Asking price on property

[Cafemad]

Hi

A desirable property is on the market for “offers in excess of £600,000”. We are the first to make an offer of £600,000. The minimum. If you were the seller, would you accept or hold out for a better offer? What about the economy? As a seller would you worry about the impact of an economic downturn?

If I were the seller I'd definitely hold out.

Has it just come on the market?

If so then they'd be mad to accept the first offer. It's a desirable property, and they stated offers over so I would expect a few other offers higher than 600k.

It has some big negatives including needing A LOT of money spending on it. I like it because of where it is located and not the house itself. I understand from the agents that the asking price is more than reasonable. A similar property sold nearby and has one more room and bathroom for £660,000. Strangely, I’m worried I’ve offered too much but I like the area and see it as desirable.

So also worried I might miss out.

It depends how long it’s been on the market and how many other viewers they have lined up. If it only came on this week and they have 20 viewers lined up this week, they probably won’t accept. On the market for 3 months with no offers, they probably will.

It’s not been on long and the estate agent seems to suggest that it is worth £600k and doing the sums based on the comparison to one nearby, I’d agree. My offer is the only one so far and no other viewings but that’s not to say some may not materialise over the coming week or so.

I think it depends how desperate they are to move. We looked at a place last week that seemed very expensive compared to other things we've been looking at and had been on for over a year. Turns out the vendors had moved out a few years ago and kept this house for when their children were at home during university holidays, they clearly didn't need to sell it right away and could hang on as long as it takes to get what they want for it. Another one we looked at the vendor was desperate to sell as they were moving into a new build with a set timetable for completion thatvwas fast approaching and they'd paid a holding deposit.

My view is that a bird in the hand is worth two in the bush. Its a good offer and the “in excess of” is nearly always a ploy to guarantee the minimum price. Furthermore if a similar bigger property on the same street sold for only £60k I cannot see any sensible person paying over £600k. The mortgage company may simply down value to £600k any way and a lot of time and effort would have been wasted waiting for a higher offer that in the end isn’t able to stand up to scrutiny. If the estate agent also thinks £600k is a good representation of the value, then stick with that. All the signs are pointing in the direction that the property isn’t worth more than £600k. Desirable or not.

Greed can backfire.

Did the 660k house need work? What will be the value of the house you like when it’s done up?

I also agree with @Climbingallthetrees
If there are many viewings lined up, you’ll probably need to be patient.

Are you in a position to proceed?
If so, that would sway my decision.

Easily £50k-£100k to get it up to where I want it to be. £50k if I do only basic modernisation - painting, new carpet, etc. The other house was in a similar state from what I understand. I would be gutted if I miss out but I don’t want to be a fool either. I’d hope after renovation it would be worth around £675-£700k. Assuming I completely renovate. I don’t know for sure but I don’t expect much more than that.

My brain tells me it is overpriced but I like the area.

Yes, I am in a very good position to proceed. No chain and mortgage ready to go.

Sound like you’d break even at best? The house should really be cheaper. But I’d probably go for it if it really ticks all the boxes and you’re very picky and know that you’ll get many years’ use out of the property,

"Easily £50k-£100k to get it up to where I want it to be..."

Your choice, surely? Does it need that much or is it what you want? As for house prices, well apparently currently "Mini house-buying boom leads to highest ever monthly price" according to the Beeb website.

Your offer shows an interest, are there currently others interested?

I agree JoJo but I’m not a seller and not sure whether the hope of squeezing out an extra few pounds will be the driving force for the seller or whether they’ll think through things from a different perspective.

Sbplanet, it really does need a lot of work or as the EA said “a sh*t load of money”. That’s why I’m still unsure whether I would feel a sense of regret (ie paying too much).

The mini boom is from the pent up demand but I imagine that the market will cool if the Bank of England and all other forecasts are right. They’re all expecting a fall in prices in in autumn.

I’ll know if they’ll accept at some point next week. The wait is killing me.

I must confess that I wish I’d never seen the house for the amount of stress I’m stressing over it. Oscillating between wanting them to accept my offer and wondering whether I’m a mug. Also the irrational fear of losing out looms large.

If it needs a complete overhaul, are you sure you can do it for 50-100k? 50k isn’t much unless is a 2 up 2 down.

Have you looked more widely for sold price comparisons on Rightmove to get a sense of how the house is priced in the local market? Have a look at sales in the last 12 months. I would also look at how much interest the property is getting on Zoopla (under number of views) in comparison to its competition to see how much interest it is receiving.

We are in a similar position at the moment and my advice would be do not overpay. After this mini boom it is very likely that there will be a drop and you do not want to be in a position where you have a huge project to do and you have lost significant sum in equity. It sounds like you are in a good position and the seller should be taking your offer more seriously - I would put a time limit on response next time. Leaving it so long to accept/decline your offer just sounds like someone trying to use you as leverage with future potential buyers.

Bumblebee that’s what common sense is telling me. I’m glad to read your post. I will be drawing a line under this next week even though I would be gutted to miss out but I cannot see any financial sense in paying more.

@Cafemad there will always be other houses. But house buying is stressful whenever you do it. You've got to feel a bit of personal involvement to want to live there I think.

TBH I'd have stuck their 'offers in excess of' with a proper offer of less than £600k (maybe £590k and say well you've under-estimated the work needed) if you were going to offer £600k (which isn't in excess).

There'll be other places, don't stress too much. :)

A house is worth what people will pay for it OP. If there are multiple people willing to pay more than you; that means the house is ultimately worth that much money. Whether you will make back the money spent renovating it depends on whether you are buying an investment or a home. If you're buying a home, then you will remain in it long term and ultimately make your money back not just because of a rise in equity but because of what the renovations bring to your life.
If you are renovating to hit a certain value to sell on then it's not a smart business investment.

How much has a done up house gone for locally?

It's been on the market for a while and you offered asking? 'OIEO' are often bullshit as far as I'm concerned. I wouldn't have offered asking price in the current climate, but I guess only you can decide what the property is worth, and what you'd be willing to pay for it.

I'd hold out 100%. My parents put their house on as OIEO as the estate agents had very different estimates to each other.
They wanted 15-20k over the base offer they got much more however.

The property on the same street which was in similar condition and with less externally obvious problems to deal and which had 1 bedroom and 1 bathroom more will surely put some constraints on the price. At least from a bank’s perspective. So I’m not sure how much in excess of £600k they can hope to achieve.

But another buyer may make a higher offer and eventually must renegotiate because the bank will not lend to the inflated amount.

Thanks Sbplanet and Small. The more I think about it the more I think I’m allowing myself to be ruled by emotions. The property is over priced and I should reconsider.

Plus the economy is changing and it’s probably better to see how things pan out. I can wait. I’d be sad to lose out but life goes on.