What to bid

[InstantKarnage]

Hi all, seeking your thoughts on a property conundrum and where to start bidding. We're looking at a fairly niche property on the market at £975k, it’s been on for 4 months, and no offers. The property is a standout for us - the nicest we've seen - but the area isn't our top choice. We're a bit uncertain about what to offer - nothing similar has sold recently in the area. DH thinks it’s offensive to offer anything beginning with an 8. I’m not sure. What would consider offensive here, what would you consider cheeky, and what would you consider reasonable or at least borderline? Not looking for a valuation on the property, as I say it’s fairly niche so difficult to value. But if it were your property, and you believed it to be “worth” £975k - what would you be offended to be offered! We’re trying not to alienate the seller, but also trying to find the market. We said to the estate agent that we’re worried about the lack of offers, that we don’t know the market without other bidders. We would like to make a low offer to see if we can get some idea of where others see it. We don’t want to be the only bidder and start (and finish too high). Any thoughts please?

If it was my property and I believed it to be worth about 975k I wouldn’t take seriously any offer beginning with an 8. I would immediately reject it.

Having said that, it’s possible after 4 months that the owners are beginning to question whether the EA overvalued it. The EA may have even mentioned the possibility of reducing the price by now, & probably by about 50k to make it meaningful. It may be tactical to wait until it gets reduced and then offer 900k or even 875k if the price gets reduced to 925k.

Or you could offer what you think it’s worth to you now - 900k say, & although your offer will probably be rejected, at least you have expressed an interest so will hopefully be kept in the loop if anyone else makes an offer.

I would also warn you against expecting any help or good advice from the EA. They work for the Seller and aren’t your friend.

Our conversation with the EA wasn’t to get advice - we were just sounding him out really - along the lines of “we’re willing to make an opening offer to get things moving towards the end game, but we’re undecided where to pitch the opening bid yet”. We said any bid wouldn’t be a take it or leave it but an invitation to negotiate if there are no other bidders. And of course if there are any other bidders then it will end up where the market is.

But even by telling them your initial offer would be “an invitation to negotiate” you were showing your hand & basically telling them you could go higher than your first bid. They will tell the Sellers you said that & they definitely won’t accept your first offer. I mean, they probably wouldn’t have anyway if pitched at 900k or below, but I wouldn’t give the EA any further insights into your thought process.

The only question is what is it worth to you. If that is the asking price, offer the asking price. If it is £600,000 then offer that. There is one person who will buy that house and that is the one who values it more than anyone else and has the ability to pay their valuation. And if that valuation does not meet the sellers valuation then there will be no sale.

So take all the amateur psychology out of it. Just decide what is worth to you, offer that and stick to your guns. That is quite hard now as you have told them you are going to low ball to negotiate, but I would still just say ‘we have thought about it and this is our best and final offer’. This way you don’t get dragged into a bidding war and inevitably over pay, nor do you feel you missed out when you would have offered more but the sellers took a higher offer. It also allows you to move on if they say no.

Yeah I know what you mean. I guess my thought process is make a low offer to see if any other buyers break cover and therefore find a market price (whether the seller accepts that market price is a different matter). If no other buyers appear then we would negotiate a little as our initial offer would be below what it’s worth to us. I’m thinking it’s worth at least 925 to us and would be willing to go to 975 (if there is a competitive bidding process). Thinking of starting at 875 and negotiate up to about 935 if no other bidders. We will need to sell it ourselves at some stage - so if there’s no other bidders we’re not willing to pay full asking.

You really shouldn’t have to pay full asking in this current market unless the property is very attractive to lots of people and it doesn’t sound like this one is or it would have sold by now. Not saying it’s not attractive but it is fairly niche as you say & those sort of properties are harder to sell.

Personally I would start higher at 900k but finish lower at 915-925k unless other interested buyers came out of the woodwork. You can use the phrase “I’m not bidding against myself” to explain to the EA why you won’t keep increasing your initial offer. They have tried it at 975k and it hasn’t sold in 4 months so they should be receptive to a sale at below asking price.

I use the "offer but not an offer"..
Perhaps wait for the EA to call you for feedback, depending on confidence.
Along the lines of "we really love this house <lots of heartfelt reasons reasons>.... Sadly our budget can only go to <number> cos eg we'd need to budget for xyz (handy on refurbs)... Appreciate this might not be what you're after...."
Then wait 😂
Ultimately you've gotta hold your nerve though. EAs are used to it and won't be offended. It's up to the seller as to whether they get offended... Who knows, you may still be the highest offer.

Round our way, RM starting prices have been overly optimistic, perhaps off the back of the" boom". Generally speaking there's more room to negotiate. We had an offer accepted 50k under list price just now (550 to 500)

Good luck!

This is very important advice.

