Help me to decide offer price

[raisinbran]

Ok a house we like is on at 385K and has been reduced from 450K. It needs loads of work to get it the way I would want( it hasn't been touched since the 1960)It also needs converting from 2 flats back to 1 large victorian semi.

The venders are a lovely elderly couple who have had the house on the market since Jan 10. We took an architect round yesterday and he thinks there is great potential for us to meet our family needs.

The vender is keen for us to make an offer as she said she thinks the EA valued it too high, plus the few properties she would like to buy are still on the market too.

A guestimate is that 150k would need spending to get it sound, new windows, heating electrics etc, which I think is realistic. Obviously we would need a survey which may highlight additional work we haven't considered.

A house next door which is slightly different went for 310k in June but that needs loads of work doing too and may have been in a worse state than the one we like.

We are cash buyers with no chain and could work to their time frame.

I am aware that any £££ I can save on the purchase price would be able to go towards the soft furnishing budget which is limited if the building/refurbishing works does cost 150k.

My DH thinks we should offer 300k but I think 285K as if they say yes to 300k we would always wonder if they could have gone lower. Plus they may move us up to 300k bit if we offer 300k they could ask for 320k?

Also whilst it is going to be a family home for life if it was on the market all done up now, I dont think you would get more than 500k and people would be looking for a % drop.

Go on please give me your thoughts.

150k sounds rather a lot (this must be the only time I've said this) to renovate a large semi, if it's structurally sound. Your description sounds like it's basically plumbing, windows, electrics and then decor, but the house is okay. That doesn't sound like £150k worth of work. I'd be interested to know what others think about that.

However, about the offer price. One thing I noticed with my parents when they were selling (another elderly couple) is they didn't get the idea that they were supposed to be negotiating. For them, someone made an offer and then you said 'yes' or 'no' to it, not 'we'll say yes at £320k'. I kept saying this, and they kept not getting it. I think that this caused some confusion among their buyers, so might be worth bearing in mind?

Thanks for your thoughts all opinions help. Maybe it is a lot but you hear about projects costing more than you expect so I need to factor the contingency in.It does need to include stamp duty and removal costs, fees etc.

The house needs central heating boiler 15k,30k for windows 7k electrics 3 bathrooms 30k, kitchen 25k( structural work needed)plus some damp and the roof some attention,there was some other things too but he hasnt sent the report through yet so cant remember. Even vat next year at 20k per 100k spent will be a big chunk. It's a 7 bed room house with huge rooms. ( I live in the North West) It would be millions if it was London.

I think your estimates sound rather high too: #15k for central heating, #30k for windows, #10k per bathroom. You can spend that and it would be a very high spec but I'm not sure you can expect a buyer to take a hit because you want a luxury finish. As you don't need to extend and, from the sound of it, might only be knocking down the odd wall, I'm sure you can trim your budget. I tend to think that offering less than #300k on a property that was recently on at #450k is unlikely to bear fruit - the owner sounds keen to sell but not desperate.

Also, check that you would get permission to convert the house back to a single residence - some local authorities are getting less and less keen on this as it pushes down housing density.

Well it is encouraging if you think both think the estimates sound high. So maybe 300k is the starting point for an offer.I just want to have a nice house and be able to afford some furniture.With the uncertainty in the market,I would just hope to break even with the value of the house once the work is done and not be in negative equity for the next 10 years.

I suppose its the old seller v buyer caution.
You here allsorts of stories of EA over valuing to get the house on thier books, sellers being swayed by 50k differences in 3 quotes,others increasing asking prices in the expectation buyers will knock them down. So its hard to work out the fair price.

Plus if it hasnt sold since Jan 10 then maybe it wasn't priced correctly to start.

Yes its fine to convert back to one house.Thanks for the thoughts.

I can't believe you'd go in at 20% less than reduced price - crikey you're brave. I've never been able to make such a rude offer!

I suspect it has taken a while to shift because it needs to be converted from flats into a house.

I think the vendors won't accept such a low price.You have way over-estimated the price of refurbishment .I have a 6 bedroomed house and have just refurbished the bathrooms and boiler.Your estimates are way over the top.I'm assuming you don't particularly want this house!

My bottom line for that house would be 350-360k. 365k if it's going to be the house of your dreams.

I agree that 20% below asking isn't worth the effort

Thanks everyone.It is interesting hearing all your views. I would be delighted to get the house but I have waited 2 years for the market to drop so if i am not going to get a good deal I am willing to wait another year if needs be.

I think its perfectly acceptable for a vender to refuse an offer.However surely they would rather someone made an offer. Then they can negotiate or decline all offers than the alternative of us not making an offer and they never have the opportunity to consider and see if they can get a reduction on their future house.

Isn't that how we need to get the market moving. People that can't afford to accept that low are making a choice to stay put?

Also the house next door went to a developer for 310k in June haven't prices dropped since then?

I can see the house is very large, and you're very sensible to be planning contingency, but at the same time I do think it sounds like you're planning for a very high spec - £30k on bathrooms is a lot, and I'm not particularly penny-pinching on my house - and as someone's said, there's no reason to expect the seller to take the hit because you ultimately want a high spec.

If the neighbouring house sold at £310k but you think it was in worse shape, it sounds like you think that this house is worth £310 - £330k ?

TBH, I suspect you don't want to buy this house. I think you might realise it's going to be a heck of a lot of work, you've not fallen in love with the house or area, that you're going to be the one taking the work on while your DH swans around, and you're thinking that you'd just as well this house fell through.

