Offering 10% under in current market

[AlmondMilkLatte]

Hi all,

Just looking for some different POVs on this. DH and I are looking for our ‘forever’ home and a lovely house has come on the market. It’s in the right area for us and is marketed at £400k. It needs a lot of modernisation and has no central heating, so we’d need to spend a lot of money on it - new kitchen, new bathroom, the works. It looks like it was last refurbished a good few decades ago, maybe 1960s-1970s. There’s also scope to extend which is a really positive point and something we’d look to do in the future.

Bearing in mind the level of modernisation needed and need to put central heating in, plus the current state of the market etc., would an offer 10% under be cheeky? We’re in the SW of England, if that makes a difference.

TIA 😊

Go for it. You can easily go up, you can't go down. a 10% correction is being reported in the press so start there.

Try, the worst the can do is say no.

Be cheeky and prepared to walk away. Eventually someone will say yes in this market.

Yes you can go ahead and try making a low offer, hopefully it works for you. We tried the same with 3 properties, they did not budge, we had to walk away. The sellers are yet to smell the coffee.

Where we are in SW (just - Wales border area), things still seem to be selling, but I do think there has been a definitely slow. I expect at least some sellers are now pricing for current times anyway and I would think things like no central heating etc will already have been taken into consideration. It might be worth making a low offer as long as you don't think they will be offended/not take you seriously.

Depends. How long has it been on the market? How is it priced in comparison to similar houses on the market? What would it be worth once renovated? What would it have been marketed at at top of the market? People say go in at 10% below but if it has already been priced around 10% lower than last years prices then they are less likely to take an offer.

We offered 10% below asking. It had been on the market since October and def still at aspirational last summer prices. It’s been accepted (offer made in May) we’re in SE England

I think you need to look closely at recent sold prices and the condition of those homes and offer according. It's no good taking 10% off the asking price because it's a falling market if the last 400k sale was in perfect condition. The work you are describing is likely to cost 80k, and that doesn't price in a falling market. So, educate yourself on the local market before just plucking a percentage out of the air (which, to be fair, is often quoted at the moment) if the real value is: 400k minus 10% for falling market = 360. Cost of works 80k, real value 280k.

I wouldn't bother writing this post if I hadn't seen so many vastly overpriced houses owned by old folk or family in probate in the last three months. It seems to be the group who are least accepting that properties are worth far less than the peak in summer last year.

Thank you all for your responses, taking this all on board 😊

That’s interesting, @KievLoverTwo, when you put it like that, it sounds hugely overpriced. I’ll look around at what others have sold for recently.

Price falls have started and it is likley we are just at the beginning of a significant downturn. I think negotiating downward in most cases will be expected by seller's. Anyone buying at the moment needs to be very careful as some seller's seem to be pricing in a bit extra - as they expect to be chipped on the asking price.
https://uk.finance.yahoo.com/news/uk-house-prices-post-biggest-060735967.html

Agree about having a look to see what else has sold and is on market now. We are in SW and paid 405k for a house on at 450k back in May. One around the corner was on at 580k recently and now under offer and another has just come on at 618k which I can’t imagine will sell but time will tell.

Our budget is 60k which is low for size of house but I have a great and well priced team working for me and a second hand kitchen.

I viewed a house yesterday also on at £400k. Needed everything doing to it including the roof, replastering, damp issues, new kitchen, bathroom, some double glazing,new boiler and rads, electrics before you even think of decorating and flooring. Vastly overpriced as I could buy one road over already extended into the loft with an extra bathroom and bedroom for £450k and only surface decorating to do. Some people have yet to wake up to present market conditions or are blind to the reality of their house. You would need to spread £100k to get this house to the same standard as the more expensive one and you would still only have 3 beds and one bath. I am on the south coast where property is dropping by about 10% and the market is slow. Estate agents are having to work a lot harder now just to get viewers through the door and I have them ringing on a daily basis either to remind me of viewings booked or offer viewing on properties coming on the market or hanging around unsold.

Usually the cost of work is built into the asking price.
What's relevant is the cost of the house and work that needs doing Vs a house done to the same spec, and, possibly more importantly, how much it is worth to you.

The asking price is the price that the vendor wants to sell for, not necessarily the price that the property is worth in the current market. Research comparable properties to see what has sold and for how much, and also what hasn’t sold - properties that have been on the market for a long time are overpriced.

Only offer what you are willing and can afford to pay, accounting for the works that need doing - it’s a business decision so ‘cheekiness’ doesn’t come into it. You can explain to the EA how you’ve reached your figure, so whilst you may upset the vendor, the EA we see that you’re being realistic in the current market should they have any other suitable properties.

A lot of vendors will need to lower their expectations in the coming months, else they will be on the market for a long time.

It may well be that the house is only worth about 350/360k. But what you have working against you is that it has only just gone on the market so they are unlikely to accept 10% under straight away.

Maybe leave for a few weeks and then offer 10% below? You risk losing it but it sounds overpriced so probably not. Only the bravest will take on renovation projects at the moment even at a good price.

Minimum 10% off asking. Give it 6 months market will be very different

Thank you, all. It’s only been on a week, so early days yet really. I’m thinking we’ll either see if it’s still on the market in a few weeks, or give it a miss on this occasion and see what’s around in a few months or perhaps a year. It feels an unsettling sort of time to move, and I wouldn’t want us in a year’s time to be stuck in a building site we overpaid for, looking at next door selling for wildly less than we paid… thanks, all 😊

You may as well try. I did read an article suggesting this slowing is more of a correction than a downturn. Obviously prices went mad during covid and this seems to be the fix!

I think a lot depends on your future plans.

Property prices will always dip and rise. If you don't plan on staying for long, then negative equity could be a concern. But if you plan on staying in the property for quite a while, then negative equity doesn't really matter. Negative equity is pretty irrelevant if you've got a mortgage tied up and in place, and you have no plans to sell or move. In the long term, property prices will always increase.

For context, I bought in 2007 at the top of the market, right before the huge crash. Undoubtedly I would have been in negative equity but I didn't care, and didn't bother to check. It was my home and I was very happy living there. I've literally just gone to market - yesterday - and it's been priced at around 38% more than I bought it for in 2007. And before I'm dismissed as a greedy seller, I've gone on at the lower end which is about £20-40k less than similar houses in the same area. I've had four viewing requests in the first 24 hours which suggests my pricing is competitive. I don't mind coming down a bit either - but I wouldn't lower my price by 10% just yet. However I would take 5% lower than the listed price, no problem. That's because I want a quick sale - which is why it's been priced so competitively. (Also, although the % increase seems high, I only have a small 2-bed in the SW so we're talking prices of <£200k).

We bought our new property last year - we're buying with DM to build her an annexe. We have spent £££ on a new extension and creating an annexe. As the house market falls the house could well be worth less than the total spend, but I'm confident in the long term, the value will be significantly higher. We're not moving any time soon so short-term drops won't make any difference to us.

I'm not suggesting you go wild and buy recklessly - all I'm saying is that you can wait a long time waiting for the market to bottom out, and sometimes things don't pan out as the experts predict. I don't think it's worth wasting your life waiting for the conditions to be just right - if you want to buy and can afford it, then great. If you can't afford it, then don't stretch yourself.

I do completely agree with previous advice though - you could absolutely try a cheeky 10% below asking price offer to test the water, but are you sure that you'd be paying the right price? Whatever house you want to buy, compare it to others available in the area and see how it matches up - look at condition, work needed, square footage, size of garden etc. There's no way of taking an isolated house and working out if it's good value - you need to see what else you could get for the same money in the same area.