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bearwithasorehead

Another Bear Bites The Dust?

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Okay, I know I'm going to get accusations of my account being hacked, but in a moment of madness I went into an estate agency last week and asked for a viewing of a 4 bed I'd had my eye on for a while.

This is all in the West Midlands in a reasonably nice (but unfashionable) semi-urban area.

Some observations:

'Top of market' (for me that means 400-500k, four to five bedders in good areas with good schools) is still delusional with aged sellers wanting top dollar and not even entertaining 5% reductions. (except when you look on property bee they've been cutting by 5k every 3-6 months - chasing the market down)

However, estate agents not as crazy as before. Reasonably polite and open to sense. Long conversations along the lines of 'they only way they'll understand the market is if you offer 10% below' - I was frankly surprised that the agent was saying this. To be honest I am specifically looking at houses that have failed to sell after 3-6 months, so maybe the agent welcomes a buyer that might inject a bit of reality. Last chat I had the agent basically told me I should offer 35k less! I don't want competition and have made it clear I will only make an offer if the vendor is open to this. If not, I just walk straight away. This in itself is quite interesting as we can now play the pre-offer game, which I don't remember being able to do before (in 2002).

Most of the higher end properties do not show up on the sold history so it is difficult to compare price and makes the kite flying more probable. I am still not sure how to deal with this in negotiations.

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A few more contextual snippets.

I bought a small, affordable house in 2002, but I'd like more room for my kids.

A couple of very similar small terraced houses on my street have finally sold for more than 2007 peak this year, in fact about 10% more. This, for better or worse is what has prompted me into the market.

There seem to be a lot of Ftbs emerging for the kind of house I am selling - whether this is real or an illusion (when they get the mortgage rejection, etc) remains to be seen.

For me this is about potentially exploiting a temporary (?) narrowing of differentials.

4-5bedders are still falling here, albeit painfully slowly.

2-3 terraces and small semis seem to have recovered (albeit to only a bit more than 2007 peak

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An admission about psychology and differentials between 2-3 bedders and 4-5 bedders:

The difference is about £200k between where I am and where I'd like to be.

If it gets any bigger I will never be able to afford the move up the 'ladder'.

I don't see the situation lasting - i.e. a rise in the price of the ftb properties and a fall in the larger ones.

Therefore I am willing to test the market at the present time.

However, being a perpetual bear I am prepared to walk at any point.

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For me this is about potentially exploiting a temporary (?) narrowing of differentials.

4-5bedders are still falling here, albeit painfully slowly.

2-3 terraces and small semis seem to have recovered (albeit to only a bit more than 2007 peak

There seem to be a lot of Ftbs emerging for the kind of house I am selling - whether this is real or an illusion (when they get the mortgage rejection, etc) remains to be seen.

FTBs and landlords going frenzy on such lower-end semi-prime homes here. £250K-£320K (and all needing work mostly). Trying to perform for the sellers, gyrating around like lap-dancers for the pleasure of relaxed happy sellers, with their offers and improved offers, often above asking price.

I'm hoping to see more of that differential come into play for houses at the £400K-£750K. Who they're going to sell to. More softening. Not happened as yet as still enough people snapping up those homes at asking price too.

So I can understand your reasoning with this.

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Okay, I know I'm going to get accusations of my account being hacked, but in a moment of madness I went into an estate agency last week and asked for a viewing of a 4 bed I'd had my eye on for a while.

This is all in the West Midlands in a reasonably nice (but unfashionable) semi-urban area.

Some observations:

'Top of market' (for me that means 400-500k, four to five bedders in good areas with good schools) is still delusional with aged sellers wanting top dollar and not even entertaining 5% reductions. (except when you look on property bee they've been cutting by 5k every 3-6 months - chasing the market down)

However, estate agents not as crazy as before. Reasonably polite and open to sense. Long conversations along the lines of 'they only way they'll understand the market is if you offer 10% below' - I was frankly surprised that the agent was saying this. To be honest I am specifically looking at houses that have failed to sell after 3-6 months, so maybe the agent welcomes a buyer that might inject a bit of reality. Last chat I had the agent basically told me I should offer 35k less! I don't want competition and have made it clear I will only make an offer if the vendor is open to this. If not, I just walk straight away. This in itself is quite interesting as we can now play the pre-offer game, which I don't remember being able to do before (in 2002).

Most of the higher end properties do not show up on the sold history so it is difficult to compare price and makes the kite flying more probable. I am still not sure how to deal with this in negotiations.

You don't get the account hacking accusations unless you're claiming to be an FTB, your trading up doesn't count

Good luck with it all by the way

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I've probably viewed a dozen or so houses that have lingered on the market for a bit over the past 2 years. When it has come to it though, made no offers as what I thought was fair value was far below the vendor expectations and they've gone on to sell after a year + on the market for 10-20% more than I thought they should in the market at the time.

The 3 I've made offers on are the sort of situation Venger describes. Asking price offers on houses needing TLC and still 10% off the pace. I've got one open position left where I've gone about 5% over asking that I should find out about by the end of the week. I'm quite relaxed about it all as I don't think my chances are at all realistic. But after these offers lapse, I've got to the stage where my budget no longer buys a house and garden suitable for a family.

My landlord is trying to contact me too. Don't know why yet but assume its eviction so I'll be moving soon whatever happens and the rent will be up 50%.

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I've probably viewed a dozen or so houses that have lingered on the market for a bit over the past 2 years. When it has come to it though, made no offers as what I thought was fair value was far below the vendor expectations and they've gone on to sell after a year + on the market for 10-20% more than I thought they should in the market at the time.

