Made low offer on property in London- what next??

[akennyg]

Hi All,
We have made an offer of 685 on a property which is on the market for 775. It needs about 80k worth of work, and we can only purchase happily at under 710/715 at the very most. We hoped our offer might potentially be successful for a few reasons-

• the property is overpriced. Clearly above market value. There are similar properties on the market nearby for late 600s early 700s, which we would go for except the lack of buggy access

• we are cash buyers (we can borrow from parents then mortgage later to pay them back),

• we are chain free

• We know the seller is extremely keen to sell - she has already packed up and just wants out for personal reasons

• its been on the market since november with one offer which fell through very quickly. The agent told us this offer was at 770...but she seemed quite shifty when she said that so I'm suspicious it actually wasn't that high...

Especially as the agent encouraged an offer however low as the vendor was "desperate". Then, when we offered yesterday morning the agent took all day to come back and then just said "no". It was a bit odd as she must have told the vendor in the morning but she waited all day to come back to us. she was a bit stuttery on the phone and just said it was way too low and asked if we wanted to make another offer, even though she knows if we offer again it will still be much lower than 770. To be honest it really felt like a game so my husband said we can't really go any higher and we will leave it.

I don't want to miss out on the property, its not the be all and end all and we can wait but its lovely and feels right. I also know instinctively that the agent hasnt been very honest and is playing on the fact she thinks we are chomping at the bit to buy it.

Sorry to ramble! The question is- what would your tactics be in this situation. Do we lay our cards on the table come Monday and hope no other offers are on the horizon, do we stay silent and wait for her to come to us? What's the most likely way to get a good outcome? We are prepared to walk away...we just dont want to if we dont have to!

Any advice very very appreciated on how to act now. Thanks

So basically all the properties bar the one bed, have some sort of basement flat with a maisonette or even two above ?

I guess it comes down to whether it will be your front steps and hallway or a shared one. Bumping prams up and down steps is a royal pain and will screw up your back but people do, do it a lot in London. I've seen folk put ramps on the side of their stairs but if they share the entryway or it is leasehold that's trickier.

Assuming the rent from your existing home will cover the mortgage and the rent of a family home then I'd use the next two years to try out family areas for the long haul.

Maybe we are mad...
Plan would be to buy it, do work on it before we move in, move in end summer to renovated place with current dc, have another dc while there, enjoy the property for 2.5 years, then move (yep for school entry sept 2018) to proper family home in good area. This place has a good primary school nearby, just not one of the uber desirable ones...which could of course change over next 2 years?

Surely if we buy at the right price, and budget the renovation correctly, we won't lose money and get to live in a property we love in the mean time?? Maybe (of market doesn't plateau in london permanently...) even make a little bit?

Yes, you might lose money. Would you still buy it if that was the case?

Well this is the thing...minimising chances we will? At 710k we could spend 100k on renovating, fees, stamp duty and potentially be able to sell on for 810k in 2.5 years as per sq foot it would work out as 10% below the average after our work. So there's leeway there. Any further above that and it's more and more certain we'd lose money if we moved in that time frame. Any less and the more chance we'd make money.

Will you be happy or miserable doing all that work with kids?

Managing renovation work with kids - even remotely - is very hard work.
If you are selling for 800k that will be ~6-16k estate agent fees. Plus 25k stamp up front so say 35k. Plus the risk of the market having taken a dip at that point when you will have very little flexibility over when you want to sell (due to school). You seem very keen on the idea, but from the outside (as per all the replies) it doesn't make a lot of sense.

Akennyg - can I point out a flaw in your calculations (nicely). What about the interest you will pay each month towards your mortgage in the 2.5 years? True calculation of gain/loss needs to include this as it is a 'spend' I.e. add it to the £810k. However you can also reduce this by the rent you will be saving in the same period. If you can sell the house for this final amount - that's when you will be 'breaking even'. Any less than this is a loss - so clearly means you are better off renting!

