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samtheman

Asking Price / Selling Price In London?

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I was pretty close to putting an offer in for a flat a few months back: the flat was at 270k and although it was very reasonably priced (one-bedroom but very large flat), I thought that an offer of 250k, being a first time buyer may be considered.

I missed the boat but the estate agent said that there was no chance of me getting the flat for that price in this case.

My housemate owns the flat we live in. She paid 400k for an asking price of 450k. Other than being particularly good at identifying a bargain, I'm not sure how she managed to cut the asking price by over 10% for a flat in a very central location, as the seller was not desperate to sell as far as I know.

Any ideas what realistic offers are compared to asking prices? I realise that I'm looking for a blanket answer for a variety of properties that will all have a selling price set at different values.

My understanding was that if a flat is priced at 265k then the seller is most likely looking to settle for 250k. What about higher priced properties?

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i've put in a few offers in ranging from 10-30% below asking price.

all of them rejected.

Most of them unsold 2-6 months later.

If it is a place where I would want to actually live (so far that's 3 places of around 20 viewings and 100+ closer inspections /information requests ) I would consider making an offer. However I generally discard the asking price and do my own research as to how much I think it is worth compared to (1) renting, (2) other areas, (3) historical transaction values, and including some sensitivities like a rise in interest rates to 8%. Usually this shows shows asking prices are 20-40% too high in my opinion. If the asking price is more than 25% where I think it should be (which is most of the times) I won't make an offer even if I love the place, in London that's just wasting time in most cases (unless on the market for a couple of years but then you should be seriously wondering what' s wrong with it in the first place).

You should offer what you think it is worth and what you can afford (inc assuming higher interest rates which will come + capital repayments).

Your friend mostl likely didn't get a bargain because the £450k asking price was most likely 20% or more overinflated. Therefore the seller was happy to take the lower price because it is higher than the true value and probably well over where they bought it

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I've never bought or sold a house before, but I don't understand the general thinking with asking prices, and how you can ever have a general rule about what level of offer is 'appropriate' in relation to asking prices in general.

As far as I see it, whether an offer is appropriate or not depends on the level at which the asking price is set and how realistic or unrealistic the starting price is. If the asking price is realistic, you won't be able to knock any amount off the price. If the asking price is 30% too high, you might be able to knock 30% off the asking price.

There can't be any general rule about this - you have to be specific to the property and its asking price. Offer what you think it is worth (and not what you want it to be worth) - if that makes you a time-waster, then so be it. It doesn't take much time to make an offer, and it doesn't take much time to reject an offer, so no one really loses out. If you've already viewed a place, and if you don't make an offer, you've already wasted your own time and the EA's time.

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Hi Sam

Can you tell us roughly where in London? It's a big place!

I was pretty close to putting an offer in for a flat a few months back: the flat was at 270k and although it was very reasonably priced (one-bedroom but very large flat), I thought that an offer of 250k, being a first time buyer may be considered.

The vendor's not interested in your stamp duty status. They're only interested in the fact that you're an FTB inasmuch as it means you're not in a chain and can (hopefully) proceed immediately. At present the only thing vendors are really interested in is that your finance is arranged.

I missed the boat but the estate agent said that there was no chance of me getting the flat for that price in this case.

Well he would say that, wouldn't he?

My housemate owns the flat we live in. She paid 400k for an asking price of 450k. Other than being particularly good at identifying a bargain, I'm not sure how she managed to cut the asking price by over 10% for a flat in a very central location, as the seller was not desperate to sell as far as I know.

If you haven't already, you might want to look up how much the person she bought it from paid for it on the Land Registry.

Any ideas what realistic offers are compared to asking prices? I realise that I'm looking for a blanket answer for a variety of properties that will all have a selling price set at different values.

My understanding was that if a flat is priced at 265k then the seller is most likely looking to settle for 250k. What about higher priced properties?

There's no direct relationship between asking prices and selling prices. Asking prices are the product of many factors, which include but aren't limited to:

The vendor's perception of the market - which is everything from 'House prices in London up again!" headlines to what their neighbours asked for their properties.

The vendor's emotional investment in the property (especially if it's their home)

The vendor's debts - some vendors are very heavily mortgaged and cannot sell below a certain price without crystallising their negative equity.

What the vendor thinks they need to sell for to buy the next house in the chain.

Good old fashioned greed.

Selling prices are the product of supply and demand, although as you've realised stamp duty bands distort the market slightly, and 'supply' and 'demand' both need to be defined in this context.

Hope this helps a little,

Will

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Hi Sam

Can you tell us roughly where in London? It's a big place!

Well I wasn't more specific as I was unsure if there would be too many people aware of the specifics of the area I'm looking in.

Mostly E1, E14, SE1, SE16.

Like many people, looking for something under 250k although I could afford more. I work as an IT contractor with a pretty decent daily rate that apparently could afford me a 400k mortgage according to the broker but for various reasons, I don't want to take on a massive mortgage.

Maybe I'm missing something but it seems like a big step to suddenly take on 7.5-8k of stamp duty and obviously a larger mortgage but then maybe that attitude is a false economy: as you mentioned the market is distorted for this reason and with fewer people willing to buy in the 250k-300k bracket, maybe that's where the deals are...

Well he would say that, wouldn't he?

Why would you? Sorry I'm not accustomed with estate agent mind games!

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Why would you? Sorry I'm not accustomed with estate agent mind games!

the inverse of whatever they say is probably closer to the truth.

"prices are going up" = there are no sales therefore we need this 1 overpriced place to sell to compensate for lossed revenue

"you don't stand a chance with the low offer" = you have a good chance but you're screwing me out of some extra fees...

etc etc

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Why would you? Sorry I'm not accustomed with estate agent mind games!

the inverse of whatever they say is probably closer to the truth.

"prices are going up" = there are no sales therefore we need this 1 overpriced place to sell to compensate for lossed revenue

"you don't stand a chance with the low offer" = you have a good chance but you're screwing me out of some extra fees...

etc etc

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I have just sold one in London. Offer I accepted was 2.5% below asking (two identical offers).

I am obviously a s**t negotiator as we just agreed to sell our place at 3.5% less than asking, which is 40% worse than spunk bubble

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It's absolutely impossible to generalise on this.

A few examples of why every case is different:

1.Most comments on the thread talk about % reductions but in my experience %reductions are sometimes smaller for very big/valuable houses – e.g. a 10% reduction on a £1m house is £100k, really serious money for anyone, in a way that is not true of a £100k house.

2.Sellers and EAs very deliberately adopt different approaches to start with, such as ‘kite flying’ vs. [pricing to sell’].

3.The willingness of a seller to accept a ‘low’ bid may be very different if [for example] that seller is a comfortably off person downsizing, holding out for a huge offer vs. a pair of divorcees who need to sell in a few weeks.

4.Some ‘asking prices’ have already been reduced at least once. Many haven’t.

All of this aside there are plenty of published figures on the average discount.

e.g. this article says the average discount in "the South East" is 6.3%.

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  • 338 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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