What's a fair offer?

[SeLHopeful2024]

First time buyer here looking in SE London.
We are good (I think) buyers in that we are chain free (currently renting), having a mortgage in principle in place, have a reasonable deposit to hand (over 16%) and flexible to move as quickly or slowly as the seller wishes.

The property I've really taken a shine to is £420k and has been on the market around 2 months.

Issues- we are in a fully furnished rental so we need to be very careful not to over commit on monthly payments as we have to buy everything.
Property needs new carpets throughout and may need other decorative work.
Structurally I'm not sure, obviously if we offer we'd have a survey done.

How do you start negotiating without paying more than it's worth, but also not alienating the seller?

I've read online that offering 10% less is normal, but is this true?

I've not put an offer in on any property before, so any advice on how to approach it would be welcome.

I think it depends on how houses are selling in the area and how much interest there is, so in my area currently there’s a lot of competition for houses and 99% are going for well above asking price so offering 10% below would be an immediate no. It also depends how desperate the sellers are to move, when we sold our last house we really weren’t bothered about a quick sale as our next home was still being built so having no chain etc wouldn’t have encouraged us to accept a 10% lower offer, we’d have held out for asking.

It’s also absolutely irrelevant to the seller what deposit you have, that’s to do with your mortgage and it doesn’t make any difference to them whether you have 5% or 70%.

Does the ad say 420k or does it say “offers over 420k”?

If it says 420k and you do want the property I would maybe offer 400-405. I’d be careful with offering massively lower because you run the risk of the seller deciding you are cheeky and then they dig their heels in and won’t negotiate at all.

@Mrsttcno1 that's really helpful.
Thank you.

Advert is just simply the £420k.
I was thinking £405 might be slightly more manageable on the monthly payments, so maybe we start at £400k and see if we can agree at £405k.

It doesn't look like any property has sold recently in the immediate area, so can't gauge the competitiveness.

I just want to be fair, but it's scary knowing we will have a lot more utilities etc which we don't have.
Both myself and my partner are naturally cautious so this is such a huge decision.

You can always offer 405k and see what they come back with, or speak to the agent about whether they are open to negotiation on price then make an offer. It’s becoming common where we are now for sellers to explicitly tell the estate agent that they are not interested in receiving offers below asking and so to just immediately refuse any like that which do come in but it is really quite competitive where we are

I'd start with £405k then go up to ££410k if necessary. If you start too low at £400k the seller will just dismiss you.

It's impossible for anyone to say what a fair offer is from the info' you have given. You need to be fair to yourselves though by researching your local property market as carefully as possible over a period of time and thinking through your finances and potential costs honestly.
Once you have done those things, you should have a better idea of how reasonably priced this property is and what is a reasonable price for you to offer. You need to choose a price that you can comfortably afford and that represents good value.

MovinghomewithCharlie (twitter/ YouTube) has a lot of advice for FTBs and also an offer template letter which you could consider using.

I don’t think 400 on a house listed at 420 sounds particularly cheeky.

I wouid start at 400k.

It doesn't matter to the seller that you need to buy furniture. Also, it is something you can do over time, look in charity shops, and giveaway sites to begin with.

Offer what you like, but be aware that the seller doesn't have to accept. Never pay more than you think the property is worth. If it os over your budget, you need to start looking at cheaper properties. An initiative offer of £405k seems reasonable, just decided what your top amounts is and walk away if you cannot come in under that.

Thanks everyone.
That's helped us be more realistic with where to start.

It's a buyers market at the moment. How long has it been on the market? If it has been on the market for a while you could probably start lower.

We put a cheeky offer in and they said no, so we upped the offer.

I'd start at £395.

It's been on the market since May.

Can't really work out if that's standard for the area.
Zoopla didn't have many house sales in the immediate area.

We've just had our house totally recarpeted ( except kitchen and bathroom) and it was about half of what we'd budgeted

That's good to know.
I've been trying to research rough prices for all sorts as I prepare for the viewing, bit it's not very accurate with Google and no real idea of what I'm looking at.

Have you tried looking on the websites of local companies that sell flooring and have shop fronts or show rooms? You can usually get a decent idea of cost that way if you know the size.

