Low offer on an overpriced house?

[Enjoythelittlethings5]

I'm a ftb and I've been trying to get on the property ladder for the last 3 years. I had an offer accepted on a house back in 2020 but it all fell through after 3 months as we soon discovered the house was unmortgageable. Then came the madness of 2021-2022 with house prices rising/bidding wars etc. I was outbid on a house and shortly gave up afterwards and decided to have a break. Things have now settled, prices slowly coming down and properties don't seem to be selling as quickly as they use to, although some sellers still have (in my opinion) unrealistic expectations.

I've had my eye on a house for the last couple of months. It was first listed at the beginning of May for £179,950, then reduced to £169,950 at the end of July which doesn't seem to have made a difference as it's still up for sale. I've checked and the house was first sold in 2006 for 110k then again in 2016 for the same price (inherited??)

It's a 2 bed bungalow with a driveway and back garden. Granted it looks as though you could move straight in (carpets and walls/paint look to be in good condition). It's had a new kitchen and bathroom since 2016 but I can't see anything else that's changed. I have no idea how much something like that would cost but the kitchen is small. It's currently empty. Houseprices.io estimated worth is £156,000, but I'm not sure how accurate that is.

I'm buying alone but I have good sized deposit and I earn a decent salary for a single person, however I don't want to overpay as I'd like to have some savings left over for a rainy day. I'd be comfortable with offering £135,000-£140,000 but is that too low??? On the other hand, is that a low offer when the house is clearly overpriced? I don't want to piss the vendor off but I wouldn't be comfortable or feel it would be sensible paying any more than that.

Obviously I don't know the vendors circumstances and they can only say no, but I just feel like I'm being cheeky with that figure for some reason. I don't want to waste anyone's time, including my own if this is a ridiculous idea. It would be great to your thoughts.

Yes @Enjoythelittlethings5 I think if the price drops again to 160k it would be much more likely that they would accept an offer at 140k.

You're asking for a 30k discount which is around 20%. You're unlikely to get anywhere with that.

I'd say 10% is the best you could hope for

Think I'll hang fire on this one. It's on my wish list on right move lol, so I'll just wait and see if the price comes down. I've been renting for the last 8 years, so a while longer won't make much difference. Hopefully I'll find something in the next year or two, but I'm not jumping into anything as whatever I buy, I'm planning to stay there long term so it needs to be right. Thanks for your help!

Good Luck that something a bit cheaper comes up soon or this one reduces in price, you never know.

@Twiglets1 thank you 😊 I hope so 🤞

Under The Property Ombudsman Code of Practice for Residential Estate Agents – Section 9a , it states:

“By law, you must tell sellers as soon as is reasonably possible about all offers that you receive at any time until contracts have been exchanged unless the offer is an amount or type which the seller has specifically instructed you, in writing, not to pass on. You must confirm each offer in writing to the seller, and to the buyer who made it, within 2 working days.”

which is what iv done many times, to put in writing at point of signing t&C's that I'm not interested in offers under a certain % below asking, so record them , but please don't pass them on...

Ok you’ve done it. But I doubt it’s common practice that people instruct their EA in writing that they don’t want to hear about offers below a certain price.

It's probably best I didn't act on this one as I've realised the house was actually first listed in March (not May) for 190k, then reduced to 180 in May and 170 in July, so my offer of 140k would have probably looked very stupid considering they originally wanted 190! Surprised they've knocked so much off in such a short space of time though.

If it was 110K in 2006, I'd have expected it to be around 175K by now unless it has deteriorated in condition. https://www.statista.com/statistics/751605/average-house-price-in-the-uk/. The 2016 price is a bit odd- was that in line with other similar properties on that street at the time? Even if so, I'd still expect the current price to be more like 150K, on the basis of this average graph.
Bearing in mind that a graph that averags the whole of thye UK can be well out of line for some specific localities. of course.

You could equally say that their original asking price of £190k looks a little stupid as they've now reduced to £170k and it's still not selling quickly.

An asking price is not an arbiter of 'value', it's just someone's best guess (maybe an educated guess, but a guess nonetheless) as to what they might be able to get.

Have you not got any comparables? Similar properties that sold in the last 2 years, or other properties you could extrapolate from.

@CrystalCascade only semi detached houses, which both sold in 2021 for £162,500 and £143,000. I can't see any bungalows in the area that have been sold recently so it's hard to compare. There is a 2 bed semi up the road currently for sale which is listed at £165,000 but it's been on for a few months too. It's not as modern as the bungalow but it does have a garage.

I was a bit worried about posting the link but who cares. Hopefully this will help to see if I'm being unreasonable/unrealistic.

www.rightmove.co.uk/properties/133044083#/?channel=RES_BUY

@TarantinoIsAMisogynist I do wonder where estate agents get their figures from sometimes!

I think you have nothing to lose by making your offer and maybe something to gain.

its coming to the end of the house selling season, people don’t want to get into negotiations and chains that could drag on to Christmas.

if it is a probate sale then the executors would probably prefer to lose a bit on the sale rather than have an empty property over winter waiting for the buyers to emerge in the spring.

the estate agent will know you are looking and will have you in mind for suitable properties

having an offer refused now doesn’t stop you making another offer if the price is reduced at a later date.

How big of a semi-detached compared to the bungalow?
I'd expect the bungalow to be slightly cheaper but if it has more space and large garden and the semi-D's are small boxy terraces then their prices might be similar.

@CrystalCascade

These are the two semis

www.rightmove.co.uk/properties/137365226#/?channel=RES_BUY

and

www.rightmove.co.uk/properties/134942876#/?channel=RES_BUY

2nd one looks smaller to me though.

For some reason I thought the bungalow was detached!
It's not. That will lower its value to people other than downsizers because although it has a bigger space to potentially build a second storey you'll need to deal with the neighbours. Doesn't look like it has room for a dormer extension.

It's hard to tell from the photos for first semi how big it is. But the second looks bigger than the bungalow with similar garden space if not for the conservatory. IMo it's worth more than the bungalow but I don't knwo the roads or the area.

Op, it might be overpriced, that’s subjective, but it’s not over priced by 30 grand. I think uou must know this.

@Janieforever oh no of course I know this, but when looking online the house is estimated to be worth around £156,000 not £169,950) so if I offered £140,000 for example, that's only 10% off the asking price. Factor in the cost of living crisis, mortgage rate rises, market slowing down etc, I personally don't think that's unreasonable. That's what I'm trying to explain.

Looking at it compared to the two houses I agree that the bungalow looks overpriced. Having said that, bungalows are usually on a larger plot if land even when semi detached so perhaps that is why the price is high.

I don't know how the online estimate works but it will have factored all of this in already. So if you're taking that as a good estimate then a further 10K off makes no sense.

Also not sure if you know the seller's situation but the market slowing down isn't just due to rate rises leading to less buying. A lot of people don't HAVE to move , so if they can't get the offer they want, they'll just stay put and take it off the market.

@CrystalCascade I don't think the sellers live there. It's been empty since March and from a previous listing it looks as though it was a rental.

I suppose all I can do for now is wait and see if it's reduced again, but it's helpful to compare against other properties etc.

People always forget they are buying land when they buy houses. What is the size of the land you would be buying? Bungalows usually have a larger plot or similar plot in comparison to a semi with the same number of bedrooms. Also bungalows are way more scarce and will probably rise in comparable value as our population ages.

I guess inflation plus a new kitchen could easily take it to £150-170k but £190 looks ambitious to me but then my house has increased by £130k in 5 years according to zoopla.