How do you know how much to offer?

[soupforbrains]

I’m a first time buyer and I’m buying on my own. I would have asked my dad for advice but he passed away in the spring. My mum has dementia so obviously isn’t particularly helpful. And I’m feeling a bit lost.

I think I’ve found a house I’d like to buy. It’s listed with a Guide Price of £315k. I have a mortgage offer in principle for a house of that value with a deposit I can afford. But obviously I don’t want to over pay just because I can. Property prices in my area have continuously risen for the last 3 decades, including during the housing crash. However the market has stagnated in the last year and we are now beginning to see prices dropping. Particularly of 3- bed houses, which this is. A number of similar properties in the same area are listed for circa the £300k mark.

Obviously I’m aware that offering below the listed price may make my offer less likely to be accepted. But it is listed as a guide price rather than ‘Offers in Excess of’ etc.

if I make an offer of £300k is would obviously be 15k less but would also mean I’d have no stamp duty as a first time buyer.

All advice welcome please!

Hi OP, what an exciting time for you. Property buying is stressful and nervy. My best advise is to fix in your mind what you are prepared to pay and don’t go over it. Hold your nerve as challenging as that can be.

Have you viewed other properties? If so you should have an idea of what this one is worth to you. How long has this one been for sale for? What is the vendors situation? You are in a strong position and you need to max that and not be pushed.

yes. Offer £300 along with no chain. They will negotiate it up or say no. Be patient and walk away if necessary. It’s a buyers market. If this doesn’t come off something better will.

If I were you currently, a FTB in a area where prices have risen for 3 decades and have finally started to come down a little in the last few months, I would not be in a hurry to buy. I would definitely be looking to bargain hard and not over pay. I don't think anyone can give you a figure. It depends on what comparable properties are selling for, how many buyers are currently looking vs what this seller's position is and how many other options are available currently. You can only offer what you are prepared to pay and keep looking if you aren't successful. If you place an offer of, say £285k, they may come back to you in a few months in a falling market.

Thanks both.

Yes I’ve been watching the house market closely for a year or so and viewing properties for around 3 months.

I know my financial limits so I’ve got no problem walking away if they don’t/won’t accept my highest offer. It’s more trying to figure out where to start the offering.

the seller is in quite a strong position too I think as they don’t live in the house I think perhaps they’ve been renting it out and have recently refurbed it to sell. So it’s empty at the moment. So they might not be so under pressure to accept offers quickly.

All you can do is make your best offer and then don't budge any further. I would definitely keep it under 300k for stamp duty reasons.

From recent experience, I’ve just accepted an offer (subject to my buyer selling) and agreed a purchase myself — all within the past 28 days.
An estate agent told me back in August that even if a property was sensibly priced, most were still selling for around 3% under asking. Her advice was to start low with the initial bid; the agent will usually come back quickly with “that’s not enough” and guide you to a realistic figure.
And if you happen to nudge just over £300k — say £301k or £302k — the extra stamp duty is minimal, maybe £50 or £100. Still, there’s something psychological about that £300k threshold that seems to reassure sellers and there’s a lot to be said for people wanting things done and dusted before Christmas.
Good luck whatever you decide.

Also leave enough in your budget to be able to afford a Level 2 RCIS survey. DD's friend offered £328k for a house on at £350k and was accepted. However the survey he instructed came back with nine 'reds' on the survey report and he walked away. It was a previous rental property but the seller had been quite 'cute' and painted everything white. I'm sure you can get that survey for £600-£700.

I'd definitely start at £300k based on what you said. The worst they can do is reject it. There are still a few sellers who have unrealistic expectations in the current market, so be prepared for them not to budge and for you to walk away. I did that when my 10% under asking wasn't accepted, and ended up finding something better. And that house eventually sold for 10% under asking, when the sellers had to come to terms with reality.

Another reason you don't want to overpay is related to the mortgage: if they do their own valuation and find that the house is not worth £315k, they will offer you a mortgage for the value they think is fit, so worth bearing in mind.

Best of luck with your first house! 🎉

Just wanted to say thank you again to everyone. I went in at 300 but was told immediately that 3 other offers had already been received between 300 and 307. I then offered 308 and was outbid by a couple of others. But I now have an offer in at 312. Although this is not my maximum I won’t be putting in any higher offers as I don’t think the house is ‘value for money’ beyond this.

I’m also continuing to view other properties while I wait. And honestly even if my offer is accepted now I may withdraw it as I’ve found some other properties that perhaps speak to me more.

thank you all again. I feel much less overwhelmed and better prepared now. It means a lot

Good luck @soupforbrains. You sounds more confident now.

Good Luck @soupforbrains

I didn’t see this thread until today but would have suggested starting at 300k.

Once you got the feedback that there were other interested parties, it made sense to do what you did.

