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Negotiating As A Cash Buyer In Todays Market

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I am having my first negotiation for a house and would appreciate some advice. I was hoping to have a two way negotiation between myself and the seller but another bidder has joined the party.

Should i simply not be willing to enter into any bidding competition in todays market. Four years ago i am guessing there was little difference between a cash buyer and a buyer requiring a mortgage. Few mortgages were being refused so money from a lender was pretty much as secure as money sitting in the bank.

I have bid 130k on a house. Someone else has come in at 140k. I am told by the estate agent this bidder is strong and has been vetted by them. But they still need a mortgage and i would not like to bet my life on anyone getting a mortgage deal secured in todays market.

Lets say i did get into a bidding competition with this other person and we bid the house up to 147k before he finally pulled out with no other parties interested in the house. My fear is i could be bid up by a potential buyer who never had a pups chance of getting a mortgage in the first place.

The other situation is if this other bidder capped his bid at 140k and that was his final offer. Surely as a cash buyer i would always only need to underbid him by a reasonable ammount which reflected the certainty of my cash situation. If a buyer needing a mortgage put in his final bid at 140k and i put in my final bid as 138k which would be the most appealing bid to the seller.

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Did this bidder mysteriously appear when you got interested in the property? Offer what you think its work. Factor in any falls from peak (We’re 50% down) and any future falls you think will happen. If the vendor doesn't accept just remember it’s a buyers market out there. Price falls are accelerating. Good Luck.

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First question does this offer really exist? It may be the estate agent's methodology for increasing a bid (remember it worked when the market was booming).

Remember you've got all the time you need to find the perfect house but you'll be lumbered with it if its not perfect. Take you time to find what you really want (which may mean walking away from this one).

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Obviously, i can only take the estate agents word that the other bidder is real. I have no reson to think there is not a genuine other bid. My main concern is getting into a bidding competition with anyone in todays market when you can not be sure if that other bidder is ever at the races in terms of getting his mortgage.

The estate agents view is that my money in the bank is no better than someone elses money through a mortgage. The seller will get the same money. But, as a cash buyer i am offering certainty while no one requiring a mortgage can offer that to a seller. Surely, there is a difference.

If the seller went with a slightly higher bid from someone requiring a mortgage and the deal falls through he cant think he has always my bid to fall back on because that train left the station. If he wanted to come back to me after a deal fell through we would be negotiating downwards from my previous offer.

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Obviously, i can only take the estate agents word that the other bidder is real. I have no reson to think there is not a genuine other bid. My main concern is getting into a bidding competition with anyone in todays market when you can not be sure if that other bidder is ever at the races in terms of getting his mortgage.

The estate agents view is that my money in the bank is no better than someone elses money through a mortgage. The seller will get the same money. But, as a cash buyer i am offering certainty while no one requiring a mortgage can offer that to a seller. Surely, there is a difference.

If the seller went with a slightly higher bid from someone requiring a mortgage and the deal falls through he cant think he has always my bid to fall back on because that train left the station. If he wanted to come back to me after a deal fell through we would be negotiating downwards from my previous offer.

I would not under ANY circumstances get into a bidding contest in this market. Either real or imagined. The fact is you are a cash buyer. An organism rarer than hen’s teeth. If you are really into this house I would leave a short note through the owner’s letter box explaining your position. Leave contact details maybe they'll get back to you. Plenty more houses about. I really would be sceptical of a supposed bidding contest in this market.

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Did this bidder mysteriously appear when you got interested in the property? Offer what you think its work. Factor in any falls from peak (We’re 50% down) and any future falls you think will happen. If the vendor doesn't accept just remember it’s a buyers market out there. Price falls are accelerating. Good Luck.

First of all price falls are not accelerating. 2008/2009 we were looking at annual falls of 30%. We are now, if the nationwide is to be believed looking at 4% year on year falls. The average house price in NI is still falling and despite the nationwide latest 3% increase I believe this average will continue to fall as different geographical locations adjust to a value that is considered market value.

Of the 46% falls to date, 40% of this was in the first two years and the latter 6% or so has been in the last two years. We cannot sat the falls are accelerating as this is clearly not the case.

If you believe prices are going to fall substantially more,my advice would be - don't price it in, don't try to convince the vendor or the vendors agent, just don't bid. Let the other guy buy it and buy another later when the market falls to a level where you believe it wont fall much more. Thats the decision you have to make.

On your question, is a cash offer better than a Mortgage offer? The answer is yes, the real question is how much.

