Asking prices v. actual prices

[Boondoggle]

Am planning a move next year. Currently undecided whether I will be buying or renting (realistically, will depend on how easily/quickly I sell our current home).

Am trying to get a realistic idea of what I will need to budget for. Looking on Rightmove at renting/selling asking prices in the area is all very well but I would love to know what the average discount off the asking price is. Am looking around Guildford/Woking area. Assuming we are talking about properties that have been marketed for a few weeks and aren't fresh on the market, if a house is on for £2,000 p.c.m rent, would an offer of £1,500 be laughable or realistic? Likewise, if a property is on at say £425,000, would an offer at £360,000 be too cheeky?

I don't want to alienate sellers/landlords with ridiculously low offers, but equally, I don't have a lot of money and every penny saved will help a lot in the move!

I reckon you can knock 15% off the asking price of a house to buy. I've never managed to knock much off when it comes to renting though.

We knocked 15% off our rent price and 10% off the asking price for the house we are about to buy (we were first to view it the day it came on the market and she wanted a quick sale/we really wanted the house).

I've never managed to get more than £50 a month off a rental figure, but have negotiated a month's deposit instead of two.

With regard to buying, do your homework on the recent sales prices of houses in the area of where you're looking. Then you know what a house of that size, in that street is generally worth and have a bargaining tool. Also re work needed on the house, anything that must be done (as opposed to cosmetic taste) can be used to negotiate the price lower. I'd go in at approx 15% off the asking price, depending on how long it's been on the market, how keen they are to sell, how long the chain is and how much you want it. Sometimes a cheeky offer may be accepted.

Don't worry about alienating anyone, it's business.

I don't think you would alienate them - it's not a personal thing. Start as low as you like - you can always up your offer later. That's what all the prospective buyers of my house did! I don't know the statistics, but it seems to me many houses are on the market for significantly more than they're selling for at the moment.

"I don't want to alienate sellers/landlords with ridiculously low offers,"

If you offer does not embarrass you then it is too high.

The average house in the UK goes for 90% of asking price so, it makes sense, that your first offer is LESS than 90% of the asking price.

Of course, with house prices currently falling then paying 90% of the asking price today will mean that your house will be worth less in 6 months time.

So, what to do?

Well, in this market I personally think the first offer should be 80% of asking price and the final offer should be 85% of asking price. Alas, getting sellers and estate agents heads around the economic reality is a different kettle of fish.

There have been a few economic reports over the summer saying that UK asking prices are 30% too high so even getting a house for 80% of asking price may result in you losing money a year or two from now.

Ok thanks guys. I feel better now. Will go in low!

Go in so low that you physically blush when you make the offer but have a haughty attitude when you say it.

Remember, if you offer 20% less then they buyers can offer 20% less on the house they are buying.

Remember to check Rightmove's house prices tab - it's a fairly new one but lots of people don't seem to notice it. It shows you what the house was sold for previously.

Assuming there aren't people queuing up to buy the house, then going in with a low offer is generally a good idea. But depending on where abouts in the country you are, whether the house you're looking at is priced realistically and what the sellers situation is will influence whether or not you're likely to get as much as 15-20% off!

Personally, assuming the asking price isn't ridiculous, then I'd budget for 95%, aim for 90% and see anything better as a bonus. But then I'm in an area where housing is already quite cheap, so circumstances here may well be different. £425,000 would get you a mansion round here.

It's all doom and gloom in the news just now about house prices - I think people have woken up to reality. Go in
low

So we should price our house even higher than the estate agents think we should advertise for to allow for this?

Go in so low that you physically blush when you make the offer but have a haughty attitude when you say it.

Sorry, but that is terrible advice. No one wants to do business with anyone "haughty" and arrogant.

The EA or LA will have arrived at that price for a reason - even if that reason is chancing their arm in case some idiot bites. You have to acknowledge their justifications - however ill-advised - whilst making your own lower counter offer, and justifying that.

