If you were a FTB in zone 2/3 now - how would you decide what to offer?

[another20]

Helping young relative to buy their first property. My advice has been to wait a couple of years but he is keen to get on with his life and wants to spend around £400k in zone 2/3 NW London. What data should he be looking at for comparables? eg almost ignoring "for sale" prices and then looking what has been paid since April 2017 for similar --- and going in 10-20% below that. Or maybe looking at properties that have been on for a long time - or just those that are "accurately" priced now? Or go to auctions? I know none of us have a crystal ball but just trying to understand how to approach this so that they dont get their fingers badly burnt first time around.

We were ftb in z3 sw London and compared what other houses were selling for and what they had sold for.

You can of course offer what you think it's worth and the vendor can say yes or no

Are they looking at flats or houses? I'd try to make it as future proof as possible in the current climate. We bought a 2 bed end terrace as I knew I didn't want dc in a flat and having direct garden access is very handy.

Don't think a FTB will be able to buy at auction unless they are 100% cash - you have to complete v quickly which doesn't work with traditional mortgage financing.

I'd just keep you eye on what is happening, and like PP says try and future proof i.e. not a tiny 1 bed flat if poss as you might need to be there for a while.

Check out the property price reports that are by london borough so you can see how things have performed. I probably wouldn't want to pay more than things were going for a year ago, but that 400k zone 3 bracket is probably the area where that has been growth still.

Check the local market, how long properties have been up for sale, and if reduced (often plenty at the moment) by how much. Zoopla has this feature. Also I'd check last selling price and date - often available on Zoopla - to see whether a price is over-optimistic, usually aka greedy.

In this market I don't think I'd initially offer more than 10% below asking, and maybe quite a bit less if property has been on for a long time. Also, if it looks like a landlord charging for the exit before the new tax regime kicks in - you can usually tell - no chain and the place looks a bit bare/unloved/ scruffy - then I'd probably reduce my offer a bit more.
You can always up it - not that it's good to do that in a hurry. Let them sweat a bit, and think you're not going to.

I suspect property at the cheap end of the market, and £400k in zones 2/3 is cheap, won't be so affected by any down turn, they will a steady queue of FTB's looking to get on the ladder and the typical professional couple on a joint income of 70 - 80k can expect to save a 40k deposit quite quickly.

I'd be careful about offering things like 20% below asking price.
I own a property which I'm considering putting on the market (it would be aimed at FTBs so around the £450-475k mark (in London obviously)). For my part and that of others who market their properties, I'll be seeking advice of a few local agents and pricing it sensibly. By sensibly, I mean reflective of the condition, size and location/desirability of the property as well as the prevailing market conditions. There are also the general laws of supply and demand to consider.

My point being, I'll price it by taking into account all of the above factors and if someone comes in with a cheeky offer of 20% below asking, not only will I not even entertain it, I probably won't even engage with the prospective buyer again (I would assume that they are time wasters and would be the type to pull out last minute or make another lowball offer as we are above to exchange).
Don't use a rule of thumb eg making a 20% low ball offer on every flat you view; when viewing, the buyer should also seek advice from the agent etc. ie find out if the seller is in a chain/a rush to sell etc etc and use that information to make a sensible offer.

Look at recently sold prices and consider the condition of the property.

It might make sense to get something cheaper that needs work. Doing the work and increasing the value of the property might balance out the drop in value.

As pp have said try & future proof as much as possible. I would look at what prices were over the last 4 yrs or so, has it massively increased etc.

Also I was under the impression that due to much stricter lending rules you will need a much higher joint salary of 80k/or deposit to afford 400k homes.

Sorry forgot to add the + on.

Thanks all for the advice. It is very helpful. I have been following this thread www.mumsnet.com/Talk/property/3062266-this-weird-property-market and it is seems that in London at least there are consistent examples of the market is at a standstill, v little viewings, property hanging around for a long time, as well as lots of significant reductions - but is that from initial over valuing by EAs? Also quite a bit coming on the market at high prices to test it?

I didn't suggest offering 20% below asking price - I suggested ignoring the asking price and looking at what comparable properties have actually sold for and then offering 10-20% below that to absorb the downturn.

I'm in zone 2/3 and someone in my block has just put their flat on at 50% more than two v similar ones just sold at this month. So 20% under that asking price is still ridiculously overpriced...

I didn't suggest offering 20% below asking price - I suggested ignoring the asking price and looking at what comparable properties have actually sold for and then offering 10-20% below that to absorb the downturn.

Unless the seller is in a forced sale situation they aren’t going to sell to you or 20% less to ‘absorb the downturn’ yet.

Scrubby - yes I think that there maybe a few sellers who want to get out of the market and are chancing their arm like your example - that why I suggested ignoring sales prices and doing thorough comparable research on actual sold prices....which in reality is what you would do anyway. I just want to ensure that there is a bit of slack built in to any offer to cushion the blow of an inevitable decline (if this is not already reflected in a sensible asking price).

This thread kept us amused a few weeks back: www.mumsnet.com/Talk/property/3054048-Whats-wrong-with-our-house

another how about you keep your amusement in check eh.

If I was skeptical I might think you were one of those arseholes from HPC just trolling away...

Whats trolly about my post? I have contributed and been amused by MN for over 16 years now! Long may it continue - eh!

It really isn’t just thousands of sellers across the capital putting stuff up for too much.
The market has just really turned over the last couple of years starting from the super prime prices and now down to pretty much everywhere.

The London market is still very area-dependent, so I wouldn’t assume sellers would be accepting less money than recently sold prices at all. For FTB properties in areas on the upswing, prices are still moving upwards from what I’ve seen locally near me (e.g. flat in my building sold for 300k eight months ago, and now another identical one has just sold at 310k with quick turnaround)- just moving upwards at a slower pace!

Think the best advice is maybe for him to find somewhere he can add value by doing work, check out similar properties via Zoopla before offering and get a fixed rate mortgage with a view towards staying in the property whilst the market is weird!

I suggest he always finds out the length of lease remaining and the annual service charge before viewing.

There may be a reason, hidden in one or both of these, that a property has languished on the market or seems cheaper than other local properties or dearer.

Thanks all - thats very helpful - lots to research and consider. I have noticed a few go under offer in the past week - so will keep an eye out for how much they finally sold for. Anyone know how soon this is logged on RM after completion - or if this info is available elsewhere earlier? Would an EA tell you (ie after exchange)?

RM get the info from the Land Registry. It’s meant to be about 3 months but our sale price took nearly 6 months to reach RM.