The problem, I have found is the cash offer is, at times it is the more risky for the vendor. Let me explain.

A buyer with cash to buy a house should have the pick of the bunch. He should get the best deals, first choice etc, etc. The problem is that buyer, quite often starts to behave in a manor best described, with a strong Belfast accent as a dog with two d**ks. I apologize for been so crude but most people will have heard that one before. What we find happens is the cash buyer will front to more than one house, he will book and still deal with others and can be quick to jump as he is spoilt with choice. At the moment there are two buyers we are weary of and that is people who say they are a friend of the boss and people who say they are cash buyers. We (internally) place markers against both in our sales database as we know both tend to behave somewhat like spoilt kids. We are used to it now and know to expect it.

It has always been the way over the years but more so now. With a result we don't favour them over mortgagees. Their behaviour dilutes any perceived benefit of the certainty they initially present. The other factor is only a small percentage of people who book our houses fail to get a mortgage and we will determine this in a few weeks.

On a resale this will be different. However, the problem is the vender will be delighted to have two punters and no doubt the agent thinks he is the bees knees. It would be a good idea to have a fall back house, particularly with another agent. There must be plenty about (about the £135k would be a good one). I would let the agent, selling this house know you are making a quick decision on one or the other and see what happens.

Edited by BelfastVI

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Tell them you're not going to enter a bidding war, especially since you are a proceedable buyer at the moment and the others may not be. Say that if they come back to you in the future, your offer will be 5% lower. Should sort out pretty quickly if this other offer is for real.

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Thanks everyone for your advice. A lot of times i come on here knowing the answers to my own questions but need reasurance. Often though i get some real good advice that i never thought about. Some interesting points to consider from all the replies.

I do like the house and thought my bid was strong. I was happy to do a deal pretty quickly but this other bid has complicated matters. Now i am thinking i simply dont wish to bid against anyone. The seller must think its christmass if indeed he has two bids on the table.

Now i am thinking i shoud pull out and not give the seller the adavnatage of having even my underbid. If the other deal fails to materialise i may still be interested but only if i am the only party involved.

Interesting point which belfast v1 makes about cash buyers. I can see his logic and i am sure he is talking from experience. All i can say is that i am not in the business of messing anyone around if i see a house i like at what i think is a fair price. In this instance i was happy to pay what i think is a small premium over fair price as it was a house i would be happy living in for several years.

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Thanks everyone for your advice. A lot of times i come on here knowing the answers to my own questions but need reasurance. Often though i get some real good advice that i never thought about. Some interesting points to consider from all the replies.

I do like the house and thought my bid was strong. I was happy to do a deal pretty quickly but this other bid has complicated matters. Now i am thinking i simply dont wish to bid against anyone. The seller must think its christmass if indeed he has two bids on the table.

Now i am thinking i shoud pull out and not give the seller the adavnatage of having even my underbid. If the other deal fails to materialise i may still be interested but only if i am the only party involved.

Interesting point which belfast v1 makes about cash buyers. I can see his logic and i am sure he is talking from experience. All i can say is that i am not in the business of messing anyone around if i see a house i like at what i think is a fair price. In this instance i was happy to pay what i think is a small premium over fair price as it was a house i would be happy living in for several years.

Explain what you have just said here to the agent. Tell them how quickly you can complete and you are prepared to put the bid in writing (use the term 'subject to contract' on the letter) and are prepared to pay a 10% deposit.

The resale market will treat cash buyers differently than we do and I believe you will have a good chance. Increase your bid slightly (a few grand) but you do not have to match the other bid). Assume the other bid is genune but balance that with being willing to walk when the price is above what you intially were prepared to pay.

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A little bit of background. The house is being sold as part of an estate following a death. It came on the market a month ago but the sellers say they want to test the market and are in no hurry for a quick sale. I have been told the fact i can proceed quickly is not a factor to my advantage at this stage. It is on for 149k and was told that the sellers will not take it off the market unless they get very very close to that. 147K. Its rated 130k.

Initially when i put 130k on it the estate agent told me it would get rejected but if say in 10 weeks if no one else had bid on the property then the sellers may have to re-evaluate their expectations.

As for the other bid when i asked about it i was told it was strong in terms of getting the finance. The estate agent told me increasingly they will only accept offers they deem secure as when they sell a property they only want to sell it once and dont want any deals falling through.