Rightmove might have some more sales data https://www.rightmove.co.uk/house-prices.html

Depends where you are in SE London but in our neck of the woods houses are selling relatively quickly but flats really aren’t moving. If the place you like is still available after two months my offer would begin with a 3. But I am fairly hard arse and always happy to walk away if the money doesn’t work for me….

We are looking around South Norwood area.

I'm stuck between don't make a rash decision as this is the first place we are looking, versus I've not found anywhere else that ticks as many boxes, very aware of decreasing time left to get a mortgage (both over 40 FTB) and need to get a little one settled to start school next year!

I think the school stuff probably means you have more pressure to get a deal done. And there isn’t very much stock to choose from at the moment- tho that could maybe change if interest rates fall and/or there’s a post-election bounce.

i think take a deep breath and make an offer - once you’ve done that a few times it feels less overwhelming. You can always move your offer upwards!

I think that only one person above has suggested working out what the property is worth before you even start asking that question.

I'm selling my old three-piece suite for £425K. Of course I'll accept offer starting 10% off!!!

This may be useful

https://www.mumsnet.com/talk/property/4935470-tools-for-house-buyers

We probably overpaid a touch for our house (completed last month, so it's all very recent), but in the end we wanted to live here so when our first offer was rejected, we upped it to get the house. We've been viewing houses for sale on this street for nearly a year, and genuinely feel that we are in the best one of the lot, so we're content.

Having said that, I haven't had any positive experiences with negotiating prices when offering on a house. People are motivated to sell for usually very emotional reasons, and although this is technically a business transaction, it really doesn't feel that way for the people involved. Vendors may have found a house they want to buy and need a certain amount to make their own offer; a much-loved family home being sold on due to probate and several siblings are all due a portion of the proceeds; a house sold due to divorce; etc etc. These are not going to be people who will be dispassionate when receiving 'cheeky' offers. They could very well be deeply insulted and be suspicious of your intentions, therefore not wanting to engage further.

I tend to push back on advice to offer below asking as standard, and to instead consider how much YOU would be happy and able to pay, think about your intentions for the property (temporary vs long-term, appetite for DIY, nearby schools, etc). How would you feel if they refused to sell to you? And make your decision from there.

We have no regrets upping our offer on this house. I am still pinching myself that we live here now. I love it.

That's all really good points @MovingToPlan
I think I'm worried I'm not going to remain objective based on feeling like we have few options available on affordable areas where my partner and I can still get to work in a reasonable enough time to juggle childcare needs too.
This house we are looking at makes it more possible (still dependent on finding childcare which is always a worry).
But, because we've not found anywhere else that is viable so far, I'm worried I would just offer the seller anything to get it.

I think if we went straight in at the asking price we could stretch ourselves, but it's just the uncertainty of all other bills etc that we don't have the ability to predict all costs as much as I'd like to.

Whilst we are very realistic in what we are prepared to settle for, I don't want to pay over the odds if we may not sell easily in future.
That would be a long term worry though as thus would be a long term purchase.

Vendors are likely to negotiate, so go in less than the max you're comfortable with paying. That way if they come back with a 'no' or ask for something nearer the asking price, you've still got something there for a counter offer - unless you know there's someone else interested, that counter offer might want to include 'on the basis it's off the market by the end of the day'.

Without seeing the house and knowing the area, I think I'd be tempted to go in at £390k, they'll probably say 'no', but you could go back at £400k and you still have another £5k to add.

I'd go in at £390k and if you give really good reasoning for your offer it will help eg, with the work reqd of carpets, (add whatever else needs doing), your position etc they will be less likely to think you're making a silly offer. They're more likely to think you've thought about it a lot and you're very serious and interested. This has worked for me several times before! Good luck!

Thanks for your advice everyone.

We've been to view and to say I'm disappointed is an understatement.
The advert was very misleading compared to the work that needs doing.

It looked livable whilst we planned budget for decor etc, but in reality it needs a complete refurbishment with bathroom and kitchen included, carpeting and redecoration throughout, ideally all internal and external door replacing and there's no functioning boiler!

It's also been raining heavy and there was an awful smell of damp throughout the upstairs, although claims that no damp issues were picked up on a previous survey.
Damp had been found downstairs so a damp proof course was added.

Lesson number 1 learnt- do not rely on anything in the advert!

Definitely a nice house for someone who has capital and confidence to manage a project. Unfortunately that's not us at the moment.