Offering under doesn't work

[Peachyroll]

A lot of advice on here strongly recommends always offering under asking price by 5-10%. And lots of people here say they get these kinds of offers accepted all the time.

Am I missing something? Currently looking for our first house and none of the owners will remotely entertain accepting anything less than (sometimes hugely inflated) asking prices. Even a house we recently saw that had been on the market for 4 months, with hardly any viewings and no offers. Needs some work and modernisation. We offered 6.5% less than asking price. The owners rejected and said they're still holding out for asking price.

For context, we're looking for a house in Surrey/Sussex commuter belt so appreciate it's a more desirable area.

I have bought and sold a fair few houses. There are so many variables. Here are a few pointers that I have mostly learned the hard way:

Firstly, a home to live in long term is not purely a financial transaction. If you are going to live somewhere for 10 years, then if you pay 10% too much, it is 1% per annum. Is that premium worth it for the house you want?

There is no such thing as a ‘dream’ house, and lots of factors which matter (like nice or noisy neighbours) you won’t even find out about until you are there. So, look at lots of houses and, if you see a few you like, put in several low offers. One may bite.

Never trust estate agents (although you do occasionally get a good one). Markets are always ‘hot’ when you want to buy and ‘cold’ when you want to sell. For that reason, it is often a good idea to look at houses that have been on for a while. Estate agents always try to create a buzz when properties first come on the market. If they sell quickly, it is often due to this psychology and not because they are especially desirable.

Buy fundamentals, not ‘taste’. You can’t change the area of a property or the land it is built on. Adding space to buildings is also expensive and may require planning permission. A beautifully decorated house is nice to buy but often overpriced and decorating is relatively cheap and simple.

I struggle to believe the market is ‘hot’ at first time buyer level, as most need mortgages and mortgage rates are high, so be patient and you will get something that you like at a sensible price.

You speak so much truth!

Buyers are often unrealistic and want new build spec but not the new build cost. This is the perfect life social media bollocks that is pushed on everyone.

When I buy a house I don't care about the work that needs doing as I buy a house to live in.

I see past dirt and flaws and see the 'bones' of the house and what it can be. A friend of mine was put off a house as the kitchen had green painted walls 🙄.

I have often been found laying on the floor looking at the ceiling when viewing a house as its the best way to visualise the actual floorspace.

Some people also seem to quote that THEIR area is always asking price or above - its everywhere else that is sticking.

Basically in my view of having brought a sold a few times over the years and very recently sold late parents two properties (they were divorced) its very very area dependant. I know some buyers seem to think you offer 10% under and a seller will snap your hand off. Not necessarily...

I priced to sell both houses - one in a very attractive part of West London which I know very well. We had a huge amount of interest in one even though it was trashed and needed complete overhaul. Many many over the price offers. This was 2.5 years ago.

The other house in London but much smaller and very dated but in a very very good location near the tube took a little longer to sell but we priced to sell. It wasnt a probate sale but it needed selling.

A number of people dont need to sell though As a PP says - in larger houses if it doesnt sell at the required price they just take off the market and review in a year or so. The vast majority of people dont HAVE to sell.

So you’re cross because you can’t actually afford the house that you want?

it about supply and demand. Demand for houses is much bigger than their supply. In the area where I’m it was the problem for quite a while. We saw many houses while house hunting (I think no less than 50) and only a few of them went below asking, quite a big percentage went over.
We bought our current one 5 % below asking but it’s pure luck as it was empty already and there were 2 others houses (one almost the same) for sale on the street so there was a bit of competition between sellers.They wanted to sell quickly as the house was on the market for some time and they lost another buyer a few months ago. Also our house was a bit on a smaller side, so not the most popular option.
However the majority of the houses we saw went at asking or over within a week.
There was a moment of slowing down in 2020 and 2021 but now we practically don’t see signs “ for sale” it’s “sold” straight away.
So my advice is just offer what you can offer when you want the house.

The EA told us no offers. The owner did the viewing and said they hadn't had many viewings, things had been slow. They also dropped the price by 25k after 3 months on the market. But still overpriced. We saw it about a month ago and it's still on the market.

I think people forget that prices and how a market is entirely depends on the area.

We’ve recently moved (as in weeks ago) and paid 5% over asking price for our new house. The sellers had ann offer of 10% over, but the person was in a long chain.
Our old house sold for 14% over as three viewers all wanted it. We had two offers before the house even hit Rightmove.