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When i asked for feedback from my initial offer which at the time was the only offer i was told that the seller, an executor, personally wanted over 150k but came down to just under that so it would come under stamp duty. I also get the impression that dealing with an executor may not be good as i imagine they feel under responsibility to get the best possible price.

I do know that the proceeds of this sale will be split 4 ways. I made the point that my offer of 130k and their asking price of 147k was similar to me putting in a bid of 33k on a property each of the beneficiaries wanted 38k for.

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In this instance i was happy to pay what i think is a small premium over fair price as it was a house i would be happy living in for several years.

If this is truly the case then the other bidder is unlikely to get the place mortgaged to the level of their offer - valuations are being deliberately conservative at the moment. I would leave your offer on the table but specify that, should your rival pull out, the property stop being marketed immediately with completion within 2 weeks (should be very straightforward if you're a cash buyer and the property is freehold).

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First of all price falls are not accelerating. 2008/2009 we were looking at annual falls of 30%. We are now, if the nationwide is to be believed looking at 4% year on year falls. The average house price in NI is still falling and despite the nationwide latest 3% increase I believe this average will continue to fall as different geographical locations adjust to a value that is considered market value.

Of the 46% falls to date, 40% of this was in the first two years and the latter 6% or so has been in the last two years. We cannot sat the falls are accelerating as this is clearly not the case.

If you believe prices are going to fall substantially more,my advice would be - don't price it in, don't try to convince the vendor or the vendors agent, just don't bid. Let the other guy buy it and buy another later when the market falls to a level where you believe it wont fall much more. Thats the decision you have to make.

On your question, is a cash offer better than a Mortgage offer? The answer is yes, the real question is how much.

The problem, I have found is the cash offer is, at times it is the more risky for the vendor. Let me explain.

A buyer with cash to buy a house should have the pick of the bunch. He should get the best deals, first choice etc, etc. The problem is that buyer, quite often starts to behave in a manor best described, with a strong Belfast accent as a dog with two d**ks. I apologize for been so crude but most people will have heard that one before. What we find happens is the cash buyer will front to more than one house, he will book and still deal with others and can be quick to jump as he is spoilt with choice. At the moment there are two buyers we are weary of and that is people who say they are a friend of the boss and people who say they are cash buyers. We (internally) place markers against both in our sales database as we know both tend to behave somewhat like spoilt kids. We are used to it now and know to expect it.

It has always been the way over the years but more so now. With a result we don't favour them over mortgagees. Their behaviour dilutes any perceived benefit of the certainty they initially present. The other factor is only a small percentage of people who book our houses fail to get a mortgage and we will determine this in a few weeks.

On a resale this will be different. However, the problem is the vender will be delighted to have two punters and no doubt the agent thinks he is the bees knees. It would be a good idea to have a fall back house, particularly with another agent. There must be plenty about (about the £135k would be a good one). I would let the agent, selling this house know you are making a quick decision on one or the other and see what happens.

Interesting that you can afford to be fussy over a proceedable buyers attitude. Granted, they may on occasion, be repugnant but I would have thought a sale was a sale. Ever known any developers or EAs with two d**ks during the boom? What goes round.......

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Thanks again for all the replies. Sometimes i need a reality check by coming on here. I agree with the post which stated the other bidder might have trouble getting a mortgage which valued the property as much as the seller. That infact was the first thing i thought especially if the biddiing was to go close to the 150 the seller is looking.I think at 150k any lender is going to be looking to cover themselves by asking for high deposit on a house rated at 130k and very dated inside. Would that be a fair point?

I have liitle experience of the mortgage market but if a buyer was to ask for a mortgage on a 145k house rated at 130 would kind of a deposit would they have to come up with?

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keep the offer at 130 and dont budge

im considering offering 250k for something that was asking 550k peak. asking price 289k. RV 225 ( dont think RV does this place justice especially the high spec of the property internally so am prepared to offer 11% above RV)

if i put in an offer i will be making it clear that that the offer will not be increased.beyond 250 under any circumstances.

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Thanks again for all the replies. Sometimes i need a reality check by coming on here. I agree with the post which stated the other bidder might have trouble getting a mortgage which valued the property as much as the seller. That infact was the first thing i thought especially if the biddiing was to go close to the 150 the seller is looking.I think at 150k any lender is going to be looking to cover themselves by asking for high deposit on a house rated at 130k and very dated inside. Would that be a fair point?

I have liitle experience of the mortgage market but if a buyer was to ask for a mortgage on a 145k house rated at 130 would kind of a deposit would they have to come up with?

