How much under the asking price??

[Rainsbow]

Want to put an offer in on a 580k house. Online says 5-10% below asking price as starting offer but that would be as low as 522k. That's a pisstake surely??

I think this is an interesting question. I remember when we bought our first place a three years ago I also read the "offer 10% less" advice onljne, which I think is quite outdated and arbitrary. Especially in areas where house prices are high and that's a huge chunk off the asking price.

As others have said, it depends a lot on the local market and whether the asking price is sensible for the amount of time it's been on the market.

Your own situation is quite important too. We got a great deal on our first place. We were FTBs, no kids, although we liked the place we had no particular reason to need to move there and then. As we were flexible on what we wanted we knew there were likely to be other suitable properties coming up. We had lowballed on several properties and missed out, took the same approach with this one and it worked out.

We've just had an offer accepted on a new place and our situation is completely different. We have DD now and the timing is good as we'd like to move before (hopefully...) having more DC. We're not confident something else suitable will come up in the timeframe we have in mind. And we don't just like the place, we LOVE it and aren't confident something similar will come up any time soon. So we offered much closer to asking.

Fingers crossed it works out for you (and keep your fingers crossed for us too!!)

We were never ignored when we put in a low offer initially.

Any seller which does that is ultimately shooting themselves in the foot. You never know if your sale might fall through and you need to go back to that "annoying" buyer.

If you think its valued fairly - so worth what they're asking - why on earth would you expect them to accept an offer £60k lower?

believeitornit its because sellers who play games (seemingly) or make what a vendor thinks are ridiculous offers may be perceived as difficult - so the expectation is they'll want to chip away at the agreed price after survey, in the run up to exchange etc and generally make things difficult. And if you as the vendor have spent money on your onward purchase (survey etc), its more stress than its worth.

So I'd be exactly like a previous poster, if someone made a ridiculously low offer unfortunately I'd probably be reluctant to deal with them if other people were interested.

If this is a popular area, with a realistically priced house, there are likely to be others interested.

We'll offer 560 initially which is about 3% below but if rejected will rise offer in steps of 2.5k.

I don't see why the fact you want to extend it means it's worth less money- surely the EA has valued the house as it is now at whatever price- if you did an extension that cost 50k then you would then have a house worth 630k (in an ideal world)

I'd offer less than asking price, but only because EAs tend to say put it on at x with a view to getting Y. But not because you need to save money on the house in order to do a big extension- why should the vendors fund your work? If it urgently needed work to be habitable, or urgently needed kitchen/bathroom doing maybe, but the the EA would have priced taking that into account?

See my last post.

You do have to be careful. If you pitch it too low you could irritate the vendors and their estate agents, who will write you off as a wofter. No harm done if no one else offers, but if someone more sensible than you does offer then the vendors probably won't bother coming back to you to see if you can match it.

We payed £10k under the asking price on a similar priced place and thought that was a pretty good deal tbh x

@biggreen
That seems to be the way things are done around here? If you want to offer less than asking, you need to back up your position as to why your offer is fair

Our buyers did it, and we did it when we put our offer in. Also underlined why we weren't going to up our offer to asking price...

@Spare but it is one thing saying the house needs new gutters or a new boiler as per the survey and something completely different to say that it needs an extension which will cost £xxxx before you'd consider living in it.

Depends what the extension is...
If it's the side return or loft, the house could be considered 'unfinished' without it being done and it's easy to find a ceiling price for when it is done

If it's just making it a bit bigger, it would be harder, so go for the price/sq ft to find a fair price for it

The danger with saying you are discounting the price because you want to do x which the house doesn't need is that the vendor simply thinks, 'why should I pay for or towards that?'. Stepping an offer up by small amounts smacks of game playing. What are you going to do if they counter with the minimum amount they will accept? If you increase by £2.5k and it's nowhere near you'll just look daft and as a vendor I'd be saying only come back when you are prepared to make a serious offer.

not sure where is this house but offer of 560k on a house listed for 580k is a decent offer in my area. I am in sw london and houses arent selling as fast with brexit and election.

Then calculate your offer in price/sq ft, like I have said in every post

This is how high end houses have been bought and sold for decades, and it now seems to be a lot more normal in other parts of the market
It makes it very clear if your offer is fair

Thanks all, we've decided not to go for it and are going to continue the search.

Me again!
Right, found THE house. Don't want to lose it. It was on for 705k but got reduced a month ago to 675k. 1% below would be 668k. Good starting point??

Might not be popular but id offer asking price on the proviso they take it off the market and cancel all further marketing and viewings. That's how i got my house and dont regret it at all.

OP - take a look at anchoring prices and what that means. As the buyer you have ALL the power and offering a low price initially is a huge advantage (providing it is so low they dont think you are time wasters). The opening offer should be insulting and expect it to be refused but by anchoring the price in this way it puts lots and lots of doubt in the sellers mind. I expect people to say 3-5 times in any friendly negotiation otherwise I have paid too much!