If you do want to buy it, I think you might be better off going for an offer of £300k, explaining that the neighbouring house sold for £310k and you feel the market's dropped since then, and then coming back with £310k if they refuse.

The thing I've noticed with both my parents and my in-laws is that they don't like people playing negotiating games - they get the impression that you're not serious buyers, that you're just chancing your arm and are likely to drop out later in the process, and they would rather turn that kind of person down and keep looking for someone they think will actually buy.

I have considered what you said and I dont believe I do want the house to fall through anymore than I want to be the numpty on the housing ponzi scheme that bought at the wrong time.

We plan to offer 300k, DH thinks its amusing that I am listening to a bunch of strangers instead of him.

I promise to keep you posted if its good or bad news.Even if I have to get some we told you so posts!

Raisin - I suspect you don't like opinions that don't match your own.

Your DH probably does think it's amusing that you are listening to a bunch of strangers, but a bunch of opinions is better than one opinion.

Perhaps you're right - perhaps you'll get a bargain and good for you if you do - the housing market is ridiculous - but - at the same time, everyone's circumstances are different. We had some buyers desperate for our house who couldn't afford to buy in our price bracket but thought they'd view the house and make a low offer because they aren't in a chain.

Unfortunately, they fell in love with the house and now feel fed up they can't afford it. They think I should be more flexible because they aren't in a chain but their position is irrelevant to the price of my house and I'm not desperate to move.

What I'm saying is - yes, it's a buyers market - but you don't know people's individual circumstances.

You think the house is worth £500k all done up to a good finish. You have an extremely generous budget of £150,000 for the renovations (I agree with others that this sounds way ott) but you think the elderly vendors should take a further £50,000 to £75,000 hit so that you can afford some furniture?

I'm afraid you come across as rather greedy.

Do let us know how it goes.

Good point, well made.

Whatever price you secured it for I'm sure you'd be demanding more off after the survey on the Victorian house - and the vendors would know that.

Raisinbran - At this time I think 20% off offer sounds about right however if you wait a bit longer*(and it sounds like you are willing to do this) you'll probably get it for nearer 30% off.

• within 12 months is my guess

We spent 40k doing up a Georgian townhouse which was v out of date and needed s lot of structural stuff as well as v specific windows doors etc as it's listed. If you want the house up your offer slightly. & take it off the 150 k

I don't think you're being greedy and people use very emotive language when discussing house buying, depending on whether you're buying or selling.

We have just had an offer accepted at 12% below asking, although it hadn't been reduced.

The question is, do you really want the house and how much can you afford. The estate agent valuation may be wildly over, maybe not. It makes no difference.

Make an offer you are happy with. If they say no they say no. Who cares if the 'elderly' couple think you are rude or greedy. You are offering to give them money for their house, not demanding to be written into their will.

I should also add that I am on your position.

Been looking for 2 years and desperate not to be caught out.

Months of reading property articles on housepricecrash are not good for the soul.

But we need a home. And the effect on our family of renting is starting to outweigh potential financial gains or loss.

So we have hedged our bets. We are buying a house which is smaller than we planned but easily affordable and a good price. I think we'll want to move again once DSs no longer need the primary school.

If the Market goes down, out next house would be cheaper. If it doesn't, we haven't lived in a less than ideal rental house for another 2 years for nothing.

If it goes down

I think you should offer £285,000 as you first suggested as that's what it's worth to you. You can always up the offer if they so no.

Also I'd ignore the price the house was first put on the market at: perhaps its value as two flats is worth more than as one house? In any case, if the house has been on the market for almost 10 months, the market is telling them their house isn't worth what they are asking for it.

And btw I think your budget sounds eminently sensible.

ignore previous prices, people saying you are being rude about low offers, people calling you greedy, a house is only worth what someone is willing to pay not what a brainless estate agengt has put it on the market for.

20% under seems a reasonable starting point given the work that needs to be done, the state of the market and the vendors rush to sell.

But the point is that Raisin seems to think that around £310k is a fair price, and the issue is what she goes in at ino order to pay £310k and successfully buy the house. That's why I can see that with a young couple, £285k might be much more suitable as a starting pont for bargaining, but I genuinely reckon that an older couple are less likely to want to bargain back and forth, and might be put off by it.

Thanks everyone for your comments particularly the supportive ones!

Tommorow we are putting the offer in at 300k. I expect the EA may advise the couple but I have no idea which way.

I genuinely do think the couple just want to go. She hasnt had the flat rented since Dec 09 as its in such a poor state and they couldn't sell before that at it was protected tenancy. Her husband is in poor health and I think they just want a simpler life in a modern little bungalow instead of being burdened with 2 council tax bills and the large up keep of a big house that they only use a 1/3 of.

At there time of life I dont think they want to chance waiting another year to perhaps get another 50k.If they bought it in the 1960's they still have made money on it.

If it's going to be a family home for life, as you say in OP then don't get too tied up in the current market and worry about what prices are going to do. By all means try and get it for a reasonable price, but work out what you can afford and what you would be happy to go to. If you're hanging on to it then it doesn't matter if the market crashes next year.

Good luck!

Put in a low offer. The market is tanking and it is not just the cost of doing up the house you have to factor in but the inconvenience, stress and planning time etc...
It is very difficult putting in a low offer as it is perceived as an insult but sellers need to remember that it is a business transaction and IMO sellers are far too emotive.
Your 285 sounded a good starting position to me, but good luck with whatever you do.