How negotiable is asking price?

[BournardTourney]

First-time buyers, we have an agreement in principle but the houses at that exact price and under don’t quite meet our requirements. We are also looking at other houses that are up to 50k more - but there is one house in particular that is more than 200k above our AIP. We would appreciate any advice on whether it would be inappropriate to make an offer that is 50k to 200k below asking. TIA

It's never inappropriate to make a cheeky offer. Just don't be disappointed if they don't accept. But on the other hand if they are desperate to sell, they just might !

I think it’s pretty unlikely that someone is going to take £200k off their list price!

what are we talking in terms of percentage?

£50k off £200k is very different to £50k off £1m.

What @Mildura said!

Offers of around 5-10% below asking price are perfectly acceptable. Any more than that would be significantly below market value and rejected.

I think you’d be taking the biscuit to offer £200k under, but it’s all relative I suppose so if it’s several million to start with the owners might consider it pocket change.

We’ve always considered 10% below to be a fair starting point, anything less leaves you at risk of not being taken seriously or offending the seller, but given the current market you might get lucky.

Percentages is better than figures. Offering 5% below is pretty normal in a normal market. Up to 10% if the market is slow and the property has been on for a considerable time. Either way the seller can just say no, or perhaps counter offer.

Of course you can make an offer though but first you need to research your local market very carefully over several months to see what is selling, what is not, track the prices, etc.
Use Property log extension available on Chrome. Look at stats for your area.
Once you are informed, you can make informed offers.

Whether sellers accept a large reduction generally depends on how long it has been on the market, what interest they have had, how much the need to move and their timeframe for doing so.

I think you will need to readjust your property expectations to match your budget
Houses of 200K more than you can pay are quite simply nowhere near your price range - unless they are for sale at 1 million or above.

As a first time buyer, I’m assuming you are not looking at the million plus level?

200k sounds like too much unless we're talking about a very high sell price? Just think that I've offered 5k under asking and they rejected it.

It depends on the asking price.

There's no one right answer here. £200k less than asking may be reasonable or completely nuts depending on the asking price.

In the past year or two, I've seen one property that was initially put on at a laughable £700k, and the asking price was slashed twice in fairly quick succession to £550k before it sold.

I've seen one which was a really nice gaff, put on for offers over £650k and I expect it will get some competition and sell well into the £700ks.

As PP said, you need to track both asking and sold prices, and then you'll get a feel for whether the Seller is asking for a reasonable price or (more likely) their dream price. Everyone is just pulling a figure out of their arse at the end of the day.

Thank you everyone for your replies so far, they have been really helpful. Our agreement is around 400k and we have seen a few we like that are 420-450k. If we were to rule out any above 400k, is it best/usual to offer less than we can afford or is it more appropriate to go in at our maximum? TIA

This

Were you wondering if you could offer £400k on a £600k house?

Yes, but I think we might have been massively unreasonable now

You don’t say😂😂😂

I think it is usual to go in at a 5-10% reduction of the asking price, assuming that you feel the house is fairly priced. Research is absolutely key!

At the end of the day, you can offer whatever you want. If it’s too low, you risk offence and losing out to a more sensible offer. Too high, and you might overpay. With the imperfect system for house buying, it’s unfortunately a bit of a lottery
Good luck

Depends how much you will be comfortable spending each month. Did you have a talk with your mortgage advisor about this?

I have a maximum amount on my AIP but I will get nowhere near that as the monthly payments would be too much for me to live comfortably with and without worrying constantly.

Err, yes you have!!

You don't need to rule out properties being advertised at > 400k. You need to research your local market as above and get a good feel for pricing.
You may see a house advertised at 500k that wouldn't fetch more than 400k or you may see one on for 400k that is the same as another than has just sold at a higher price and therefore likely to generate a lot of interest.

No hard and fast rules. You can offer what you want. You need to do your homework properly first though.

As a FTB, presumably renting atm, you're in a strong position as you have no chain (nothing to sell). So if I were you I wouldn't rule out houses with an asking price of around £440k max. If you offer £400k that's 10% under asking which isn't insulting. However, it also depends on the market where you are. Are there lots of houses on the market for a long time, or is there little on the market and do houses get snapped up and go for above asking price? Whenever you are booking viewings and then viewing houses you need to ask what other interest there has been and whether there have been other offers.

To offer 400k on a 600k house is just crazy, they'd laugh in your face. Surely you've done your research into the area and know what houses go for. My son and daughter in law have just moved into a house which was on the market for 630, they first offered 595 and ended up paying 610. If you've got 400k to spend you should probably restrict looking at houses on the market for 450 max, even they probably wouldn't go for 400.

Where we are you’re far more likely to end up in a bidding war and paying over asking than to get anything at all under asking. Most houses here now and for the last 12 months ish are up for sale and sold within 2 weeks max and almost always for either full asking price with agreement to refuse any further viewings or for over asking price after a bidding war.

FWIW, we are house hunting atm, and we've seen a house that I honestly think is overpriced. I have seen houses in the area that have sold quickly for over asking, but I've seen others that have been reduced considerably (eg from £900k to £800k). The problem is that there are so few houses going on the market, and so much competition for each one, that if we wait for them to reduce the asking price, we might miss out. So we've put in an offer which is 12.5% under asking. I would never usually go in so low, but I think the house is actually worth £100,000 less than they're asking, and with the asking price I think it should be, our offer is 4.5% under. I did explain to the agent that it's the top of our budget, so hopefully the seller won't be offended by our "low" offer (it's actually a ridiculous amount of money! Bloody house prices!)

I think offering £400kon one at say £425k would be quite common

Not necessarily. It just depends on the house and whether the sellers were absolutely deluded in the first place.
It is howeber unlikely that the offer would be accepted.