Making offer on a house

[user not found]

Well... During the stressful eviction a saga a house that ticks all our boxes has come up for sale near us. The asking price is bang on our upper limit... I would dearly love to buy somewhere and avoid moving twice (and avoid landlords!). 

Is there a general strategy for making offers? I can't bring myself to offer asking price... But I don't want to go in too low and miss out.

Yes I know prices might drop but I've been saying that for over a decade...

[Twenty Something]

3 hours ago, Sausage said:

Well... During the stressful eviction a saga a house that ticks all our boxes has come up for sale near us. The asking price is bang on our upper limit... I would dearly love to buy somewhere and avoid moving twice (and avoid landlords!). 

Is there a general strategy for making offers? I can't bring myself to offer asking price... But I don't want to go in too low and miss out.

Yes I know prices might drop but I've been saying that for over a decade...

It’s going to depend largely on how much this is the one and what it is therefore worth to you. We went in at asking price for ours earlier this year as the vendors had already turned down an offer 5k under. We ended up going up again from there but the house is perfect for us and we are still happy with how it played out. 
 

You’re gonna get a lot of replies here shortly telling you to go 30% under as they’ll be begging you to take it off them in a few months, but that isn’t reality. Our house was on the market about a week when we had our offer accepted. Houses nearby now are on for 2 - 14 days or so. The market is moving insanely fast, but that might just be london.  
 

The other thing I bore in mind was that in the grand scheme of things, what is a few thousand pounds. Say you go 5k under and lose out, what would that 5k cost over the period of 25 years? An extra twenty quid a month or something? I’ll leave you to the incoming barrage of ‘you’re an idiot. Prices are going to crash for sure etc etc.’

[shlomo]

How old are you?

[micawber]

It depends on your position. If you are a cash buyer, not dependent on selling a home, and willing to be flexible on completion dates then I'd consider sensible offers below asking. If you neeed a mortgage, need to sell and have unrealistic expectation around dates then I probably wouldn't consider any offer including above asking.

[user not found]

5 minutes ago, shlomo said:

How old are you?

43. Need to buy in next year or two (20 year mortgage). Rented for 15 years with wife. Gets to the stage that you think... I've had enough.

[user not found]

2 minutes ago, micawber said:

It depends on your position. If you are a cash buyer, not dependent on selling a home, and willing to be flexible on completion dates then I'd consider sensible offers below asking. If you neeed a mortgage, need to sell and have unrealistic expectation around dates then I probably wouldn't consider any offer including above asking.

30% deposit, chain free, mortgage won't be a problem.

[user not found]

59 minutes ago, Twenty Something said:

It’s going to depend largely on how much this is the one and what it is therefore worth to you. We went in at asking price for ours earlier this year as the vendors had already turned down an offer 5k under. We ended up going up again from there but the house is perfect for us and we are still happy with how it played out. 
 

You’re gonna get a lot of replies here shortly telling you to go 30% under as they’ll be begging you to take it off them in a few months, but that isn’t reality. Our house was on the market about a week when we had our offer accepted. Houses nearby now are on for 2 - 14 days or so. The market is moving insanely fast, but that might just be london.  
 

The other thing I bore in mind was that in the grand scheme of things, what is a few thousand pounds. Say you go 5k under and lose out, what would that 5k cost over the period of 25 years? An extra twenty quid a month or something? I’ll leave you to the incoming barrage of ‘you’re an idiot. Prices are going to crash for sure etc etc.’

Indeed. We offered 15% below on another place, and that was declined then went SSTC soon after. Who knows how much higher they bid.

As Henry Pryor says...

The asking price is part of the marketing. Pitched correctly it should attracted potential buyers. It is not;
- an indication of value
- a statement of what the seller might accept
- necessarily what the estate agent advised
- what a mortgage valuer might sign it off at.

Edited August 16, 2020 by Sausage

[micawber]

Is it an easy house to value, e.g. many of the same type sold or on sale in same street or nearby? In which case use houseprice.io and offer the going rate less a few K to reflect your enhanced position. Say how much you love it and the fact that you are a serious no chain/low finance buyer.