Thanks all of you for your thoughts- we are clearly awfully naive, and I'm not sure why Dils (who develop property) seemed so thrilled with this plan?! We will be sticking very low with this property and potentially doing less work on it because we really love it location and style wise. If it's meant to be...etc. But it probably won't work out and plan going forward is to look for a larger home in good catchment and area for us that will see us through at least until dc gets into a good primary school.

Otherwise yes we will end up having to sell up in 2017 so would only really have a clear year there without either work going on or the search for a new place on our hands.

I think the main reason this plan came about is that both dh and his parents are suspicious of the areas we may need to buy in. Dils are stuck in their ways and dh loves his home turf (very privileged area) so much it's a big old wrench to leave it.

Thanks again all I really appreciate the honest opinions on this.

Thought akennyg was borrowing the full amount from parents. She may not be paying them any interest at all. Is that right?

Right as in have I got that right, not as a moral judgement!

Plan for borrowing money is to get a mortgage to pay them back and do some work. Majority of the money is inheritance but top up is loan.

Haha yes don't worry I read it as you meant it!

I think your DP needs a reality check and a kick up the backside. He's very lucky to be able to consider living in London at all - many people who have spent their wholes lives there now can't. A young family with 2 kids needs a house with space and near an acceptable school. Not to be near where the father grew up. Or move further out, get a mortgage, and use the ILs money for private school for 2 dc if they don't need it long term.

My advice, having made this mistake, is forget the interim home purchase. It only costs you stamp duty. If you already have a child, why not go straight to the family home now? (rent while looking) - I can almost guarantee you would be a happier family in the long run. Your little on ewill soon ebe making friends, joining clubs, doing activities etc - easier to get established in an area now and stick to it in my experience (and get on waiting lists!)

The only proviso to this is, I suppose, if the ILs want to buy anyway as an investment and you could then just effectively rent it off them for awhile while you're looking for a family house.

The future of the london property market is very uncertain at the moment. My consistent advice has been to future proof your next purchase for the next 10 years. We chose a home of just over 1200 sqft (paid similar to your budget) and are now extending to double its size with a view to to staying put for at least a decade. We haven't even started a family yet. What you don't ever want to be is a distressed seller: moving because you fancy somewhere nicer is completely different to moving because you've run out of space, no good schools etc etc. as forago said, it's v expensive to move each time, and that's dead money every time. Don't buy for the short term. Every move you make at this level of money would be expensive, hassle-ridden with kids, and disruptive for your kids.

We lived on the edge of a less than desirable area because the house we were in was our only choice at the time. We already had DS then DD came along and we quickly outgrew it but had to stay and were falling over each other.

In the meantime DS starts at the nearby school, makes good friends as do I, starts nearby club and we really settle into the area.

An opportunity came up and we were in a position to buy a bigger house. I always swore I wouldn't move further into the area we were in, the edge was fine but in the middle is not where I wanted to be. I looked at a lot of houses, all further out but a short drive and soon realised having the drive the school run in any direction was going to drive me mad and we love the school so moving DS was not an option. We bought a house smack bang in the middle of where I said I wouldn't go but I don't regret it at all. We are near the life we made, I can walk to school and their friends are nearby.

Once you go somewhere and start to settle, it is hard to move on. I would never pay 25k in stamp duty only to sell and have to do it again in 2 years. Sorry but I think you are mad and anyone who said this was a good plan really has no idea!

Seeing as you have 1 DC and want another soon, buying a 1 bed flat, no matter how big is a crazy decision and not practical at all. I really think you are doing the wrong thing here. Like others have said, steps are not a big deal, they are young for such a short time that I would never base a decision on a property on such a short period of a child's development.

I suspected we would get sucked into whatever area we buy next, for better or worse. Good advice.

But on the pram stage..we are planning (fingers crossed) 2-3 more dcs about 2 years apart...so that stage might last up to what 9 years?even if we are in this particular property for 6 or more years I think easy access is important for us.