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Liza123

First Time Buyer - Help/advice Needed

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Hi,

I have been an ardent reader of this forum for the past year and a half . I registered last June but haven't added any posts, as honestly I didn't have anything to say that hasn't been said here already. I do religiously open and read most of the topics, though.

It was HPC which actually opened my eyes to the whole housing fiasco and taught me to look at things in a more criticial manner.

We (my husband and me) are FTB's . We are renting at the moment and have been planning to buy a house for the past year and a half. In June 2008, we saw a house in a desirable area that we liked but thought it was a bit highly priced. We offered 20K less, our offer was rejected but later we found that the house was sold for around our offer price.

We saw some other houses but I have to say HPC did have a major play in my decisions and we are still renting and saving for a deposit.

Our current contract is nearly up and we have given our notice and will have to move in a couple of months. Initially we were planning to rent, but the rent prices seem to have risen(in the area that we are looking for) and we thought we might be better off buying.

Last week we saw a house that we liked in a much sought after area.

The house is in pristine condition and wouldn't require any work (atleast from first look) once we move in.

The area is quite nice as we have been living here, for the past 3 years and do know about the place inside out. We also have a child who goes to a nearby school. Knowing the area and the house prices around, we think 232,000 is an alright offer albeit on the higher side, but we did like the house.

I did a bit of research and found that the current owner bought it in 2004 for 170,000.Previously it was sold for 175,000 (so possibly it was repossesed after that ). The 170,000 bit put me off. I thought the owner is being a bit too ambitious . I suppose he did make some renovations but even then a 70k rise in 5 years, seems a bit too much. Last year we did see similar houses in the area and they were around 265,000. So prices have reduced since last year.

I am not sure whether we should go for this, if so how much low can we go ? How much do you wise HPC forum members think I should offer ?

Thanks for all your suggestions in advance.

Edited by Liza123

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In a normal property market when house prices are close to the long term trend and the number of properties selling is at a healthy level, etc. the norm for a first offer is 10% below the asking price (assuming that the asking price is consistent with selling prices for similar properties in that locality). In a property market that is in a bad state - such as the current one with prices massively above the long term trend; number of sales still collapsed at historically low levels; the need for very large deposits to access mortgages; recession and galloping unemployment; etc., etc. the usual level of a first offer is -20% to -30% of the asking price.

And don't be taken in by the Estate Agents cliche ridden response which will be along the lines of - I thought you were a serious buyer; the vendor will be very disappointed; your offer is unrealistic; the p[roperty market is recovering and about to boom again; I won't pass on an offer like that; you clearly have no experience or understanding of the property market; etc., etc.

You need to stand your ground - send a copy of the offer to the vendor directly - make sure the offer is subject to survey, contract and the property being taken off the market immediately - make your offer time limited if need be - only raise your offer by a few thousand and make sure you do not go beyond a level that is actually sensible for the property in the current economic climate - move on to another property if negotiations go nowhere (there are plenty of good properties to choose from and plenty more will be coming on the market in the coming months). Don't be rash you could end up with a property which you can't sell (when you need to) for the next 10 years.

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During the 1990s house price crash my brother and 3 of our friends, in 1995, decided the time was ripe for buying houses (and they were right!) and used a strategy of identifying 5 or 6 properties that they liked, would be happy to live in, and went to view them. On the properties they liked they put in offers of -30% to -40% all at the same time. They had to put up with rejections, annoyed Estate Agents, etc. but all of them ended up buying houses for between -25% to -35% of the asking prices. And all of them were really happy with the houses they got. It really is a strategy that lots of buyers should be using now, and over the next 2 to 3 years to make sure that they buy a good property at a really good price. After all - do you want your money (and we are talking 10s if not 100s of thousands of pounds - depending on people's budgets) to go to Estate Agents and the mortgage lenders or do you want it to go into your savings, pensions and maximising the quality of life for you and your family, including children if you have any (now or in the future)?

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Hi,

I have been an ardent reader of this forum for the past year and a half . I registered last June but haven't added any posts, as honestly I didn't have anything to say that hasn't been said here already. I do religiously open and read most of the topics, though.

It was HPC which actually opened my eyes to the whole housing fiasco and taught me to look at things in a more criticial manner.

We (my husband and me) are FTB's . We are renting at the moment and have been planning to buy a house for the past year and a half. In June 2008, we saw a house in a desirable area that we liked but thought it was a bit highly priced. We offered 20K less, our offer was rejected but later we found that the house was sold for around our offer price.

We saw some other houses but I have to say HPC did have a major play in my decisions and we are still renting and saving for a deposit.