[Chunketh]

18 minutes ago, Sausage said:

43. Need to buy in next year or two (20 year mortgage). Rented for 15 years with wife. Gets to the stage that you think... I've had enough.

You have my sympathy, I am slightly older than you and the clock is ticking very loudly now

[shlomo]

28 minutes ago, Sausage said:

43. Need to buy in next year or two (20 year mortgage). Rented for 15 years with wife. Gets to the stage that you think... I've had enough.

Do you have kids, is it near schools and a park and shops

[qejunkie]

Offer at or below what similar properties have traded In the last year or so. If that happens to be in line with the asking price then you might have sensible Seller. If asking price is a big premium to what has gone before, ask yourself why you are to be the person to pay that. There could be good reasons why that is the case in that area. 

[user not found]

6 minutes ago, shlomo said:

Do you have kids, is it near schools and a park and shops

yes we have kids, its near park, shops & school (and is 2 mins round corner from our current house)

there's only 6 similar properties, this is the only one that has sold in last 10 years - £245k in 2011, £325k in 2016, currently on for £375k.

 

[Twenty Something]

35 minutes ago, Sausage said:

43. Need to buy in next year or two (20 year mortgage). Rented for 15 years with wife. Gets to the stage that you think... I've had enough.

It gets to that point doesn't it!? I'm a year behind you at 42, and have rented all my adult life, apart from a few years of home ownership with an ex. Not been with my now partner as long as you have with your wife, but we resolved last summer to make 2020 the year we brought somewhere. This was off the back of out current landlord being an utter tool and threatening us with eviction over something we didn't do. Anyway...

We have definitely had enough. We complete on Tuesday this week coming and I cannot wait to say goodbye to rent rises, inspections, arguments over deposit deductions, being kicked out because your landlord is moving back to the country etc etc. The house is perfect for us, more than enough room to (hopefully) bring a family up in, and I couldn't give two hoots what the housing market does at present. We're both frontline NHS so have jobs that aren't going anywhere, and the mortgage payments are about £150 more than our current rent. It's an absolute no brainer for us. 

Having hung around here on and off for 17 years and having seen all sorts of prophecies of doom come and go, my best advice is that if you like the place and can afford it, then go for it. Trying to time peaks and troughs in the market is a fools game as many on here have demonstrated over the years, and for every monthly payment you make on your mortgage without financial disaster, you are a month closer to living mortgage / rent free. As per what we did - we loved the place and we put our best foot forward with an asking price offer. If I paid 5 - 10k more than I should have then so be it. It makes pretty much naff all difference to our monthly outgoings, and in five years time I bet the price will look cheap. 

[user not found]

2 minutes ago, Twenty Something said:

It gets to that point doesn't it!? I'm a year behind you at 42, and have rented all my adult life, apart from a few years of home ownership with an ex. Not been with my now partner as long as you have with your wife, but we resolved last summer to make 2020 the year we brought somewhere. This was off the back of out current landlord being an utter tool and threatening us with eviction over something we didn't do. Anyway...

We have definitely had enough. We complete on Tuesday this week coming and I cannot wait to say goodbye to rent rises, inspections, arguments over deposit deductions, being kicked out because your landlord is moving back to the country etc etc. The house is perfect for us, more than enough room to (hopefully) bring a family up in, and I couldn't give two hoots what the housing market does at present. We're both frontline NHS so have jobs that aren't going anywhere, and the mortgage payments are about £150 more than our current rent. It's an absolute no brainer for us. 

Having hung around here on and off for 17 years and having seen all sorts of prophecies of doom come and go, my best advice is that if you like the place and can afford it, then go for it. Trying to time peaks and troughs in the market is a fools game as many on here have demonstrated over the years, and for every monthly payment you make on your mortgage without financial disaster, you are a month closer to living mortgage / rent free. As per what we did - we loved the place and we put our best foot forward with an asking price offer. If I paid 5 - 10k more than I should have then so be it. It makes pretty much naff all difference to our monthly outgoings, and in five years time I bet the price will look cheap. 

if we pay asking price, our mortgage will be 4 x joint salary, equating to 33% of take home, on a 15 year fix.