In this market with prices falling 3 months in a row, Brexit and asking prices currently on average 30% higher than actual selling prices, a low offer is acceptable. If the seller thinks prices are going down and needs to sell even better. As an anecdotal we offered £270k on a house 'valued' at £350k and agreed on £290k.

Good luck!

£668K sounds reasonable to me but be prepared that as they've just dropped the asking price by 30K that they will stick out for new price at worst or come somewhere in the middle at £670K

As neonrainbow says if you are really serious offer full asking on proviso that it is taken off the market. I've also done that and even if values dropped initially they always went back up again and if you are planning to stay long term it works out fine. Good luck

No sign of prices dropping here and don't agree with jennyj, I think making an insulting offer will often backfire.

Its down to what its worth to you, maybe make that as an opening offer but be prepared to pay asking price to get it off the market. Assuming it doesn't go to sealed bids, and you want to stay put for a few years, would you kick yourself 6 months down the line if you lost out because you wanted to barter over £7k?

Ok namedchanged, another way is looking at the maths of it all. You never own the house until the mortgage is paid off and assuming the OP is using a mortgage lets look at the figures of an asking price purchase compared to a cheeky offer that is accepted.

Asking Price £350,000

Deposit £50,000
Mortgage 3% 25 years £300,000
Stamp Duty £7,500

Total Cost over 25 years £434,290

Reduced Sale Price of £290,000

Deposit £50,000
Mortgage 3% 25 years £240,000
Stamp Duty £4500

Total Cost over 25 years £345, 932

So by negotiating a discount we have saved £88,000 over the lifetime of the mortgage. For me that means we could retire at around 64 not 68 or that would help fund both our children through University. I certainly don't lie awake thinking if I upset a total stranger by offering an insulting opening bid to someone who I met once and will never meet again.

Obviously the OP's budget is much larger so much larger savings to be had on any mortaged purchase.

I was told from an early age you always make the money when you buy something not when you sell it. Offering asking or close to it in this uncertain market would be crazy imho.

Yes, I understand that jenny but we're not talking a discount of £60k (see OPs latest post) but £7k.

But let's factor in another scenario. You offer £290k on a house that (OP confirms) is realistically valued at £350k. EA thinks you're game playing and makes a note on file to say "not serious buyers" or some code for that, vendor tells you to take a running jump. You realise you still want the house. EA reluctantly agrees to put another offer forward but vendor dismisses it out of hand as you're time wasters in their view, property only been on for a couple of weeks and they're willing to take their chances finding someone else.

Other propertied come on the market with same EA. You don't get a look in with any if them as you're way down the EAs contact list for genuine purchasers. All the while, house prices are increasing.

You eventually offer on one with another agent and get it for £370k. How do your figures work in that scenario?

I know its a bit convoluted but if you're in a competitive market (as OP says she is) and you are seen to be messing about (even if you think you're not) it can - not saying always - backfire.

£580K house on the market for 10 days - not long enough for them to consider 10% discount imo but a £560K offer is a good offer. The vendor might very well counter offer at £570 and you'll end up at £565K very quickly. However, if it's still on the market in a month's time, they might well be discounting it if they were motivated to sell.

£675K house on at that price for a month with no takers, I guess. If you were competing with other offers, it depends what your own position is. If you are in a strong position, no chain cash buyer, I would go in at £650K. If you have at least accepted an offer on yours, i.e in a chain but proceedable, I would go in at £660K otherwise, it's a moot point because you're not proceedable. If there are no sniff of other offers, I would go in lower than £650K. If you have seen loads of houses in your area, you'll know whether it's a fair price or not (and so will other people!)

Understand your point, yes you have to justify low offers but in my experience EA's and owners tend to overvalue what they think houses are worth, sometimes by alot.

I live in Bristol where prices in recent years have rocketed but seeing lots of reductions and on my street one 2 bed house still for sale after 12 months, one flat listed at £360,000 reduced to £330,000 then £320,000 then taken off the market. Prices are not increasing on average in UK and Halifax, Nationwide and Land Registry all reporting monthly drops for three straight months. Last time that happened was 2012.

Obviously every area is different but if you believe house prices only go up you might be in for a shock in the next few years imho, with Brexit and high inflation, high energy bills and increased taxation all coming to working households soon.

Definitely market dependent. We bought about 3 years ago in London and our first offer on a house was low - we were completely blown out of the water by much higher offers. We saw another place we loved with an OIRO price of £460. We offered that and then had to raise a couple of times, buying at £500 in the end. The market was incredibly competitive around then and we felt sick at the time, thinking it was a huge mistake.

Since then prices have continued to go up. We would probably be looking at having to pay around £750 for ours today, which makes our decision back then feel more justifiable.

In the end paying what you think it is worth to you is pretty good advice, we love this place (in spite of all the niggles and work that needs doing) and the thought of missing out on it as we were searching too hard for a bargain makes us feel a bit sick!