I just noticed that you haven't started to sell OP ? So on one hand your not in a great position to low ball. However 4 months of no offers at all says the house you want is considerably overpriced. I think 10% under is not an offensive number to go in at considering the situation.

I would not consider you a serious buyer if you started with an 8. I wouldn't even accept your offer at £950 (say) if you were not under offer yourself.
At £975k they probably started thinking they'd accept £960 bottom, the fact they haven't already decreased it after four months makes me think they are in no hurry. However, they may now think their bottom line is £950k as they haven't had offers.
So no harm in starting in the low £900s - you've already said you are willing to go up to ask if needed. But unless you want an extremely drawn out process, if they reject it I'd go to X as maximum bid, they either accept or reject, and if the latter then wait a bit. You can always tell the EA that it's on the table and if another offer comes through to inform you. But get your own house under offer otherwise no point even starting.

Looking at it from the sellers perspective, I think the strength of your negotiation lies in your position. Apologies if it’s in your op and I missed it but do you have a property to sell? It is under offer? What is the chain like?
As a seller, I would be more inclined to accept a lower offer from someone ready to proceed, and in a short/ well qualified chain. If you are not in that position, I guess go in with what I’d be prepared to pay and leave it on the table but knowing that someone else may come along and offer more and you would lose out.

@InstantKarnage 🙇🏻‍♀️🙇🏻‍♀️🙇🏻‍♀️

WHY would you blah all that at THEIR EA?

you might as well have stripped naked while you were about it.

Thanks for the comments all. Just to clarify - we are chain free cash buyers. Also, as we understand it the sellers are emigrating and building a house abroad in their home country. Maybe that helps in that they are under time pressure to sell, or maybe it doesn’t help if they have a bottom line figure they need to finance their house build and new life - who knows.

Ours is on at a similar price to the one you are looking at, and I won't consider an offer starting with an 8

At £900k I would think it was a fair starting offer

We are currently buying a house that started at £1.2m and we ended up paying £825k.. it's a massive listed house but in a town near Gatwick so a tricky sell but it works for us in so many ways .

It was on the market for a year and they dropped it . We only sold ours to buy that because of the way it works for us and we would have to pay so much more had it been in our town . id say they are testing the market and will come to the realisation themselves they wont get that amount.

at the moment id offer £900 as at least it starts with a 9.

@WagWoofWalkMeeoow - basically so as not to alienate them and so they wouldn’t reject us outright. I don’t expect them to sell at 875, so it’s not a serious “offer” that we are expecting them to accept. It’s just to start the process as no-one else seems to want to kick it off. I don’t know if it’s the wrong tactic - but it just feels too cheeky to go in at 875 as if it’s a serious offer.

Niche, overpriced and not your preferred area - might be a difficult resale?
I would move on and keep looking

OP doesn’t have anywhere to sell. They were talking about potential problems selling this house in the future if they pay too much for it.

@Digimoor Yes I think our concern is it would be difficult to sell at the current level - so we are trying to ensure we determine the market price, or if no bidders get a reasonable reduction in price to reduce our risk. The area is not our top area, but it’s fine - we will absolutely live with it.

What would you feel happy paying for the property?
You don’t have to find the market price. If you offer and your offer is accepted, that is it. You are the market, and that is the market price.
Don’t offer more than you’re comfortable with, but don’t play games or try to second guess other potential buyers. As a niche property it’s always going to have a smaller pool of buyers btw, so I don’t think four months is a particularly long time to be on the market.

@NewFriendlyLadybird we would be comfortable with 925 - that’s our gut feeling as to what it’s worth to us - but would be willing to go higher if needed

So just under 95% of the asking price. I wouldn’t be surprised if that’s actually what they have in mind.
If I were you, and bearing in mind I’m not and don’t know the house, I’d offer 910 or 915. They will want to negotiate you up, of course, but that means you can land on 925 with dignity intact on both sides.
Offering too low isn’t necessarily insulting, but it can make it difficult to reach a figure where both sides feel happy.

I can’t really see the point offering at 875k if you think the house is worth 925k & are happy to pay that. It seems excessive game playing and could backfire re the sellers not thinking you’re serious buyers when you are.

To start at 900k gives you plenty of wriggle room to allow yourself to be talked up a little- maybe 915, maybe 920 maybe 925k. I would offer 900k and when it gets rejected ask them for a counter offer.

@Twiglets1 - thank you. The 875 was just a throw out figure - I think you’re right 900 would make more sense, it’s in the right century at least and still gives us room to negotiate.

I'd say 900k if you are happy to pay 925 or more. Psychologically far less likely to annoy them
But also of its been on at 975 for 4 months with no offers and they haven't dropped the price they might not be interested in negotiating at all
Won't know til you try