Offer too low?

[SleepyOwlz]

Hi all

I’ve seen a property that’s been on the market since October 2023. When we visited, we realised it needs some work to be done plus some modernisation required.

Its priced at £290k and I was considering offering 250k. I realise it’s quite a cheekily low offer and it’s simply what we can afford if we were to also do the extra work after the property purchase.

However, I then checked “the move market” and this particular house has a valuation estimate of £233k with the range being “£220-£246k”.

This was shocking as looking at the previous photos, it shows hardly any work has been done? And the EA didn’t mention of any recent upgrades/improvements either.

I’m sure any offer that’s not close to asking won’t be considered by the vendor anyway, but should I offer closer to market value or stick to my £250k? It’s not exactly my dream house but we’ve been looking for ages and want to get on with a purchase quickly (for various other reasons).

And even though we could afford up to £250k, no one would want to pay more than what somethings worth right?!

What do you think?

Bump?

A property is worth what you are prepared to pay. If you are chain free with a DIP in place then go for it. Over £250k will have SDLT implications so it is not unreasonable. However, if it is a divorcing couple, don’t take offence if it is rejected.

You could post a link if you want other opinions?

Offer £235k giving the valuation and work required as your justification. You can always go up.

Speaking from experience I've found it a mistake to buy a house I didn't really love. I always ended up moving again and that costs time, money and hassle.

Move Market info is not particularly accurate in my experience - ultimately it’s about how the house compares to other similar properties in similar locations in a similar condition - in particular those which are selling. The fact it hasn’t sold yet suggests it’s overpriced but is it 20% overpriced? It’s impossible to tell without seeing a link and being able to see how it compares - only you know this.

I agree with @ibelieveinmirrorballs it's impossible to say without knowing the property & the area but it would be unusual for a property to be 20% overpriced.

Online valuations can be very inaccurate as I have seen with Zoopla. You need instead to compare it to other properties you have looked at. You say you have been looking for ages so you should have a good idea how much this one is worth compared to others you could buy for about 250k.

If it stacks up well then I would be inclined to offer 250k and the owners should hopefully take that offer seriously as it has been on for a few months. Any lower than that and I would expect them to immediately reject your offer but you never know of course.

As 250k is what "you could afford to pay up to" that should be your initail offer, to try and get the vendor into a situation where they accept an offer and start to plan for the future. You then wait as long as you dare before getting an independent RICS valuation done before committing to the full mortgage application and survey.
If the value comes in considerably lower - you have a very strong justification to adjust your offer downward, and a seller that has started to plan ahead relying on you to purchase. If the valuation comes in close to your offer then you can just go ahead feeling comfortable that you are paying a fair price.
The costs of doing this if it falls apart are very small, compared to how much you might be overpaying by. The RICS valuation survey for example will be about £300. You can also appear to have appointed a solicitor but have actually asked them to not start working on any enquiries until after valuation. You can get the MIP free also by choosing the right broker.

@DrySherry its advice like this that convinces me I would be right to never accept a lowball offer from a prospective buyer. I’d much rather lower the price myself at a later date and have a reasonable transaction with a reasonable buyer behaving reasonably. The amount of game playing and trying to “outsmart your opponent” that goes on is infuriating and makes the property buying/selling process unnecessarily stressful.

I think you completely misunderstood my post. My suggestion is that if the house turns out to be fairly priced the buyer can go ahead with confidence at the agreed price.
If it turns out not to be priced fairly the person playing games and trying to outsmart someone was the seller, surely?

This. The advice smacks of trying to delay as long as possible to get the vendor into a position where they feel pressured into accepting. That's a vendor who'll strip the house of every light bulb and leave the house in a state.

To be fair the OP is right to be worried about the market from the other side of the coin as a buyer.
It's very evident if you like keeping an eye on RM, as I do, that there is a lot of price kite flying going on at the moment. Loads of property sticking for weeks or even months at prices that the market can no longer afford. Fairly priced property is still going quickly. It's just that there are considerable numbers of properties for sale where the asking price is about what the seller "wants" or "needs" rather than what the property is worth. I would argue that those sellers are the problem, not a buyer who just wants to buy at a fair market rate.

The condition of the property ie needing some modernisation has already been taken into consideration when being valued by the estate agent for the price. I wouldn't trust Move The Market as they have not visited the property, lots of things price a house differently than others that are similar, orientation, parking, proximity to other houses, being overlooked more etc.

It is a hell of a drop from £290k to £250k and the only way to gauge whether the rest of us think it is over priced is to put the link on here and let us look.

@DrySherry Your strategy is 2 fold, one is about the offer which is fair if they accept it but even if you offered full asking price and the survey comes back with a much lower valuation then that is when you can negotiate the price. If the seller says no the same survey will be done for the next buyer and again will reinforce the price. You share that info with the estate agent so that they can talk to their client about the valuation.