[Twenty Something]

1 minute ago, Sausage said:

if we pay asking price, our mortgage will be 4 x joint salary, equating to 33% of take home, on a 15 year fix.

It's a no brainer then. If you see yourself there for the long term then you are very well isolated from any economic shock with your 15 year fix. You could lose your job, you could get hit by a bus etc etc, but what's the point in fretting about things outside of your control. Get that viewing booked! 

[househunter123]

Some good advice here. I'm in the same position, no chain, no mortgage needed but unless other buyers are in the same position, asking price is usually met and so my offer price of 3-4% below asking price has not been accepted. This is all in the last months for homes between 200-220k.

Viewing one tomorrow that is way over priced as I viewed another one 5 doors away  but gonna offer about 7-10% below. Let's see. 

 

[scottbeard]

15 minutes ago, Sausage said:

if we pay asking price, our mortgage will be 4 x joint salary, equating to 33% of take home, on a 15 year fix.

When I bought my house I offered 20k below the asking price, which was about 5% below.

They counter-offered and So I bought it for 15k below asking.

The house had been on the market 5-6 months and I felt pretty happy I wouldn’t be outbid.

There’s almost certainly a bit of room for negotiation in most house prices, but equally without knowing the asking price it might be that it’s already set at a good level. 

[Si1]

1 hour ago, Sausage said:

43. Need to buy in next year or two (20 year mortgage). Rented for 15 years with wife. Gets to the stage that you think... I've had enough.

I don't understand this 'need to buy' pov with respect to retirement age.

If you're renting then instead you invest money using govt scams (TM) in pension vehicles. That means it's not a problem getting a mortgage going beyond retirement age.

 

[Pop321]

4 hours ago, Sausage said:

Well... During the stressful eviction a saga a house that ticks all our boxes has come up for sale near us. The asking price is bang on our upper limit... I would dearly love to buy somewhere and avoid moving twice (and avoid landlords!). 

Is there a general strategy for making offers? I can't bring myself to offer asking price... But I don't want to go in too low and miss out.

Yes I know prices might drop but I've been saying that for over a decade...

You can pay however much you want.
However the direct answer in terms of what you ‘should’ offer is it depends how much it’s worth.

House near us just listed, 1800sq ft terrace on 3.5 floors. Worth £350k v’s normal comparisons. Next to a smelly restaurant, no garden at all and bin storage for other houses at the rear  

Hilariously listed for OIEO £600k because it is absolutely stunning inside with £40k kitchen, £20k bathrooms etc. It’s in the town centre and some numpty out of towner will get a ‘steal’ for £550k and then realise they have paid a fortunate for an awful house. 

Asking price means almost nothing to me. I have paid over asking and 50% of asking in the past. You pay a little more than market price if you really want a place but asking price isn’t necessarily market price. 

At £375k (assuming that’s is near market price) then if it’s just been listed then you may need to be near that ie £365k isn’t rude at all, but in a month if still listed they may drop to £350k?

If you can have a look on Rightmove v houseprices.io to see listing prices v achieved prices in the area over the past year. 

Know we have said before but I have never been more bearish than I am now. I believe there is an overwhelming underestimation of the economic problems ahead of the UK and globally and we will have a better picture in 6 months.

However unlike simple investment decision like buying shares (which can be put off for 6 months) I completely understand this house purchase is more than just about money and you want to avoid a double move etc....just avoid paying £600k for a blinged house, but it sounds like you already know that all too well ?

Good luck  

 

[adarmo]

35 minutes ago, Sausage said:

if we pay asking price, our mortgage will be 4 x joint salary, equating to 33% of take home, on a 15 year fix.

 Hi Sausage. 

A lot depends on your position but I'd advise you to find out what their position is and terror motivation for moving. If they're elderly and moving into care or have found their next dream home then they're motivated. That doesn't mean you'll be able to get a bargain but puts you to the front on the line regarding proceedability. 

I would ensure you have a Decision In Principle before offering as the agent should check this before putting forward the offer. Mortgage applications can be a but of a ballache but they're not too bad with a good independent broker. 

