Advice on Negotiation

[SleeplessNights2011]

I Wonder of anyone could give any their thoughts about whether our offer seems reasonable and whether it would seem likely that we would have a problem with the sellers?

We have put an offer on a probate property, sellers are siblings, one in UK and one in Australia. It came on the market at the beginning of June, they accepted an offer but that has now fallen through. It is on for 950K but needs complete modernisation, re pointing, new windows at a minimum. We assume will likely need re wiring and re plumbing/boiler (currently has emersion).
It has 3 bedrooms and really needs side return and loft conversion to make it comparable to other properties on the road.

Ceiling price of the road is £1.25K for fully extended/remodelled and 5 bedrooms.

We initially offered 890K which they declined. EA reverted with their response that they wouldn’t consider anything ‘without a 9 at the beginning’.
We have subsequently countered with £910k.

They are unable to get a response from the party in Australia. The UK party has apparently said to EA that they feel this is due to the fact they would like minimum of 920-925K.

We are in London for context so works is going to easily be in the range of £250-500K.

There is no right or wrong answer to what is it worth? It's worth as much as someone is willing to pay.

If they accept an offer from someone else on the property and would have been willing to pay £925k, would you be relieved or devastated?

Yep. Golden rule. Offer your maximum comfortable amount at outset and state that. Now you've budged you have given the signal that you may have more funds available to be extracted through negotiation.

I wouldn’t go up any higher. That sounds like a fair price from the information you’ve given. If the answer comes back as a No I would leave the offer on the table.

No one can tell you because no one can judge what the house is worth to you.

You have to decide on a figure and then I would stick with it.

Personally I think holding out for 10K on a 920k house (ca. 1%) is arguing over pin money. It shows a lack of professional negotiating skills typical in house buyers/sellers who are inexperienced at doing big deals and are unable to focus on the big picture (this is not unusual btw).

The fact that this is being done against the backdrop of a falling market doesn't help build a picture of reasonableness.

Finally I would say 500K to rebuild actually sounds like knock it down and rebuild territory. That is one hell of a modernisation.

Sounds as though replumbing, rewiring, repointing, new windows, side return plus loft conversion would be at least £350k. So going much higher than your offer wouldn't make financial sense compared to buying an already-developed property. That's without new kitchen/bathrooms/decor.

You have already offered too much.

Honestly it isn't about what it is 'worth' but how much you want it.

If they refuse to sell to you at 910 are you prepared to walk away?

I appreciate it is more of a buyers market in many places at the moment, but that means if you are willing to settle for pretty much any property, you can likely find a 'bargain'. If you very much want a specific property, you may have to stump up more or risk that the seller just leaves on the market for another 6 months or ends up with a higher offer.

We are hoping to buy a flat and have some fairly specific requirements in mind. So whilst we could get a 2 bedroom flat at what feels like a good deal, we accept we may 'overpay' compared to the best bargains available for the features that we want.

It sounds as if you have offered too much already based on the figures given (unless you have endless money which you can afford to lose and adore the house).

The cost of the proposed works to bring it up to maximum value for the street has no connection to the value of the property as it is now, in my view. I had someone make a low offer on my house because he wanted to do a loft conversion and took that amount off what he was prepared to pay. I declined (even though he was a cash buyer) on the basis that the house was priced comparably with similar properties in the area. How does the price they are expecting compare with other properties with the same number of bedrooms and also needing renovation?

Thanks for everyone’s replies.

FWIW I do think the estimates
for work are in the right ballpark for where we are. DH has a friend who owns a building business and although they were talking very loosely about property renovations (not specifically this property) that was what he thought it would be likely to cost. A friend has had a recent rear extension locally and the foundations alone were £80k 🤷🏻‍♀️

Regards comparable houses… tricky as obviously you never truly know until further down the line what property has been bought for. Almost all of them have been extended when looking on the planning website.

Similar property but with a accessible loft space and wooden stairs (not fully converted and accessed from master bedroom) and basic side return in need of modernisation- on for £999, offer accepted in June but I don’t know how much. One further up the road with loft conversion including bathroom, no side return, a bit tired so needed decoration but didn’t obviously seem to require extensive works - went for £1.1.

You are all correct though, we need to decide our max and stick to it.

Your offer sounded reasonable but it's more about what the vendors will take. I imagine in probate sales it can be difficult if one sibling wants to hold out for better offer etc.

It's difficult when you have to assess how much work will cost etc.
I'm also looking for a house in london and I'm not thinking that much about ceiling prices as I will be in the new house hopefully 30 years plus... I'm more working out how much to offer based on can I afford to do the work it needs done and pay this for the house. And if the offer isn't good enough for the vendor, Im moving on.

I was actually relieved not to have bought a house I loved as I realised I'd offered more than I could really afford (eg wouldn't have had any money left for work) but thankfully the vendors still thought it wasn't enough!

I would just leave your offer on the table. One of the siblings being in Australia seems a bit of a red herring, they are just seeing if you will up the offer.