state (handily the one two doors down the road was also on the market) and then worked backwards. Deducting cost of new kitchen, two new bathrooms etc etc and then that was the offer we went in at. It was very hard to argue against it as a result. We were also cash buyers. Don’t look at previous valuations - look at what other comparable properties in terms of size and location are on the market now and how long they are taking to go under offer / whether they have reduced the price etc.

They still refused to accept it. We left it on the table and they came back to us six months later with their tail between their legs.

It's absolutely fine. Our house was offers over 900k with the estate agent saying they'd take 950k. We went in low and ended up paying 815k. Also needed lots of work.

If you don't try, you won't know!

Do it.

If it needs complete modernisation it makes sense. The survey is likely to show some issues if the properties has not been maintained and updated for quite a while as well.

There is this article today about house prices in 2023: www.theguardian.com/business/2022/dec/26/experts-predict-housing-market-will-cool-in-2023-as-uk-enters-a-recession which forecast falls of between %5 and %12.

Most buyers will expect prices to reflect the current market. The fact that this house is still on the market after 3 months means it was over-priced to start with and/or people are put off by the amount of work needed.

I am trying to buy as well and fully intend to offer based on the current market downturn and stick to my budget. Sellers can always say no but a realistic one will consider your offer.

If one spouse dies, you can have the jointly owned property valued to establish its value for tax purposes and transfer the title to the surviving spouse, so that may explain the land registry entry?

We tried this (some years ago now) - the house was on for £450k, we made an initial offer of £380k (and were willing to go up to £410k). £380k was refused, and we asked the estate agent if there was a counter offer, and were told the vendor wanted the full price. We said the house wasn't worth that, and the estate agent agreed! We bought elsewhere (in retrospect a wise decision as the house needed a lot of work), but it eventually went for £387k, so the vendor was clearly not being realistic when the price was set.

Unless the property was sold and bought last year, I think the LR valuation figure would be as submitted for probate purposes rather than what it would have been marketed at.

Anyone applying for probate has to state the property value to HMRC (along with all of the other assets) so it is common to submit the lowest realistic valuation, which is easy to justify if the house needs extensive refurbishment.

I would ask the agent what they think its value was last year and you can then decide if that affects the amount you’re willing to offer, as this seems to be heavily influenced by the LR valuation figure.

Having said all of that, I sold a probate property this summer under very similar circumstances and valuation, and it is worth noting that EAs need to make a sale ASAP so, as the difference in his commission is very little between the asking price and the final sales price, he is the person you want on your side.

However, I refused to give in to (persistent) pressure from my EA as I was in no rush to make the sale as my duty was to obtain the best price for the beneficiaries of the estate.

I would happily consider an offer 10% below market value but probate value listed will always be less than full market value so that is not really a good guide.

I received an offer for a house recently at the probate value. I declined it outright and am unlikely to accept another offer from that buyer because I think they are CFs. If they had offered 10% below MV, I would have negotiated with them if they were cash buyers. If not, I would just refuse it again. The market may drop 5% over the next year - nowhere near 50%!

Sorry that last % should be 12% not 50%!

Probate valuations are often kept low if the estate exceeds the inheritance tax threshold as everything above the threshold ( unless subject to an exemption) is taxed at 40%. £440k was probably the lowest legitimate value they could acquire and it's almost certainly worth a bit more.

That said valuations in 2022/2023 are in flux so a low offer is probably more tenable.

I'd probably go in at 10% below rather than 12% but you've nothing to lose

I am stuck with a probate property at the moment while we attend to the legal stuff - it's cost a fortune maintaining it this year

Just to add my estate agent's "conservative" valuation is 11.5 % higher than the probate value - the property is similar in price to the one you are considering OP. We'll have to pay capital gains on the difference when we sell.

As long as your house doesn’t belong to the OP who was ranting on here about someone making a similar sort of offer on her house, you’ll be fine 😉

There’s no ‘unreasonable’ dimension here - if you think they’ll go for go for it then by all means try.

I would do this. Our first ever house was the only one we liked and at the top of our budget. We offered £215k and the seller said no leaving us very deflated. We got a call back about three weeks later from the EA saying that they had reconsidered and would accept. We said we’d think about it as we’d seen another house we really liked we hadn’t . Kept them waiting 3 days before offering £207k and they accepted.

Could you not approach the EA say you're interested in a few properties, the one you really want is the one you describe, but you don't think its worth £500 but could offer 440....and see what their reaction is (they might know they won't get 500 for it anyway!)

Any seller turning a buyer away at the moment needs to plan to be in it for the long haul.

Mortgage rates on the up
Nationwide are predicting between 7 and 30% (very worse case) drops in this recession.

Give it a go, they can only say no. Some people get upset, but you aren’t trying to make friends.

Offer what you feel it's worth. £60k below the asking price is taking the piss a bit