Whereas BIL has just accepted an offer 5% under asking price for his place as the market isn’t the same where he is.

We were offered 35k above asking price when we sold last year - I don't think the market is as strong now but expect to offer 5k over just to get you in the running.

Totally depends on the market you are in and the mindset of the vendors.

We had a substantial discount on our home - we got it for 22% less than the original selling price BUT:
*it was significantly overpriced - it was priced as a turnkey property
*it had been on the market for over a year
*it was a probate property, no one had lived in it for over a year and was just looking worse and worse and worse. They had not cleared the house - it was full of old man stuff, which looked awful
*the layout was nuts - just awful
*The vendors both lived hundreds of miles away, (in opposite directions) and had no emotional attachment to the house
*Everything and I mean everything needed to be done - plumbing, electrics, boiler, reconfiguration, garden landscaping.

We offered a low ball price - they rejected a higher offer over 12 months before - they bit our hands off as they were just getting sick of it.

If you can wait it out a bit, I would go back in a month or so's time with the same offer.

Well, if it’s outrageous in the current state of the market in your area, they won’t sell at the price they’re asking. But I’m frequently amused on here by posters who look up last time it sold and do some mental calculations and exclaim in outrage about the current asking price ‘But they hardly did ANY WORK!’ In some cases sellers don’t have to do any work at all, a rising market and/or sought-after area will do all that’s necessary.

We bought a house in 2015 for £336,000 (they’d asked £350,000), and sold it, having done nothing more than repainting and retiling the bathroom, for £480,000 in 2021. We’d asked £450,000, and had lots of offers at and above. (In fact someone offered more than £480,000, but we were in a hurry and went with the buyer with no chain.) Nothing to do with us being hard nosed, and it was a deeply ordinary house, but house prices had risen, and the village was considered sought-after.

Thanks for the advice @Newbutoldfather To be fair we're probably not typical FTBs looking for a typical FTB property. We're pushing 40, long-term London renters with roughly 30% deposit.

We're looking for a short-term family home, an older semi, something modest, we have no illusions of grandeur. We're desperate to get out of our flat. We can't afford a home big or flexible enough to be our 'forever home' quite yet. We're looking for somewhere practical to live rather than a 'dream' house. I love DIY and fully expect to be doing a fair bit of cosmetic work to make it livable and clean, to our standards. Some pretty grotty houses seem to be listed for as much as houses in the same area that are presented to a higher standard though, which I don't understand!

I went straight to asking, when buying last year. Desirable area, really rare for any house to come on the market and this was the only one we wanted and would be able to afford. I also wanted the most straightforward sale possible, and expressed this.

It was a quiet time of the year and I wasn't expecting too much interest but we still had to wait a week for the seller to accept our offer, while she negotiated with another buyer.

No regrets, already seeing similar houses going for more, yet still haven't seen anything I'd like as much as mine.

I think maybe missed the point as you’ve literally just agreed with me. The point the op is making is that folks come on here and say 10 percent off is standard, it’s not. Far from it. Sure you can often get something off, sometimes you pay more, but rhe advise of 10 percent is standard is nonsense.

We offered a smidgeon over 5% under on Monday and were immediately rejected. Asked what we would like to increase our offer to and I said ‘we won’t, that’s our only offer.’

I partly didn’t want to pay any more for that house due to the compromises it involved but partly also want that agent, who is HUGE in the area to know that future vendors should be advised that we only come in once with an offer and were absolutely serious about that - and we are in a fantastic position for sellers to consider. So maybe it’s arrogant on my part? If they want the easiest chain imaginable, we are it. So no, I am not lowering, nor messing around.

I guess I am privileged in that I am completely and utterly ambivalent about absolutely any house that’s not twice our budget! And there are hundreds on the market where we are looking. So I just don’t care enough to play games.

Anyway OP, I wonder if this may explain your experiences:

You are buying first step
Your offers are going to second step
Their offers are going to third step family home owners

We are going straight in at third step and my experience of all the houses (at least ones we like, anyway) is that they are very reluctant to reduce price. Some theories:

A lot of them want to buy new build bungalows or houses which are heckin expensive

Most of them just want to move closer to their kids so are in no rush

Almost all of them will be having to help their kids out with extortionate house price deposits or cost of living help, and, being sensible, are probably trying to hold on to every penny

Many pensioners are being taxed for the first time due the tax threshold freeze and it has been all over the news

Cost of living, energy, suddenly their retirement funds are looking far less rosy

That lack of ability to reduce has to work its way down the chain, surely?

