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

Presumably if your agreement is for £400k that's the borrowing and you will have 15-20% more to spend? I would strongly advise against maxing out otherwise there is a good chance of negative equity.

Also FWIW, I had three asking price offers within 24 hrs on my house in a very hot market. I went with the cash buyers and rejected the FTB as they needed a LTV of 85%. So your position isn't strong.

As long as their mortgage is approved, why does it make any difference where the money is coming from?

Wow, we thought we were being cheeky offering 167k on one which was on for 180k!!

And I hate to say this OP (but I will anyway): FTBs are a complete nightmare. You thinking you can offer 30% below the asking price just shows this.

You need to reframe your expectations. Cut your coat according to your cloth.

"If it has been on the market for ages and was massively overpriced to begin with, which applies to loads of houses, then you never know!"

Exactly, you need to look at the sales history, if they bought it for much cheaper when interest rates were super low they might be trying it on, especially as moves in the bond market today are indicating that the recent crop of cheap mortgages might not be around for much longer.

Were you a nightmare as a FTB? I wasn’t, and the ones we sold to weren’t either.

Because a lender literally require a valuation on the house to qualify which could be a risk of failing and even if it doesn't it overall delays the process.

Cash buyers answer to no one (except the solicitors laundering checks) and can exchange pretty much immediately if they want (like they do at auction). Its just fast, easy and far less likely to fall through.

When we had a cash buyer they decided half way through that they weren’t a cash buyer anymore and needed a mortgage. As they hadn’t even spoken to a lender until that point it caused a massive delay. Pain in the arse. I think they just told us they were cash buyers so we’d pick their offer.

Actually no I wasn't, I just went gung ho straight in. But the people I have tried to sell to were (we refused their nonsense offer). And the OP clearly is, because she thinks that offering £400K on a £600 K property is reasonable.

How where they not a cash buyer?

That should have been verified by your EA before the memorandum and by your solicitor after so it should be fact that they have enough to buy cash.

You can't just say you are a cash buyer willy nilly, thats not how it works there is strict checks before anything starts under laundering laws lol.

It was. They decided a month in that they didn’t actually want to spend all their cash on a house, and wanted a mortgage for a portion instead 🤷🏻‍♀️. They had enough cash, they decided not to use it.

Then you tell them that wasn't the terms agreed upon, they either pay cash or you go back to market (and the EA blacklists them for bad practices).

I mean it was 8 years ago so we’re passed all that now, and it was resolved. But it delayed things, which was my point. All sorts of things can cause delays.

But it wouldn't really be a delay if you didn't just accept it.

It seems like you where let down by your solicitors and EA but it would be pretty rare overall for the scenario to pop up that someone has more than enough money needed to buy a house, makes a cash offer, goes through financial checks and then switches mid way through to start a mortgage application.

Its hardly the standard out come and most sellers would go back to market if some pulled a stunt on them.

That"s true, many houses now get "downvalued" (valued correctly for the market) even although the buyer offered the asking price, but many cash buyers are smart, smart money will be paying attention to things like sale history etc. and offering accordingly, more chance of getting a silly asking price matched by a FTB than a cash buyer in my opinion.

Market value is not determined by estate agents, its determined by what the market is willing to pay. Estate agents regularly overvalue properties, and lots of people price properties extremely ambitiously because they wajt to think their home which they love is worth that.
Its never cheeky to put in a low offer - if its miles off the value thats fine, the sellers will also get offers much closer to their asking price and can turn this low one down.
When it gets silly is when sellers bemoan how long their house has been on for and say they have only had 'silly' offers... Those offers they find so offensive are probably much closer to the true market value.

Why would it be unreasonable to ask? They can say yes or no, it's not like asking is going to tie them into agreeing. People sell for all sorts of reasons and some are more urgent than others. But they wouldn't be unreasonable to refuse.

There's a lot of emotion invested in homes. It's difficult for some people to detach themselves from that for business discussions.

There's a lot of emotion invested in homes. It's difficult for some people to detach themselves from that for business discussions.

But you aren't asking the seller, the agent is. After deciding you want it you don't normally see them again.

What's emotional about saying 'no 400k isn't enough'

You're new here?

@XVGN why would I be new here? No I'm not as it happens and I post plenty! And I've also bought and sold a fair few properties in my lifetime.

'Market value is not determined by estate agents, it's determined by what the market is willing to pay. Estate agents regularly overvalue properties, and lots of people price properties extremely ambitiously because they want to think their home which they love is worth that.'
Exactly. Over valuation is rife at the moment. If no one is paying the asking price for months, the asking price is above market value @Dee00. On the other hand, a house that has received several offers around asking price is obviously being marketed at the correct amount.

I mean I'm guess they'll say no, but I guess there's no harm in asking. I imagine if you really want the house and could offer more you would. If they say no, you haven't really lost anything compared to not asking.

This is a really good summary and hopefully helpful for the OP.
Much more helpful than the nasty replies.

Good advice.