How should negotiate on property purchase?

[foursquares]

Hi. First time buyer, appreciate some advice.

Saw a property we like, listed for £450k. It's been on the market just under 3 months. It's had one offer in first week, which was rejected by seller - I don't know amount.

We've recently offered £423k (6% under asking), which was rejected. According to agenct, seller looking for close to asking price.

Given that it's been on for a while, we're in a buyers market, and heading into post-summer period...couple of queries :

1. The asking price is overpriced right?
2. How should I approach negotiations?

Thanks in advance.

If you want the house you offer £440 and go from there. If you don't want it then keep looking. Impossible for anyone to have any idea whether it's overpriced based on what you have said. It's worth what someone is prepared to pay.

As above, depends how much you want the house and how much you can afford.

Even if it is 'overpriced' it might be that the sellers simply aren't in a rush to move.

So offer what you think it's worth and be prepared for them to say no

Also depends whether it’s been reduced, since it has been on the market for nearly three months. The seller might be needing close to asking to fund their next purchase, but that’s not your problem. Offer what it’s worth to you, depending on how keen you are.

If they really want to move, they’ll accept an offer that’s less than they hoped. If they won’t accept,they may be staying put.

As a first time buyer your advantage is that you are not in a chain - so theoretically should not hold things up. So emphasise that you have your mortgage offer in place and go a little higher than your current offer to what you feel it’s worth. You can state that your offer is based on x sales of similar sized properties in the area.

Thank you, that's helpful. I'm clearly trying to second guess sellers motivation. It hasn't been reduced yet.

From what I've read, sellers should consider price cuts at 3 month mark.

Rightly or wrongly, I thought i may need to be aggressive on offering on a newly listed property that quickly get multiple offers, but have more scope on those that have sat around for a while, without offers.

Three months doesn’t feel like it’s been “on the market for a while”. Especially over the summer holidays. We have had ours on the market for six weeks, it’s been pretty quiet, but we’re going to wait until a week or two into September before we reassess.

Thank you. Appreciate it's a how long is a piece of string question, but should I increase next offer by £5k, £7k or just go up to my max?

I would just go up by 5k and see what happens as you're bidding only against yourself at this point. Then walk away for a while.

I thought most of the interest is generated in first few weeks weeks, where serious buyers notice a new property on market. After that isn't is just a trickle of 1-2 viewings a week?

Appreciate it's an emotive topic, and you may not want to respond, but appreciate a sellers viewpoint, so:

1. If by late-Sept you haven't had a serious offer, then presumably the only option (assuming marketing is on point), is to reduce price to generate more interest right?
2. Of course a buyer could come along that loves your property, but the longer it's on, the more buyers will feel they have leverage to negotiate right?

The above are just my assumptions, no offence intended.

It depends on the sellers motivation. Do you know if they have found somewhere? If so then they may be more inclined to accept an offer but may need a certain minimum to be able to afford where they want. If they have not found anywhere yet then if they have a firm offer from a FTB then that might give them more bargaining power on their purchase.

There is no right or wrong answer on houses - it’s all quite emotive. On our first purchase we were limited by our mortgage offer. We offered a bit lower than our mortgage max and were turned down - we then upped our offer to our max and were very open that this was the max we could go to and would have to walk away if not accepted.

when we sold that place, we had the sale fall through and had to re-list - we got an offer at a lower price and went back to our purchaser to say we had a new offer but lower and so we amended our offer down but sharing the cut with the chain - so we all took a bit of a haircut.

OP you are writing as though you’ve rad some sort of science text book and this is the black and white way buying and selling houses works.

it doesnt.

3 months isn’t long and you’ve already been told they rejected one offer and want to achieve close to asking price. And you felt you knew better and ignored that. Of course it was going to get rejected.

how does the marketed price compare to that of other properties you have viewed?
what are you happy to pay for it?

this has nothing to do with % or time.

if you really want it offer the asking price. of you truly dont think it’s worth that then move on. Or, be able to articulate why.

making an offer at a value because you think you should go xxc% under after yyy length of time is weird.