My small bit of advice is not to get too hung up on stopping at 312k just out of principle. The property has attracted decent interest so it was probably valued about right. If someone else matches your 312k offer I would personally go to 315k to secure it. But stick at that, explaining to the EA that you have a mortgage offer in principle up to that amount.

Hopefully you won’t have to go any higher than 312k but if pushed - that is what I would do. Some people would disagree but I wouldn’t lose a house I liked for the sake of 3k just because I wanted to feel I had negotiated hard. It would be different if there was no other interest in the house.

So… I may be an idiot. In fact I openly admit I have no bloody clue what I’m doing.

but as I said when I viewed the house it wasn’t ‘quite’ as perfect for me as it had seemed at first. It didn’t make me not want the house just made me a bit more pragmatic and less ‘I absolutely love the house, all my eggs in one basket’. If that makes sense to anyone.

over the weekend while waiting to hear about my offer (and assuming I’d probably be out-bid) I viewed some other houses and saw my mortgage advisor who has actually said I can borrow more than I had first thought and I now have an AIP for up to 350k.

As a result of a combination of these things ive found a number of other houses I’m interested in and 2 in particular which I like a lot more than the one I offered on. I am viewing both this week.

This morning I’ve heard that my offer on the first house has been accepted. Which is lovely but… I definitely prefer the other two houses.

I know this sounds ridiculous but is it really rude/poor form to withdraw my offer? Or how long can I sit on the offer acceptance? (next step is to pay for the anti money laundering check and do some paperwork which I obviously don’t want to pay for unless I’m definitely going for the property.)

Obviously it's disappointing for a Seller if the offer gets removed but I wouldn't consider it poor form for you to rescind your offer as long as you do so within a few days. You have to be sure you are buying the right house even if that means disappointing other people.

Just hold off on spending any money until later in the week when you have had the opportunity to view the other 2 houses. They might make you feel differently about this house, either positively or negatively.

You can be honest with your solicitor that you don't want them running up any fees on house 1 for now. And try to avoid EA calls while you wait to view the other houses!

Ok thank you. That is what I hoped. I want to at least see and feel the other houses before making any next steps.

That is natural and I've done the same thing in the past.

Yes you do feel a bit bad for the Sellers but I've also had it done to me when someone has offered on a property I was selling then withdrew after seeing something they preferred. I don't hold any grudge about that, you can't be as polite in house buying and selling as many of us try to be in general life. The sums of money are too big!

OP, I'd rescind the offer today before they take it off Rightmove and let them salvage their other bids..
I'd call the EA up immediately and say, you are sorry but over the weekend you've had huge second thoughts and genuinely you want to to walk away.
And just pray that this agent isn't listing the houses you prefer.

It's not ideal but buyers and sellers withdraw all the time. In this situation, you haven't inconvenienced anyone as they have literally accepted your offer today and no one has spent any money. Just tell them that, while you waited for the protracted bidding process to complete, you continued to look at other properties and have now seen one that you prefer and would therefore like to withdraw. I would call them today rather than waiting. If the sellers of the original property really have several other bidders, they will be able to sell it immediately without any problem. Please bear in mind that estate agents are frequently not truthful so always have this in the back of your mind when you are dealing with them.
As I said in my other post, don't rush into buying. Also, don't stretch yourself to the maximum. It's not a great time to do this, with property prices falling in many areas and job losses having already ticked up and expected to rise more. It sounds as if you don't have financial/emotional/practical support from your family, which many FTB benefit from greatly so take your time, do lots of research and don't get caught up in bidding wars or get pressurised into agreeing things that are against your gut instincts.

Hello everyone,

I just wanted to give you an update.

I withdrew my offer on the first house. I fell in love with one of the other houses and was lucky enough to have my offer accepted on it. Solicitors have been instructed, survey is booked and mortgage arranged. I am very happy.

I just wanted also to say thank you to everyone for being so kind and helpful. I was in a very emotional place and feeling very lost, nervous and overwhelmed. You were all kind, didn’t make me feel stupid and helped me to calmly process things. It meant a lot so thank you all.

Congratulations! Fingers crossed it will be a smooth journey for you 🙏

Soup, that's a great update. The words 'fell in love' are noticeably different to house 1, so it's absolutely clear you did the right thing. Tough time for you with all what's been happening but sincerely wishing you that smooth journey, too.

Thanks @soupforbrains I love a positive update 😊

I'd expect whatever you offer - they then would want more, also depends if the survey finds anything like (needing a new roof etc). I'd go 290 to start with and they will then ask for more, and you'll meet in the middle.
Don't let the Estate Agent know how much you can go up - as they earn a % on the sale.
Emphasis that you can move quickly as a first time buying. Look at the house - is there anything you'd like - eg: our house had a brand new fridge freezer American and when negiotations were nearly there - we said okay if its included - i think theyd be hoping to get an extra couple of £ for it - but they were moving to a smaller place anyway. Make sure you have a full survey too, and listed housing repairs are expensive.

Just read your update. Well done.

Delighted for you and thanks for the update?