Someone on here, quite a while ago, said banks were valuing at RV + 5% - I can't verify. This might impact on the deposit scenario. BVI says there's 100% mortgages out there also.

Don't try to get into the heads of the seller(s), you'll just torture yourself. Logic and common sense probably won't come into it. Stick with the big facts and your side of the deal. You can't make someone sell you their house and they certainly won't be pricing in further drops down the line. They are being advised by an EA. I've been there.

Good luck.

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Two thoughts for you:

1. There's been several posts on here recently about EA's being more favourable to bidders organising a mortgage through their in-house broker. Allegedly, it's the only way for some EA's to keep in profit nowadays. You might be up against some of this issue but as other posters have suggested, they actually need to get a mortgage at the inflated value and it often/usually falls over before completion.

2 If the house is a disposal from an estate, particularly with mutiple beneficiaries, then the " we can wait forever logic" seldom holds for long. As soon as the coulcil tax bills come rolling in, as well as having to deal with maintenance, busted windows, etc., people start to realise that money in the hand is better than jam tomorrow.

Unless this house is the only one you can ever see yourself living in it might be better to sit back and let things run their natural course.

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Interesting case especially as this is an estate house. You could have different beneficiaries thinking that they should hold on for a bigger price since they have 2 possible bidders already. So they will have an inflated view of the house. Not a good position for you.

I was in this position 1 year ago. Estate House with beneficiary thinking Mummy's house was worth a fortune. House eventually dropped 50K over the year with very little interest and by the time it had dropped to the level which I might have paid - it didn't look so good against other houses at a similar price.

Personally I would put it on the back burner. Make an offer but show no particular concern about it. Never ever will I get in a bidding war.

Keep on looking and if the EA comes back to you fair enough. Remember that you have only 1 bullet and don't fire it too early.

Edit -- I see there are 4 beneficiaries -- very bad situation getting them all to agree a price. I would keep looking and not depend on this one.

Excellent advice. Welcome to the stressful world of house buying Sundance. The more you talk to EAs the more information you give them either intentionally or unintentionally about your position. As with most things in life, knowledge is power and you are just giving yours away for free. I know its not easy, but do yourself a favour and wait until the EA contacts you. This business about cash buyer Vs mortgage buyer is just the typical mind games being played to sow a little seed of doubt and its working. You need to start playing your own and make the EA think a bit about maybe losing a potential buyer. The other bid might exist or might not, but cash is king in the game we're playing now and bids conditional or mortgage approval aren't really worth a fig just now.

Be strong Sundance, try not to let your emotions get in the way of rational decision making. There will be plenty of other houses, seriously, there's always another dream house to be found just when you didn't expect it. I know this from having bought several houses over almost 30 years, maybe bought our first one before you were even born. This will be a good experience to learn from.

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Interesting that you can afford to be fussy over a proceedable buyers attitude. Granted, they may on occasion, be repugnant but I would have thought a sale was a sale. Ever known any developers or EAs with two d**ks during the boom? What goes round.......

I didn't say we wouldn't take the booking, ofcourse we will. I said we wouldn't necessary prefer a cash buyer over someone looking for a mortgage. Its still a buyers market and I cant blame a cash buyer from taking advantage and stated he should have the best deals etc. I didnt and wouldn't describe any purchasers as repugnant. It is just that the 'certainty'they present is sometimes far from it.

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I didn't say we wouldn't take the booking, ofcourse we will. I said we wouldn't necessary prefer a cash buyer over someone looking for a mortgage. Its still a buyers market and I cant blame a cash buyer from taking advantage and stated he should have the best deals etc. I didnt and wouldn't describe any purchasers as repugnant. It is just that the 'certainty'they present is sometimes far from it.

I get your drift.

How many cash buyers are there out as a %, what type of property do they go for and are their numbers increasing or decreasing (excluding auctions). What is the split - homebuyer/investor? Are these sales recorded anywhere or in any of the indices?

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Thanks again for all the advice. All your help is really appreciated. Think i am totally convinced now not to compete in any bidding. Just seems a road to nowhere and i would be in the dark all the way. I will see what develops over the holiday week and have another talk with the estate agent then. My offer then will probably be a take it or leave it. It was not in my thinking at the start to imagine having to compete with another bidder as silly as that might sound. Reckon i will just say my race is run at the offer i made and if the seller wants to go with the other punter good luck to them.

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  • 311 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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