Guide price

[bartyfum]

Viewing a property tomorrow. It’s listed on Rightmove with a Guide Price of £700k. Any thoughts on what to offer if we like it and want it?

Offer what it is worth to you. Any property is only worth what someone is prepared to pay.

You should look at the sold and asking price of similar properties in the area, the amount of work that needs doing, and your budget. Also keep in mind that your offer price is subject to survey, so there will still be wiggle room. I don't think I have ever paid my offer price.

The market has completely stalled at the moment in large part because sellers are being unrealistic and not accepting the market has moved down.

Impossible to comment on the value of a specific property I know nothing about but on average if a property is on for 700k I’d not be offering much over 600k even if I liked it. You’d be amazed how much below asking price people a lot of people are dealing at.

I achieved full asking price twice last year, moved in Feb this year. I was already pricing a popular renovated house in a popular area for a reasonable price so I wouldn’t have accepted a lower offer

You don’t offer less arbitrarily, you offer what it’s worth. See it, is it in good condition, are other similar houses locally selling for more or less? How much do you want it? On a forever home, if you love it, sometimes it’s worth paying a little more than you’d like as long term the market won’t dip.

Thanks all. Really helpful to have your insights.

We have been looking since May. Made offers on two houses. One went for asking and the other for £10k over. Both reportedly had multiple people interested.

The house is in a commuter belt type area outside of London. It is one of the less desirable villages of this city because the village is fairly new and comprised of newish properties, but its ideal for us in terms of amenities as a young family in a new area.

In my head, without seeing it, I think it’s worth around £675/680k but the market has seemed so competitive. Buyers seem to want in excess of their asking price. On one property (on for £625k) we offered £615 then 620, 625 and 635 and still missed out. It was a much lesser property in the same village.

As others have said, you can't arbitrarily value a house without seeing it and without knowing the local market. So anyone saying offer 20%, 15% less or the asking price is just being a little naive.

Check RM for homes around the asking price to see what has sold and what is still on the market and evaluate it relative to that.

Then check houseprices.io to see what the home is worth relative to when it was last purchased (if since 1995). Identify if any improvements (not twigs, new boiler, etc - but extensions, new roof) suggests that the worth could be more than stated.

Only then, and after seeing the home, can you determine how much the home is worth to you whether that is 10% less or 10% more than asking. Don't lose it by purposely offering less than it's worth to you. We saw the other day someone lose a sale because they thought it was worth bartering over 10K on a £800K home.

Well that kind of sets a market context!

I wouldn’t have been messing about with such small under-offers, it looked as if you are haggling for the sake of it.

“The market won’t dip”

That’s a bold statement that I’m almost certain will be shown to be incorrect.

Look at the wider financial markets and you’ll see a price fall is inevitable.

You're both right. Short term the market may well dip. Long term (25 years) house prices are almost always higher, but you have to be able to hold your breath underwater for 25 years.

That’s true. I think people should definitely be looking to buy homes for the sole purpose of living in them not as investments at the moment.

I would’nt play around slowly rising with £5K, you’re making it obvious you can afford to go higher. Decide your top price and stick with it.
I know it’s hard though, we’re in a similar predicament.
Can you post a link?

It won’t dip long term, by long term I mean in the next 15-20yrs. If you think it will, then I’d love to know why when there’s a housing crisis and countries in the northern hemisphere are going to become more and more popular due to climate change.

All housing markets stagnate or go down small amounts from time to time due to economic downturns but they have always recovered.

I said long term - OP misinterpreted that as short term.

Of course markets dip short term, they are now in most areas (especially if a home isn’t move-in ready and in a popular area). But long term they don’t dip.

Ask the agent how many viewings they have etc

you might be able to offer less if you are in a great position eg in rented.

last two houses I looked at both went for over asking - it all depends on your area

They haven’t dipped long term for quite a while however when you look at house prices and compare with earnings it’s clear the same trajectory can’t continue as too many people will be priced out.

If you want a cautionary tale have a read up on the Japan crash where houses lost well over 50% of their value.

The current market in the UK is over priced by about 20%. I’d be fairly confident that prices will not increase and certainly not in real terms for at least the next decade. The Autumn budget will likely cause them to fall further.

It depends on how realistic your price is.

You are far better to under price and get multiple bidders drive up the sale price to the market level.

Overpricing and accepting a lower offer is almost always a sub optimal strategy.

If you were right, one could argue 10 years is mid term, not long term. But I’m still not convinced prices won’t increase in 10 years.

We aren’t Japan - which has had a lot of unique population and economic issues which has led to abandoned remote villages affecting their housing market. Just because something happens in one Asian country, doesn’t mean it’ll translate to the rest of the world.

Inflation has increased because earnings have increased. Increased earning equals increased borrowing. Once interest rates have either decreased a little (everyone knows they won’t go back to 1%) or stabilised longer term, more people will start buying again which will stimulate the market.

Earnings have in no way kept up with house prices. The current price to salary ratio is only sustainable if interest rates are rock bottom.

You also have to factor in other cost of living increases which impact housing affordability.

You only have to look at the banks desperation in offering 6 x salary mortgages over 40 years with 5% deposits to know that prices simply can’t increase in real terms for a very long time.

Have a look at some of the Moving with Charlie podcasts. They are very informative.

We offered £700k and they accepted. We are over the moon! Thanks everyone.

Great! Exciting times 😀

Congratulations - you got a family home that you really like and can settle for years - that is what's important.

@Gemma1818 Japan housing market nothing like ours - this article explains it (though a few years old now)

Raze, rebuild, repeat: why Japan knocks down its houses after 30 years

https://www.theguardian.com/cities/2017/nov/16/japan-reusable-housing-revolution