The 3 I've made offers on are the sort of situation Venger describes. Asking price offers on houses needing TLC and still 10% off the pace. I've got one open position left where I've gone about 5% over asking that I should find out about by the end of the week. I'm quite relaxed about it all as I don't think my chances are at all realistic. But after these offers lapse, I've got to the stage where my budget no longer buys a house and garden suitable for a family.

I didn't have you in mind when I posted. The difference being I thought you were playing your wife along, or have second thoughts and withdraw offer, if it was somehow accepted, in this superheated market.

Then again, I don't know anything any more re housing market. All that I thought I knew seems to be wrong, with this reflation and forever HPI, and still with this money/debt flow playing through for houses. Media trying to dumbing down beyond belief with forever HPI talk.

Always possibility of other business interests and foreign money relocating to the area.... perhaps supporting superheated house prices for much longer. So I couldn't say with certainty it would be wrong to buy, even if the market looks outrageously bubbly. Within days I've got to begin scaling up more work - having relaxed a bit too long in expectation of some house price softening. Mostly been a life of hard-work chasing continual HPI outpacing everything, and that HPI at my entry point just powering ahead again. Everyone I've urged caution to in buying, better positioned than myself now, having seen the value of their homes go up and up. It could play out for years this way.

Good luck with the landlord / rental. Some interesting apartments up for rent, at what I consider to be fairish value, if you decide to hold off on house buy for another year.

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update

Now, since we've viewed the 4 bedder we want and been encouraged by agent himself (!) to make a low offer (7% below asking, with them having come down another 10% prior to that) the vendor has now added 'fixed price' to the listing.

Doncha love mind games.

To make things more complicated another agent has come round to our place and said that the previous agent has valued it too low and also under bidding in terms of fee. That was the same agent as the one selling the house we are interested in.

What's the value with going with the same agent as the one selling the house you want to buy?

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Short update

Every day that goes by when I have contact with EAs and deluded vendors makes me more bearish and less likely to continue looking at houses and marketing mine.

Saw an ok house in an ok area yesterday that was well located for a school we like.

Bought in 2009 for £329k, now on for £369k - can't reduce the price as they need to cash to downsize..... jokers.

The original house we were looking at has vendors who will not reduce price even by 7% (our informal offer). They've already unilaterally come down by 10% prior to that as had no interest with original agents. They moved agents only to be told - the price is too high.

However, I am sticking to guns. At asking price they want £2550 per square metre, when some really nice houses in other nicer areas are selling for £2200m2

Even if they come down to our offer it would still be around £2400

Does this sound like a good rule of thumb in terms of comparing valuations?

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I paid 800/sqm 3 years ago excluding land outwith the curtilage, but only 40% of the building was renovated, rest outbuildings. Rebuild cost was 2000/sqm including the outbuildings. So many factors, but it does give you a sense of value, or otherwise, of what you're buying, but on its own unless properties are otherwise comparable it can be blunt.

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Update - well, being 'in the market' for a while has confirmed for me that at least here in the West Mids there are really two markets.

Below 400k - new builds with 4 beds - these are selling quickly at 10-15% below peak quite quickly if the location and state of repair is good. Most sellers who bought in the last 10 years are taking a real, if not nominal haircut.

But the problem for me is that I am a 'third stepper'. I want to move from a smallish semi to a 200m + 4-5bedder with a bit of garden (20x10m will do).

Now here is the disconnect. All these types of property are on for 20-50% MORE than peak, and many are on for 10% more than a year ago. In some cases this is 50k more. And guess what? They are all getting cash offers the second day they are on the market. Whether this will translate into actual sales remains to be seen, but at the middle upper end of the market it looks like the constraints on supply are allowing this segment to disconnect. This is locking me out even though I have a 50% deposit/equity.

As a consequence, I can't see any value above 350k in my area. I don't want to live in a 350k house. So I am out for the moment.

It's not like London, but it does look like there are rich buyers afraid of missing out who are willing to overpay big time on the small number of decent more expensive (400-500k) properties.

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update,

Well a few weeks on and I'm about ready to give up.

It seems like anything decent is now on closer to 500k.

Two 500k properties I viewed went SSTC the same day for within 5% of asking price, if you believe the agent. Both had to show the agent proof of a MIP.

But here's the interesting bit....

The same week I finally got my Mortgage in Principle interview with the bank.... Now this is a bank I have some financial products with, but NOT my current account or CC.

I was expecting them to look carefully at my statements, etc, but no. Just a standard check of debt and any outstanding cc-. Then they apply a standard calculation of disposable income, check the last p60 and bob's your uncle 5.5x combined earnings.

The only snag was that while they told me on the phone they only needed my tax assessment form printed out (I'm self employed and PAYE) when I rolled up they wanted the 'actual' form even though it is all done online.

I have to say, that now I am skeptical about the impact of the new MMR rules.

Another nice anecdote was that as the 'interview' came to an end I said that I probably wouldn't be buying as the gap between where I am now (small mortgage on a semi) and the bigger detached was too big - at least 200k. I remarked that I wondered how people 'stepping' up justified to themselves this gap.

He answered, coolly, that he was starting to see people gazunder at this price bracket at the last minute..... He didn't say whether the vendors went through with the sale.

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Update

We finally got an offer of 94% of asking. Which I accepted.

However, as everything on sale that is a 'rung up' remains majorly marked up, I've said to the agent that he needs to make it clear to our buyer that we won't be looking to buy in the next 3 months. Agent of course is desperate for volume and may lie to our buyer. I hope not and secretly hoping that our buyer pulls out.

Any advice?

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