Our current contract is nearly up and we have given our notice and will have to move in a couple of months. Initially we were planning to rent, but the rent prices seem to have risen(in the area that we are looking for) and we thought we might be better off buying.

Last week we saw a house that we liked in a much sought after area. Please see the link :-

http://www.rightmove.co.uk/property-for-sa...y-23226145.html

The house is in pristine condition and wouldn't require any work (atleast from first look) once we move in.

The area is quite nice as we have been living here, for the past 3 years and do know about the place inside out. We also have a child who goes to a nearby school. Knowing the area and the house prices around, we think 232,000 is an alright offer albeit on the higher side, but we did like the house.

I did a bit of research and found that the current owner bought it in 2004 for 170,000.Previously it was sold for 175,000 (so possibly it was repossesed after that ). The 170,000 bit put me off. I thought the owner is being a bit too ambitious . I suppose he did make some renovations but even then a 70k rise in 5 years, seems a bit too much. Last year we did see similar houses in the area and they were around 265,000. So prices have reduced since last year.

I am not sure whether we should go for this, if so how much low can we go ? How much do you wise HPC forum members think I should offer ?

Thanks for all your suggestions in advance.

If you pay anywhere near a QUARTER OF A MILLION POUNDS for that, you deserve every ounce of financial pain that is coming your way. It`s worth about 50k, if you want to get excited by the area 100k. What the f*ck would you buy property for now, on the brink of the biggest slide in history, just wait, rent longer.

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They are asking far too much for the small house. Number 26 sold for 215k in April 2009. It sold for 190k in 2003. I don't know if that was as a new build or a re-sale. The Landregistry website will allow you to download the history for a few pounds.

Number 56 (if I have got the right number for the one you are looking at) was one of the cheapest 2000 prices shown in

http://www.houseprices.co.uk/map.php?pc=BR6+9XL&show=s

Was it a 2 bedder in a group of 3 bedders or smaller than the others in the street?

I suggest that you have a closer look at number 26 (knock on the door if you need to) and then determine the differences as a start.

Good luck.

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Don't let your heart rule your head on this one. Discover the facts and estimate how much the property is really worth in this market. Other potential buyers will be doing the same so try not to worry about losing the property. Remember, it is very hard for people to raise the necessary finance at the moment and therefore despite the sudden "interest" many people still can't afford to buy. My advice is to play hard ball. You are in a good position as FTB's which is the same position I am in. Present your facts and evidence to the agent/vendor and let them chase you. If you cant get it for a realistic price WALK AWAY. Chances are they'll call you a couple of days later.

Edit: Why is there a TV fixed to the wall behind the bed?!

Edited by DeadCat

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We are in a very similar position to the OP. I think it can be very difficult not to let emotion in, because this isn't just an investment product - it is somewhere to live, to raise our children, etc.

So while I can see the point of view from some that it's a falling market / don't buy yet ... it's also the case that if you've found somewhere you like, that you can afford, and will continue to be able to afford, then it is reasonable to go ahead and buy it.

That said, DeadCat's advice is so spot on. I shall be heeding that too !

--------

PS: Where is the link to the OP's property?? I can't see it, yet the others have been able to make comments on a specific property. I'm probably missing something terribly obvious here!

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I do not think there’s too much wrong with the pricing. Perhaps given current market conditions, buyers can probably demand 20k off.

However, to impugn the poster, who has come on this facility to seek advise, by suggesting a potential home on for ove 200k is worth 100k, is staggering.

It’s ridiculous to make statements like this. This type of home represents 75% of the UK stock and you think it’s worth 50k, being the South of England?

Some members on this site need a reality check.

http://www.rightmove.co.uk/property-for-sa...homes/property-

This studio in Brentford West London is on for £200k. This is a genuine example of a rip off. I would pay about 95K at best. However, if you examine the sold prices for 2009, you will see they are selling for aproximately 160k. For a new build, this is too much, since there will be massive service charges associated with it.

The lady's example is not a rip off.

Edited by roy?

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Thanks everyone for all the replies (Alfie Moon, Flopsy,DeadCat and bug09)

Roy?, Thanks for stating the obvious and supporting me.

We always knew the pricing should have been closer to 225k and hence didnt like it when the owner emphasised that he wouldn't take a penny less than the stated price. The house has been in the market less than a week and today morning, I check the link and it says "Sold STC". The scary point is someone did agree to pay him the full price . Last time we spoke to the estate agent he had said that our offer of 232k was downright rejected.

We have seen a few other houses and it sounds like there are 8 buyers for every seller.