I think boomers might be a bit scared at just how easy it is for all their excess funds to disappear quite so quickly now, and are being prudent. In the old days it was pretty normal to ‘help’ your kids out with housing with a small deposit or furnishing the place, but these days it seems to be more like a necessity than a ‘would be nice.’ That’s got to be scary if you had an idea what your pension income was going to be three years ago, and now all you know is everything is uncertain?

That’s my two penny’s worth, anyhow.

This is an excellent post.

6.5% of £600,000 for example is (I think) about £39,000. That's a lot of money to expect to drop. People are generally asking roughly what they want for a property - so will drop a few thousand. They aren't usually interested in people who announce 'We want a new bathroom and new kitchen, so we'll need to knock off £40,000 for this'.

Why would the seller pay for your new kitchen? You are buying the house as seen. If you want to do work to it, then you'll need to save up for that/fund it yourself.

House prices are crazy where I live at the moment. My house was £162k in 2019, during Covid it shot to £185k my neighbour just sold for £200k and the brand new build version of my ‘new build’ is £230k

This is East Midlands so lower prices.

I think some people believe that if the first offer is a bit of a piss take, then it's better to cut that buyer loose rather than risk having to deal with them trying to drop the price at every turn in the process (including just before exchange)

I too hate this blanket 'rule' all it means is some vendors inflate prices by 10% so they can accept an offer and get what they actually were looking for in the first place

@HeddaGarbled ,

I don’t agree with that at all.

I bought my first property in 1989 and bought a total of 5 to live in (due to marriage and divorce). I have never paid over and the reductions have been from 3-7%. On the sell side pretty similar. On the sell side, I have never received over, had one offer over that fell through.

Properties ranged from 90k odd (in the 80s) to just over £1.5 mio, desirable inner London and, more recently, outer London suburbs.

There was that weird Covid surge where people paid over the asking and estate agents have tried to keep the buzz going. Patience is the key, and seeing value that others have missed.

https://www.standard.co.uk/homesandproperty/property-news/london-house-prices-zoopla-february-2024-b1148084.html

In London looks like current average discount to asking around 4%. Yes you have tiny enclaves that are rarely on the market and give you bragging rights, and these often trade at ridiculous premiums, but more fool the buyers for having their snobbery exploited (in my opinion).

We got our house 10% under asking almost 3 years ago in the midst of the crazy covid buying. Lots of other houses we looked at were going for 10% over asking. Difference was this one needed work at a time when everyone wanted ready to move into houses.

Apologies - I didn't catch that when you said "Ten percent is standard, irrelevant of asking price, desirability, market" you were not expressing your own views.

Indeed, we do agree that people who would make such a blanket statement come across as having limited to no experience.

It's totally situation dependent.

When we put ours up for sale we had a price we wanted to achieve and were happy to wait for that price. Previously when we moved we'd already found where we wanted to go and therefore accepted 10% below the asking price to get the sale through.

We've offered on 3 properties recently. One we offered 5% over the asking price - it was declined. One we offered 8% below asking and it was declined. One we offered 5.5% below asking and it was accepted. Decide what you think a house is worth to you and don't offer over that is the strategy we've gone for.

It depends on the location, people’s situations and the market at the time. I have bought 3 different properties and never paid full price for any of them. Whereas l have a family who live in a desirable part of south Manchester, where if you don’t offer the full asking price and / or a chunk over then you won’t get anywhere

I said you were both in my initial reply but luck was the chief factor here.

Sensible post earlier.
The 4% quoted in this article does not include any previous reductions on the relevant properties (info' from Zoopla's Richard Donnell). There are a lot of reductions all over RM at present so the total 'discounts' will be higher. And that is the ones that actually sell, which will clearly tend to be more sensibly priced. A lot of v over priced property is not selling and some is being removed from the market after a while. Lots appear to have re-listed recently where I am so I guess some don't need to sell at all and change their minds. Others do need to sell but have plenty of time so will hang about for some time and then reduce to more realistic levels.