Low offers due to people wanting to make big changes to the house

[CBradshaw]

We are selling my Dads house after he passed away. The offers received so far have been 10% or more below asking price. They've all said it's because they want to extend or make changes to the house (such as moving the location of the front door). We have declined all offers, as we know the house is worth close to the asking price, due to location (sought after road in the town), and the size/privacy of the front and rear garden.

Is it normal for buyers to pay a lot less for a house that they want to change, but doesn't actually need any alterations? I think they want a house on this road, but the actual house/layout doesn't meet their requirements.

Why on earth does that annoy you?? Budgeting for work you want done is part of house buying. Very few houses are box fresh and ready to live in.

In 1998, the market was rising rapidly. The opposite is happening in many places now. Buyers will do their sums and offer based on those, in general. They will also say various things to the agents, some true, some just excuses. You shouldn't take these things so seriously.

If you have no urgent need of the money from the sale then stick it out. It is more than likely your EA has given the reason of the sale to potential buyers and everyone is hoping to cash in. EA through commission and buyer through lower offer. Very sorry for your loss but maybe take a step back for now.

What is that you think EAs should do which they aren’t doing?

This really very much depends on the market though at that point and ‘need to sell’ - its fine in a market that’s vibrant and competitive - not so much so when it’s stagnant

Advising their clients. Using market knowledge to get them the best price. Marketing right as well as vetting buyers properly. Encouraging negotiating as well as accepting reasonable offers.

I have plenty of experience dealing with them to know vast majority are poorly trained and nothing more than administrative staff.

My favourite ones are the yappy ones who release crucial information about their clients which we then use to negotiate lower offers.

Remember agents have other properties to sell as well as yours. Make yours the one they focus on. Call frequently. Allow as many viewings as possible. Give agent the keys obviously.

Sometimes buyers let the sale proceed and then offer less the day before exchange. Hardball them. They have spent money on the survey - expensive - and possibly a mortgage application fee. They want the deal.

So… explain that you NEED £X. It isn’t just that you want £X. However if they can’t get to £X, the agreed amount, you completely understand and you will go to the next buyer on the list or just take it off the market for a while. Tell the agent you are happy to take it off the market and wait some months. Agent will not want this to happen as it might not come back on with him or her. Do not confide anything at all in agent - and it is easy to make this mistake, as I did recently. Agent is working not for seller but for themselves and their commission.

Ideally have another buyer in the wings - instruct the agent that you want two interested parties (and explain to the second buyer the position so they are in the picture).

Finally, if you aren’t getting traction, give agent notice. Their service will improve as your property will be the priority, all of a sudden. (NB You must avoid commission doubling - first agent makes a list of those who they have shown it to. You give this to the new agent to avoid him or her seeking commission too if any of those buyers return.)

best of luck and I hope it works out for you - you deserve it to. X

I’m sorry to hear about your Dad.

The house is valued as it is, should they want to do things to it that’s their decision.

however the market is not great, so 10% probably isn’t too bad, speak to your agent and they can advise.

I am sorry for your loss.

If you’re willing to accept 3% or 4%% below asking price, I’d probably recommend you go to at least 5%… Waiting costs you as well…

Yes, they should be able to get potential buyers to negotiate and should have real knowledge of the buyer's budget and financial position. Getting sellers to accept what is a realistic selling price for their property can't be easy in the current market but it is pointless asking for too much at the moment, however much the seller believes their wonderful property is worth.

Our agents only allowed viewings from people whom they knew could afford our property and had finances in place, we were under no pressure to sell and simply wanted to achieve what the agents told us it was worth. We only had three people viewing and had offers from two of them. In our case we only used one excellent independent agent, did not have our property on any sales websites and relied on the agent showing to people they knew would be seriously interested. If a property is openly on the market for a long time it does encourage potential buyers to make silly offers. However in @CBradshaw's case, with just a month on the market, this should not be a problem. It sounds as though buyers have heard the magic words "probate sale" and think this means they can get a real bargain. I don't know if she is under pressure to sell or if she can wait until next year? There are buyers out there who are ready to buy but waiting to see what happens to prices, there should come a time when they really need to buy.
Agents shouldn't release crucial information either: we once bought a property which was empty, almost derelict and had been a holiday home for 15 years. A Saturday girl told us everything, showed us round saying we wouldn't like it and that she'd shown it to dozens of people. In the end we got it for way under the asking price as they were desperate to sell (though it probably wasn't worth any more anyway). There were four siblings involved in the sale and the most difficult thing for the estate agent was to get them all to agree. It's important to get all the sellers to agree on what can be achieved and to accept it.