I guess it also depends how desperate they are to sell as well. We aren’t buying anything else, it’s a probate property so it can sit a while if need be.

The estate agent says things have been very quiet throughout the heatwave. So we’ll see what happens when schools go back, things calm down and people start thinking about where they want to be before Xmas.

I don't think 3 months is that long to be on the market. It's true you get a lot of viewings in the first couple of weeks, but I found a lot of those were tyre kickers wanting to have a nosey and non serious buyers testing to see how cheaply they could get the house. We got several people offering the asking price about a month into being on the market, so for us it was a case of waiting for the right buyer to come along. Our house is half the price of the one you're looking at, so the pool of potential buyers for ours will be much higher.

Do you think the house is worth the asking price? If you look at nearby houses in a similar price bracket how do they compare? Is it a house you're planning on staying in for a long time, or do you think you'll be looking to move on in a few years? If the vendors haven't come back with a counter offer amount, then I think you will need to make your next offer around the 440+ to be taken seriously.

I would offer 430k if you think it’s worth that. And say it’s your final offer ( even if potentially it isn’t).

Here’s an example for you. Last time we moved we were making a big move from London and had a tight time frame and no wriggle room so would have reduced to sell. Now selling our much loved family home of 20 years - we are aware it is a buyers market but we don’t have to sell so if we don’t get an offer we are happy with we just won’t move yet.

The sellers may be in no rush to move and might be determined to achieve the asking price.

If you want it, make a final offer of as much as you are willing pay and if it's not accepted, move on.

As orhers have said, it's not a science, people aren't magically going to reduce their house price after x many weeks.

Judging from the comments here, perhaps 3 months isn't that long to be on the market, and I can only assume sellers drivers, so maybe I'm being too scientific.

Having said that, there's a correlation between price and time on market. If a property has only 1 offer significantly below asking in 4+ months (appreciate we're not there), there's clearly a disconnect between what the market believes the property is worth and the asking price, so I'm surprised you don't recognise that fact.

This property needs some modernisation (maybe £30kish). Similar properties not needing work have sold for £450-55k, but last comparable sale was 2023.

what else have you actually viewed OP? The best way to gage value and what you would be happy to pay is to view lots and get a feel for what's a realistic and genuine price.

The thing is you must want this house as you are posting here. If there were plenty of other houses that were better value you would be after them not this house! So what I am trying to say the sellers of this house have the advantage over you and you need to recognise that. However having said that they could find a house they love today and then they are open to lover offers. Good luck. It’s hard trying to buy a house even when you are a 1st time buyer without a chain.

A house is worth what someone wants to pay for it. 3 months is not a long time on the market.

I overpaid for my house I think- probably by £20k or so (my husband disagrees though) But it was worth that to me because I really wanted it. It's an unusual house, hard to compare with anything.

In COVID house prices went up not because houses were 'worth' more but because people wanted them more. Some sellers are still looking at those prices and wanting the same now.

As a seller I personally would prefer your final offer rather than haggling.

Again, that's helpful. I viewed 4 properties, and only made an offer on this property. I'm not in a mad rush to move, so if I can't actually get into property by Nov (getting increasingly unrealistic now) , thinking I'll pick search in spring.

I'm trying to pay as less as possible and they're trying to get as much.

Agree that I'd like property, but think my ceiling would be £435k, as I'll need to spend £30k on renovations. With current offer they're just assuming my motivations?

Apparently they have found identified properties they like (not sure how true this is), but can't put in an offer their house is sold.

Then if I were you OP, I'd either offer the max you think it's worth, citing the 30k in updating you feel it requires, or just keep looking?

It depends on 1. How much you like the house & area. and 2. Whether you actually want to do the upgrades yourself.

Upgrading yourself would give you free reign to put your own 'stamp' on the house, but it would mean that the headache of finding tradesmen and living through the process and all that entails? e.g No kitchen/bathroom for a couple of weeks etc

If you really want this property then give them your best and final offer. If you dither about, someone else could buy it.