My only other advice would be to max out the term of the mortgage. There's little point paying down a debt thday gets eroded by inflation early and you have to live. The naysayers on here so have a point when it comes to maintenance and you'll need to fork out from time to time. Your call of course but if it's your forever home then I'd happily invest the cash difference of a longer mortgage term with lower monthly payments on the stock market, just to irritate Simhadri if nothing else. 

Good luck! Let us know how you get on. 

[micawber]

^

Get on to the mortgage quickly. There seems to be a long back log being processed and it can take longer than you may think.

Work out likely total costs over the next 20 years (at today's prices), e.g. new roof, windows, boiler, etc then divide by 240 and save that amount each month somewhere you wont be tempted to touch it, say PB's. Review every few years or so and adjust accordingly.

[satsuma]

6 hours ago, Sausage said:

Well... During the stressful eviction a saga a house that ticks all our boxes has come up for sale near us. The asking price is bang on our upper limit... I would dearly love to buy somewhere and avoid moving twice (and avoid landlords!). 

Is there a general strategy for making offers? I can't bring myself to offer asking price... But I don't want to go in too low and miss out.

Yes I know prices might drop but I've been saying that for over a decade...

I think not buying would strain your marriage, I tried to talk the wife into not buying our second home but she was set on it as the next child was coming and we wanted the space.  That was 2007-2008 and I had bugger all to choose from.  I don’t regret it but if I could go back I would not have been pressured into buying a shoddy new build, overlooked on all sides with a small garden, it had four beds so the wife was delighted.  I ended up paying a lot to move on so just be careful.  
My advice is see at least 10 houses before you buy and really look carefully and what your getting, don’t get pressured into buying a house you will regret or you will soon be looking to sell.  Don’t say much but look like a serious buyer, Let them do the talking.  EAs will always make it look like the house is hot s#1t even if no one else is interested and the vendor can have friends making offers.  Just leave it with the EA and wife that you should see a few more and calm the situation.  You might end up paying a bit more buying now but for goodness sake make sure it’s a decent place and you will not care about the price. 

Edited August 16, 2020 by satsuma

[user not found]

3 minutes ago, satsuma said:

I think not buying would strain your marriage, I tried to talk the wife into not buying our second home but she was set on it as the next child was coming and we wanted the space.  That was 2007-2008 and I had bugger all to choose from.  I don’t regret it but if I could go back I would not have been pressured into buying a shoddy new build, overlooked on all sides with a small garden, it had four beds so the wife was delighted.  I ended up paying a lot to move on so just be careful.  
My advice is see at least 10 houses before you buy and really look carefully and what your getting, don’t get pressured into buying a house you will regret or you will soon be looking to sell.  Don’t say much but look like a serious buyer, Let them do the talking.  EAs will always make it look like the house is hot s#1t even if no one else is interested and the vendor can have friends making offers.  Just leave it with the EA and wife that you should see a few more and calm the situation.  You might end up paying a bit more buying now but for goodness sake make sure it’s a decent place and you will not care about the price. 

We've actually viewed about 12 over last 3 or 4 years. This is the best one by far. 100ft west garden, garage, all rooms are as big as we need, no need for any fixing or extension. I just don't like buying in a bubble. Grrr.

[Si1]

51 minutes ago, adarmo said:

. 

My only other advice would be to max out the term of the mortgage. There's little point paying down a debt thday gets eroded by inflation early and you have to live. The naysayers on here so have a point when it comes to maintenance and you'll need to fork out from time to time. Your call of course but if it's your forever home then I'd happily invest the cash difference of a longer mortgage term with lower monthly payments on the stock market, just to irritate Simhadri if nothing else. 

 

I agree with this. Tax efficiency in pension investments makes it even more compelling. And of course as 40 somethings it won't take that Iong for many of us to actually be able to withdraw from those pension funds.

[longgone]

1 hour ago, Sausage said:

 

there's only 6 similar properties, this is the only one that has sold in last 10 years - £245k in 2011, £325k in 2016, currently on for £375k.

 

Mentally I have a problem giving owners free money.