Yes, small amounts are really irrelevant, and a lower offer from a good proceedable buyer is obviously worth more than a better one from someone who is under offer but in a long chain or whatever.
But when we downsized we had offers of £70k below our EA's realistic asking price, with the buyer believing this was peanuts when in reality it was more than an annual salary for very many people. It's very difficult to negotiate with somebody who regards the whole thing as a game and tens of thousands of pounds as irrelevant - it may be irrelevant to them, but to many sellers it is critical. We did eventually find a seller who paid us what the agent felt that the house should be worth. I'm sure that those who made our original offers eventually found their bargain.

These things are relative. That 70k might be more that an annual salary is irrelevant. If it’s only 10% under ask, it’s a normal offer.

@CBradshaw firstly, I'm sorry for your loss. It must be hard losing both parents so young, and no-one reasonable is suggesting you wouldn't rather have them back than a place of your own each.

It's also a complex sale situation to be in as your first experience of the property market. It's a high value asset, one of the nicest in the area by the sounds of it, and there's a budget next month which might turn property/wealth taxes (and indeed the entire economy and/or residential property market) upside down... As you've seen on this thread, the full spectrum of opinion is available & there is no single "right" answer.

I'll try to cover a few points you & your siblings may want to discuss between you.

1. Estate Agents valuation is nothing more than an optimistic stab in the dark. Some will habitually overvalue & then reduce. If you live in an area a long time & have bought there a couple of times, you'll know which these agencies are & adjust your own interpretation when they quote on yours when the time comes to sell - I doubt you have the time or inclination to bother with researching this, but keep it in mind.
2. £750k might sound like a sensible price point for 4 bed/detached when 3/semi in similar area have been going for the prices you said. BUT you do have to keep in mind the relative quality of interior finishes as well. Zoopla can't judge that (and although estate agents can, they usually lean towards listing for 6 weeks at £750k, then reducing to £725k for a reason I can never actually fathom as it just spins out the total time a property loiters on the market). Have a good look through the listings of the high value smaller properties which have sold recently & be objective - if your father's place isn't to the same modern standard of decor/fitout/arrangement (even including garden use), then it will inevitably be at the lower end of a price band for 'next size up' properties, so may be far closer to the smaller-but-immaculate ones' value than you realise.
3. If you put yourself in the theoretical position of a buyer & look at the prices immaculate quality smaller local ones recently sold at, then estimate what the cost of getting your father's place up to a similar finish would be - then look at likely value 'cap' on an immaculate modern version of your father's house (which would either be higher end place in the area, or where people with more money look in nearby slightly swankier area). You will get a rough idea of the mental calculations potential buyers are looking at to come up with a reasonable offer on your place. A friend or relative who's owned 3+ properties and done a reasonable amount of doing up work in each would be a great sounding board for this with you & your siblings. I'd HIGHLY recommend you don't get fixated on £750k, that's for sure!
4. Bear in mind that while the EAs are working for you, they'd also love a quick easy sale to take their commission & move on. They may have 'encouraged' a slightly low offer by mentioning probate (although it's probably also fairly obvious from condition of property too). So £670k may genuinely be top end, but it may also be a bit cheeky with scope to push to £690k.
5. Would concluding the transaction at £690k be such a bad outcome for you all? Digging your heels in for £750k will just become a painful, drawn out waiting game. The UK residential property market is not a fizzing hotbed of last-minute gazzumping right now, and getting a serious buyer who wants the place is not to be underestimated!
6. In light of 5, letting the place loiter on the market until March at £750k is not going to do any favours for your ultimate sale price. By all means keep it on until the budget at end of November to see what that brings - if it's major, most current offers will probably get readjusted anyway. If not, it may calm a jittery market a bit.
7. If you don't get a decent offer before Christmas, make a gameplan with your siblings NOW about your next step. Is it to drop the asking price to £725k and keep waiting? Is it to withdraw from market & relist in March when buyers generally start looking more seriously again? Is it to empty the place & do a fresh coat of neutral paint everywhere? Is it to spend some money & actually stage the house to maximise its value (maybe not an option if no cash available from probate, but not the worst idea for a place worth that much which would other be soulless empty rooms - huge chunks of the population can't envisage spaces without furniture in for reference). Talk this through now so you have a plan come budget day & don't all fall out!
8. Figure out what your cost of waiting is. Some have said it's just bills & insurance. Some have said it's that plus £670k at 3% interest you'd get in the bank. Personally I think it's higher, because it's the rent each of the siblings could NOT be paying if you each bought with your share. So for example if there are 3 of you & you each got £210k after costs & you each bought a 2 bed flat outright instead of renting a 2 bed flat at £850/month each, NOT selling quickly at £660k would collectively cost you £2,550/month (plus bills & insurance on your father's place). Relative values & costs will vary by area & whether you'll each use as deposit vs outright purchase etc - but it's generally going to be costing you more than just the bank interest you're losing out on while value is locked up in your father's property.
9. What would your ideal buyer be? It's unlikely to be cash at this point, but is possible. Find out the full situation of each offer, as the offer you've had with no chain may be a lot more likely to come to something than £730k with a stack of 6 other property transactions below it!
10. Keep in mind it's entirely possible the whole market may drop 10% by this time next year (from a current reality valuation of £690-720k, rather than 'initial listing' valuation of £750k!. A £670k offer may not seem so bad with the benefit of 15 months hindsight. You may do well to engage and try to get it to £690k with a motivated buyer and be done...