You also need to have done your research. No point offering 15% or 20% below if the market is nuts (as it can be in some university towns at this time of year for rentals), or if you're looking to buy a family house in a commuter zone or London's zone 2. Decide on a price that you'd be tickled pink to get the deal done at, and then be prepared to go some way towards a compromise with the vendor or landlord. Sometimes, it's worth even saying to the EA, "I know this is cheeky, but let's open negotiations at (LOW price) and see where we get to." This way, the EA has a backstop, but you've given him a clear hint that you're prepared to go upwards. How far upwards depends on who wants the deal most.

For any deal to be done, both parties have to be happy, and usually this means meeting halfway or so on price.

If you do want to make an aggressively low offer, ask a friend to make an even lower 'dummy' offer on your behalf, so that yours seems reasonable or even generous by comparison.

Rents are definitely negotiable, especially if you hold some of the right cards: the ideal tenants are employed in secure professions (NHS is best, teachers also great); a non-smoking couple with no kids and no pets; have great credit scores and a verifiable positive reference from their previous landlord; offer to pay for the first AST upfront (this last isn't always sensible from a tenant's point of view, but that's a discussion for another thread). All of these are excellent negotiating chips.

"I know this is cheeky, but let's open negotiations at (LOW price) and see where we get to"

The estate agent is NOT your friend. The estate agent is a sale person looking to make money on commission from you paying as much as they think they can wring out of you.

This is why ladies who gush over a house when they view it are an estate agents dream come true. The ladies who sprout "Oh I love it, I must have it" are every opportunity, IMPO, for an unscrupulous estate agent to keep declining your offer until you go higher and higher thus giving him or her a bigger commission.

You have to be hard nosed. Go in with a low offer that is so low that it embarrasses you and tell them that the offer is on the table for 10 days otherwise you will withdraw it as you are putting in offers on other houses.

The latest RICs survey out today - it is all over the news - points to falling houses prices and a glut of houses on the market along with a shortage of buyers. Wake up and smell the roses!

Have to agree with ThisOldGirl

Being obnoxious and "haughty" will just put people's backs up. Far better to leave the EA with the positive thought that you mean business and want a deal. Of course the EA's not your friend but why would you want to make him your enemy?

If your "haughty" manner leaves no room for negotiation, will anyone come back to you?

Nice bit of sexist claptrap, there, as well Tawse, on emotional responses to houses. I doubt Boondoggle would have posted if she were ruled by her heart and not her head.

So we should price our house even higher than the estate agents think we should advertise for to allow for this?

Eh? People use the internet now. Between the Land Registry, Rightmove floor plans and Zoopla, people have a very good idea how much your house is worth. I'd hazard a guess that your asking price is immaterial.

Maybe sellers should just stop having asking prices at all, in that case!

Maybe . There's certainly something to be said for arresting house price inflation, seeing as how it doesn't enrich anyone except bankers.

I bought my current home in 2006, when the market was buoyant. I needed to move to a very specific area in a limited time frame, so offered the asking price. I got the house. With hindsight I wonder if I should have offered lower but if I hadn't got the house I would have been screwed (for schooling reasons).

I do think people are very emotional about selling their home and certainly can be "put off" a buyer. Once again next year I will be moving within a limited time frame so can't afford to mess around and have a purchase fall through. At the same time I know I will need to be realistic about the price of my own home. Striking the right balance to get it all done and dusted in time is already starting to give me the collywobbles.

When we had stupidly low offers on our house, it put us off the buyers even if they subsequently upped the offer. It made us think they were likely to screw us over any way they could. Admittedly the market round us is ridiculously buoyant still, but the basic principle stands that people will prefer to sell their house to somebody they like and think is straightforward. Haughty and arrogant won't do that - it may work, but only if you are the only buyer for miles around. If you aren't, you'll find yourself passed over, no question.