Is there is house price crash, doesn't look like from where I stand or has the market recovered and prices would only increase from now. Good houses in our area are going for the asked price or sellers are withdrawing it from the market.

We have been waiting the past year and half for prices to reduce to reasonable amounts so that we can buy a house of our own. We dont see it as an investment and would be perfectly content if we make no profit (as long as there isn't much of a loss) on it when we sell it, which wouldn't be anytime soon.

Another similar house, in extremely good condition has come up in the same area, for the same price, wonder how much we should put in an offer for ? If we can afford to pay the mortgage, should we just go ahead. I am just thinking aloud, as I can't find an answer.

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Yep, Roy is really supporting you ......... to throw away very large amounts of your current and future earnings (i.e. deposit you put down + the 25 years of interest that you will pay on the mortgage amount you borrow + the mortgage capital sum borrowed).

Roy seems to be rather taken in by Estate Agents '2nd hand car salesperson'esque' spin about the property market and the worth of properties on the market.

The so called 'recovery' of the property market is rather deceptive. If the market was truly recovering the number of transactions (succesfully completed sales) would be 300% - 400% higher each month than they currently are. Why are the number of properties managing to sell , completely all the way through to exchange of contracts and completion? Simply because asking prices are way too high and unrealistic and not supported by the amount of money mortgage lenders are willing to lend out. What is currently happening is that a tiny number of buyers are active in the housing market - the number of completed transactions are STILL at historically low levels. Other 'buyers' have made offers that have been accepted but can't get through to completion. Look at any Estate Agency and you will find that they have a wadge of properties that have gone SSTC but have been stuck like that for many, many months. The number of properties going SSTC is deceptive in terms of it making it look like Estate Agents are being successful in selling properties when in fact they are not.

If the property market is recovering so well why do you think 510 Estate Agency businesses had to cease trading during the 3 months between April and June this year (pretty much when the market was supposed to be moreorless back to normal according to Estate Agents? At this rate over 2000 Estate Agency businesses (not 2000 Estate Agency branches) will have gone out of business this year by Xmas.

So, transactions remain at historically low levels .... and that is their ';recovery'. And this is the extent iof recovery they can generate with the Bank of England Base Rate is at a historical low (i.e. for hundreds of years!!). So, as soon as interest rates start to rise (many economists predicting this will happen early next year) what do you think will happen to house prices? Say the base rate goes up to 2% (the long term norm is 6% - 7%) that will mean the base rate will have gone up by 400% ... by the time the base rate returns to the long term trend (which is inevitable) that will be a rise of 1200% in the Bof E base rate. Yep, 1200%.

Also keep in mind all the talk about ongoing galloping unemployment for the next couple years + the massive cuts in services + big rises in taxes ....... all due to arrive after the General Election next year irrespective of who wins!!!!

The downward pressures on house prices by the middle of next year are going to be massive.

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I am a FTB in a similar situation and think that at this point in time there is now a (very) temporary extreme shortage of homes so I have decided to rent for 6 months to 1 year more. I am on a rolling 1 month contract with my landlord so I can move fast but I can afford to wait. The general sentiment I am getting from the agents/vendors is now just too optimistic given the underlying economic conditions which looks rather (mini) bubbly to me. I can't believe this can last as it makes no sense economically. I find Alfie Moon's advice very useful and I will be following it but now the reality is that I just am not seeing 5 or 6 homes that I like which means that supply is just too constrained. Unless the low supply is going to be a new feature of the housing market I think it is bad idea to buy when the choice is so slim and the sentiment has turned. I will only buy when the supply picks up. However at the end of the day, it is what you want.

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SNIP

I did a bit of research and found that the current owner bought it in 2004 for 170,000.Previously it was sold for 175,000 (so possibly it was repossesed after that ). The 170,000 bit put me off. I thought the owner is being a bit too ambitious . I suppose he did make some renovations but even then a 70k rise in 5 years, seems a bit too much. Last year we did see similar houses in the area and they were around 265,000. So prices have reduced since last year.

SNIP

Going by what you've written, it would seem that the vendor has experience of buying things for less than they were previously purchased for, and should be au fait with the possibility of prices going down. He/She might also think that they're incredibly canny investors, and will only sell for the price they think it's worth...

Anecdotally at least, things are seeming to pick up in Kent, but I wonder how long for, and whether all the sales are really proceedable. If it's an area with a reasonable turnover of properties, can you wait and watch the next couple of proerties come to market? By then you should know whether these sales went through (or whether they're back on the market...) and how much they actually sold for?

However, if these properties are rarely on the market, and it's like gold dust, and it's THE house to make into your home, then obviously things are a bit different - but don't let your heart rule on this one!

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