Offer 30% below asking

[CheekyFakers]

A number of valuations all arrived at the same marketing price.

Healthy number of viewings to begin with (though feedback notes didn’t quite match who came through the door, numbers wise) but no offers. To be fair, this was right in the mini-budget aftermath.

After pressing the agent, one chap came to view. Took a few days to come back with an offer 30% below asking on a £1.7m property.

Is this pure CFery? Is the market that bad? Or have agents been known to send associates round to view and make guaranteed ‘no, thanks’ offers?

If it’s pure CFery, I’ll be making a note to try this myself!

Well exactly if it's already reduced by 150k what will it be in 3 months find.

time.

Is that your first offer since going on the market in August?
I'd reject it as a first offer, but have a serious conversation with the agent about how the market locally to you has changed in the past couple of months, and how much the offer might increase, and what your absolute minimum is.

Well, there are probably two options:-

1. Their budget is £1.2m and they’re chancing it - what have they got to lose?
2. They’re expecting to negotiate, and to meet you in the middle somewhere, say £1.5m (which might not be unreasonable in the light of the change in the market since August and now).

It’s just business. Reject the offer if you aren’t happy and see if they improve it. Work out what you would be happy to accept.

A prospective buyer can offer whatever they like. Agent valuations are guesswork based on their knowledge of the market at the time. It is not cheek to offer 30% below, it may be as much as the buyer is willing to pay, or it may be setting the scene for a negotiation. The bottom line is an offer is just that, you can accept it, or refuse it, or negotiate.

Never forget with the EA valuations... they're mostly on a % sale fee.
They have a strong vested interest in high prices.
But they also need turnover, so sometimes they'll encourage you to sell lower.

Whatever they are advising is based on what's in their interests.

Why did your EA even tell you of this offer ?

EA are supposed to inform you of every offer. It’s not their place to reject them.

If it was me, I’d reject it, but keep an eye on what is selling in that 1-2 mill price bracket to see if you are priced appropriately in your opinion. And be honest, does your house fit the criteria for the majority of buyers in that bracket. If there’s nothing comparable, then it’s pretty much a guessing game and hoping ‘the’ buyer is out there.

when split with ex, we put our house on the market (Home Counties) and had 300k difference in asking price between estate agents so you can see why some people will put in what you think are crazy offers of estate agents may not have a clue. Actually got an offer at the highest asking price because that estate agent did his research and had buyers lined up (and he felt credible, not like a slimy toad).

Exactly this. I really dont understand people taking offence at what someone is going to offer them. Either take it or leave it.

So it begins... quantitative easing was the biggest injection of "free money" into the markets in economic history hence the bubble everything - now it's going into reverse with some force. It will take a brutal winter and economy for some sellers to realise we are in a different world but buyers particularly first-time ones are sensing it already. A 10% haircut at the moment is given I would have thought.

A house near us was listed for 2.75m early summer. It's dropped and dropped and they're now asking for 2m. More reduced than new listings in my searches at the moment.

Given you have no other offers, are you sure it's worth the asking price?

I think there is going to be an awful lot of offended people up and down the UK for the next few years.

No way. The market does slow thus time of year anyway, and interest rates etc hasn't helped. I don't think you can expect the same amount as August, but thats a silly reduction.
Have a frank talk with your agent. See if you need to reduce.

I think you’re right. I also think the market’s going to grind to a halt for a long time. Nobody will move unless they have no choice.

Good grief, where did I say I was offended?

I get that prices are likely to fall substantially over the coming months but predictions have been of a somewhat more gradual slump.

Anyway, all other things being equal, you sell lower, you buy lower; that’s how it goes. It’s just that I wouldn’t have entertained the idea of offering 30% below asking on current property crush because it would’ve felt like purest CFery But it’s still not under offer and three months ago it’d have been snapped up in a couple of days…

It’s definitely a cheeky offer - no one seriously expects the vendor to say Yes ok straight off the bat when they offer 30% under asking price.
Having said that, you’ve got no offers so I would say it’s time to reduce the price by 10% or whatever your agent recommends.
You could also try going back to the potential buyer with a No to their offer but also a counter offer of a10% reduction in price to maybe start a conversation. But definitely don’t rush to accept too big a reduction at this stage. More expensive properties take longer to sell. If you reduce the price by approximately 10% the new price will attract new viewings so it would be worth waiting to see if you get more offers that way.

20 years and looks completely redone.

I also think the market’s going to grind to a halt for a long time.

most definitely, so much of the market depends on equity built up over the years & it's going to be far harder to build now.

I do think you need to realise quite how quickly affordability has fallen off a cliff for anyone looking to buy with a mortgage. We were looking. But then the amount we could borrow, with the same repayments, fell by 100k over a month. These are the repayments we consider affordable, not the banks, who are happy for us to stop paying into our pensions, where we would prefer to carry on! Once you add in lost buyers, so new prices on properties people are selling, plus cost of living, the drop will be more like 15% - 20% if it's proportionate. Certainly our budget will drop by about that much. Wages are unlikely to keep up with rises in costs so leveragability will flatten.

There is also huge uncertainty, we don't know yet what rates will top at. So people are taking risks if they are extending themselves to buy now. From what I can see, even with the small reductions, sellers generally are living in a dream world, yet to catch up with the reality for buyers. But it is so uncertain. I am hearing wildly different things from different estate agents and mortgage brokers, which tells me no one knows. Maybe buyers will have to adjust expectations too, but that will also take time. For us, it's not worth moving now until things have settled, so we are dropping out. We need to be able to move to house bigger enough to make it worth it. Unlikely now until expectations recalibration a bit.

Do you need to sell now? 30% is a lot, might be too much, but might not be.

We offered on a London property the week before Liz Truss became PM. Despite all the market volatility since, nothing changed in what we offered, what the valuation came back with. The local house price is still as strong as ever. This is zone 2 NW London.

I would have loved a 30% discount. But that's just not the case for a family house in this part of London. Wait it out if you can, do not sell.

If that price had tracked inflation (obviously disregarding any improvements uplift) the price would have been £983k!

www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator

Respectful disagreement here.

Zone 2 NW London = buyers likely to have large discretionary income anyway to soak up some of the increase.

Plus you agreed before Truss. This is exactly it. She literally blew a hole in everything.

Prices aren't maintaining here, lots of sales falling through.

If prices maintain, that would be in the face of a massive slowdown in sales whilst us Joe Normals catch up to where we were. Might be somewhere in the middle. All too uncertain to call I think.

This is the massive quantitative easing washout. Worst case, the start of a massive global recession.