If you can find an experienced & trusted family friend with no skin in the game to sit down with all of you & talk through all of the above, you should get to a much clearer view than 'cheeky offer, we're not budging unless it's £750k'.

Selling property in the UK is stressful & longwinded. Removing emotion & being as practical as possible will help reduce the stress on all of you.

Good luck with this & each of your subsequent purchases!

Such a detailed and helpful post @MeandT!

*edit to my last to apologise to Scotland...it's only the England & Wales process that's painful, ineffective, drawn out & far too often falls down entirely. I didn't mean the UK at all ;)

A house is only worth what someone will pay. In your shoes I would accept the highest offer.

@CBradshaw , it's in a good location, it's in good structural nick, it's got 4 bedrooms. It will sell. It's only been on the market a month.

So thoughtful and helpful @MeandT
My condolences @CBradshaw
I hope your Dad’s house sells soon

If we get a rate cut, that’ll help too.

I’ve reread your recent post, OP, as I had missed the one about price level etc.
Given you would not be able to complete in time, I would sit tight with current asking price and approach to rejection of offers till after the Budget (30/11). At that point everyone will know much more about the direction of the market and proceeding now would be a nerve wracking and potentially expensive experience if things changed. The buyer can always pull out with no cost to him or her save eg survey and some legal fees.

Do you have a solicitor? If not, I’d spend next week speaking to conveyancers, getting quotes and choosing someone. Cost will
be based on the price of the house so I’d get two quotes eg at 750 and at 670.

I’d them to send property questionnaires so you can get started on those.

And obviously clear out the house and sort garden to make them as nice as possible if you haven’t already done this.

If the house is over priced you'll just have to wait for the market to catch up to you. If you want it to sell soon then be flexible. Also, your ad will stagnate and buyers will see your house on RM or whatever week after week making it even harder.

We will continue to get rate cuts (we've already had a number) but I don't think they will help significantly because the signal the deterioration in the economy, the job losses, the tighter lending, etc.

The other thing is you should be looking at it in terms of square footage, as opposed to number of bedrooms. Work out the price per square foot you are asking and see if that is reasonable with respect to others that have recently sold nearby. Ask the agent for sold prices.

Also, once you have done the above, ask the agent to talk you through his or her analysis that led to the 750k figure, rather than accepting it blindly. This will help you work out whether you have it on at a market or over priced level, in all the circs. If it is a market level, and you are ok to sit it out, you wait till spring. If over priced, you start to wonder if he/she just quoted high to get the business and will be coming back to you soon asking to reduce. This is a very frequent tactic and leads to bad results for sellers as the property loses momentum.

I cannot stress enough that the agent is motivated by the commission alone and is certainly not trying to get a great result for you. If closing the deal and getting a great result coincide, fine. If not, closing the deal takes priority. There is a LOT of good advice on this thread. Please follow it and don’t be duped on the sale. It sounds as if you have a good quality property and those should do best in all markets.

Exactly. Rate cuts don’t indicate a booming economics - rather an economy that needs to be stimulated.

Having said that, the Chancellor is very supportive of young people getting on the property ladder. So much so, that bank lending criteria are loosening a great deal. You couldn’t make it up. I read the other day of a young couple with a small deposit borrowing 500k which represented a MASSIVE multiple of their joint earnings. (It was a red flag to any investor in UK bank stocks for sure.)

The average drop across the country from asking to sold price is usually 2% however currently it stands at 4.5%
This % has been reducing since April this year
10% is a big drop ! Ignore any EA or buyer that tells you otherwise

Buyers are more likely to make much lower offers on probate properties. On the assumed basis thise inheriting just want to get rid of the property quickly
This of course has nothing to do the the actual value of a property.

To work out values in your area OP
look At recently sold properties
£/m2
then + or - depending on extras ie garage, decor, large garden etc.
This will give you an idea of whether the offers are reasonable or not and whether your asking price is within range
You say it is but doing the sums will clarify further

The longer a property is up for sale the higher chance you will have of higher % reduced offers
So such low offers so early on in the sale process are trying it on. Or, Perhaps because we are moving into the winter months with traditionally less sales.

If I were you I wouldn’t leave it on the market for months on end over Christmas
either
counter offer with a max reduction of 4%
I’d see how things go for another month and if you don’t get a good offer then remove it from the market in order to put it back on at a better time next year ie Feb