The second part with the whole intentional delaying as long as you can and letting them plan their future is vile. The last time we sold a house we had accepted an offer, put an offer in on this house and started the process of all the surveys and searches. My Mum was then diagnosed with cancer with no symptoms (routine check up) and was stage 4 and terminal. I had 2 young children to deal with as well as a dying parent a distance away. I would have pulled out of any house sale involving someone pissing me around to concentrate on my family. Luckily my buyers were an couple in their 50s who were great.

You seem to think the seller priced their house scamming a buyer whereas estate agents usually show sold comparables so you know your valuation is correct and you usually ask 3 estate agents to value your house.

The Seller normally trusts the EA to provide a correct valuation so IF it is very overpriced then more likely to be the fault of the EA

I inherited a house MoveMarket said it was worth £280k but it was worth £190k when valued (needed for probate).

I sold it and I'm now buying a house for £90k (also valued for probate at £90k) but MoveMarket thinks its worth £255k.

MoveMarket is not the most reliable website. It does not take into account state of the house, it also guesses if there is not a comparable house that sold recently to use as a comparison (but even so it does know if one is an abandoned slum and the other has had 150k worth of upgrades etc...).

That's a fair comment, but I think agents are also struggling to find the right level and it's difficult to get a listing if you focus initially on adjusting the sellers expectations. What a lot of them seem to be doing is listing at sellers expectations and then approaching the reality of reducing at a later date after the seller has had no good enough offers. Plenty of good, more experienced agents don't do this though and get a sale quickly. It's an interesting market as things slowly adjust to the new costs of borrowing.

You can offer what you like, but that doesn't mean they can afford to accept it. They might not need to move at all, so are happy to wait for the amount they think appropriate.

We're in that situation now. We can accept offers under asking price, but there is a fixed figure we need to make our next move. If we don't get it, we'll just stay put.

If I had a property on the market for 290K, I certainly wouldn't accept your offer, especially based on a dodgy online "valuation". Make the offer but be prepared to be rejected.

Yes I think a lot of current listings are in the same situation. That's just the reality as we come away from the booming market of days gone by.
You can I'm sure appreciate though - why for a buyer it makes establishing a true market price a bit of a minefield at the moment. Don't get me wrong, I'm not saying they should only be paying the market price - there are lots of reasons why a house will be "worth" more to one buyer than another. But establishing wether or not the seller and agent have priced at a fair market rate, or a price that is "needed" is a bit tricky at the moment. RICS valuations are far from perfect too but they do take out the vested agent or seller part of the equation.
I completely agree that a Move Market estimate is next to useless.

I live by 'you dont ask, you dont get'.

You wont know unless you try but i wouldnt put the offer in unless youre 100% certain. If i was the home owner and i considered the offer, decided to accept it and was then messed about, id be very unimpressed and there wouldnt be a second chance.

Those online valuations just take the last price sold and add the typical percentage growth of the area - they are not to be relied upon.
Offer what you want - they can only say yes, counter, or reject. I buy and sell a lot and I don't care what your 'justification' is, I know what I will accept and only thing that would shift me is if I wasn't getting offers for a few weeks, then I will reduce. As it's been on for a while they may well accept!

Offer whatever you think the house is worth. An offer 10 or 20% lower than asking price isn't 'cheekily low' in this circumstance. There are so many houses sitting on the market for months, even years at the moment, being very slowly reduced or sometimes removed after kite flying. They are clearly over priced with 'cheekily high' asking prices. This hasn't sold in 4-5 months which suggests it is one of them.

I would ignore this price estimate websites as they are v inaccurate.

Not selling for months could be for lots of reasons though.

The house I'm buying went on the market in mid 2023 and has sat there since. I think that put people off but the sellers jumped the gun and the house CAN'T actually be sold yet.

I know it was owned by a buy to letter who passed away. It was still tenanted when marketed but the tenant exercised the right to refuse access until the end of the contract so for near 6 months it couldn't even be accessed or viewed by people interested. By the time they could do viewings it had been on the market ages and interest had gone.

As the deceased also had lots of properties in their portfolio it made for a large complex estate the probate has been on going for 9 months now and still isn't finished yet. They can't exchange until probate is granted but will instantly when it is but it could still be several more months theres no set deadline. This likely puts off anyone in a chain or a rush too.

They likely listed too early but if they have lots of houses to sell I get why they just wanted to get it sorted quickly (and reduce having to pay council tax, deal with tenants, have houses sat empty etc...) but its worked in my favor really.

The house is actually very reasonably priced though its just trapped in paperwork.

Yes, occasionally there are other reasons but mostly it is just the price.
All the best with your purchase. It seems that your needs and the seller's needs have matched up well.

Online valuations are pretty much useless unless it's a property is the same as many others on the same street, they're all in the same condition, and several of them have sold recently.
Break any one or more of those conditions and the values given can be all over the place.
I always say, just offer what it's worth to you.

You can offer what you want but the vendor is not likely to accept a really low offer. Speak to the agent, ask if there's been any offers. Go from there but £235 is not likely to endear you to them.

Just offer anyway as a start