Making An Offer ?

[lewissheridan]

A good friend of mine is selling his flat and setting his roots for his retirement. He has bought his new house already, has cash in the bank, and to complete the transition he is selling his current flat. The flat is the bottom half of a victorian house, it's 1 bed. But for me, the mrs and the baby, it represents a starting place as first time buyers. An EA has valued the place at £140k, however he says he'll sell it to me for a good price. And he said it's not worried about money, he has money, and will basically take whatever the flat sells for on the market.

I want to make an offer, and obviously I don't want to offend, so I just want to put it out to the people on here what a realistic offer would be. The top-end of what I can afford is £130k, that's based on a 95% ltv ratio on a 25 term repayment mortgage @ 5%. I would borrow £123,500, and put £6,500 of my own cash (which i can muster up - just).

I will definately buy the place for £130, although i will have no savings or cash once i do. Is £130k a fair offer ? or is that taking the michael ? I really don't know what he means when he say he'll let me have it for a good price. I don't want to offend, and i don't want to appear to be taking advantage of our friendship.

I would like to really buy it for £115k, but that's seriously under market value, but i'm not sure the best way to approach the price. Any ideas, thoughts, suggestions, advice, greatly appreciated.

Lewis

[Willy Weasel]

A good friend of mine is selling his flat and setting his roots for his retirement. He has bought his new house already, has cash in the bank, and to complete the transition he is selling his current flat. The flat is the bottom half of a victorian house, it's 1 bed. But for me, the mrs and the baby, it represents a starting place as first time buyers. An EA has valued the place at £140k, however he says he'll sell it to me for a good price. And he said it's not worried about money, he has money, and will basically take whatever the flat sells for on the market.

I want to make an offer, and obviously I don't want to offend, so I just want to put it out to the people on here what a realistic offer would be. The top-end of what I can afford is £130k, that's based on a 95% ltv ratio on a 25 term repayment mortgage @ 5%. I would borrow £123,500, and put £6,500 of my own cash (which i can muster up - just).

I will definately buy the place for £130, although i will have no savings or cash once i do. Is £130k a fair offer ? or is that taking the michael ? I really don't know what he means when he say he'll let me have it for a good price. I don't want to offend, and i don't want to appear to be taking advantage of our friendship.

I would like to really buy it for £115k, but that's seriously under market value, but i'm not sure the best way to approach the price. Any ideas, thoughts, suggestions, advice, greatly appreciated.

Lewis

Type the address of the property into www.houseprices.co.uk to see what he paid for it. You might not feel so guilty about the offer you make then

[SarahBell]

transition he is selling his current flat. The flat is the bottom half of a victorian house, it's 1 bed. But for me, the mrs and the baby, it represents a starting place

Lewis

You'll need to give the baby its own room soon. How will you trade up then? Can it be turned into a 2 bed in case you have to stay longer than you plan?

[lewissheridan]

Type the address of the property into www.houseprices.co.uk to see what he paid for it. You might not feel so guilty about the offer you make then

Records don't go back 20 years, but i think in passing conversation he paid like £20k for it .. or something like that.

But based on that I can't say I'll give you £90k for it, although, he could very well turn round and say "it's yours" or "fook off".

I personally think, if he really isn't bothered about the cash or money, then i can offer £120k, but that seems ridiculously low with current market prices. Land registry shows £113k 6 years ago.

Argh, so hard.

You'll need to give the baby its own room soon. How will you trade up then? Can it be turned into a 2 bed in case you have to stay longer than you plan?

It's a large sized 1-bed flat, but unfortunately not conducive to making an extra room due to the layout. I really do need to buy a 2-bed, but simply can't afford. I am actually in the throws of moving out of my 1-bed rented accommodation into a 2-bed flat set for the end of the month. But to pay £8400 in one year, i'd really rather put that money towards something that will get me on the ladder. The baby is 3 months old, so i would probably live there for 3 years. If i bought at 130k, i'd have 20k equity from the outset, a neighbouring flat sold recently for £165. It just feels like a good opportunity, and it's very difficult because my heart of hearts tells me there's going to be no considerable drop in prices within the next 3-5 years.

[Monopoly]

A good friend of mine is selling his flat and setting his roots for his retirement. He has bought his new house already, has cash in the bank, and to complete the transition he is selling his current flat. The flat is the bottom half of a victorian house, it's 1 bed. But for me, the mrs and the baby, it represents a starting place as first time buyers. An EA has valued the place at £140k, however he says he'll sell it to me for a good price. And he said it's not worried about money, he has money, and will basically take whatever the flat sells for on the market.

I want to make an offer, and obviously I don't want to offend, so I just want to put it out to the people on here what a realistic offer would be. The top-end of what I can afford is £130k, that's based on a 95% ltv ratio on a 25 term repayment mortgage @ 5%. I would borrow £123,500, and put £6,500 of my own cash (which i can muster up - just).

I will definately buy the place for £130, although i will have no savings or cash once i do. Is £130k a fair offer ? or is that taking the michael ? I really don't know what he means when he say he'll let me have it for a good price. I don't want to offend, and i don't want to appear to be taking advantage of our friendship.

I would like to really buy it for £115k, but that's seriously under market value, but i'm not sure the best way to approach the price. Any ideas, thoughts, suggestions, advice, greatly appreciated.

Lewis

Why not just asking him, what he will consider a "good price"?

Simple...

[lewissheridan]

Why not just asking him, what he will consider a "good price"?

Simple...

That's actually the answer... at least that way i don't risk offending him, or making him obliged to anything if i let him set my expectations. But i think his response will be, 'well you make me an offer'. then back to square 1

[cheeseandbeans]

Why not just asking him, what he will consider a "good price"?

Simple...

Yup, good advice. Lay it on thick that you're just want to get on the ladder, prices have spiralled recently, you just want a decent deal, got a baby that means you need to think about the future etc etc.

Either you're going to pay a mates rate as the seller has enough cash that 20k here and there isn't an issue, or you're going to pay market price.

Edit: Just read the last post:

Maybe a 'i can afford to pay 'xxx' price but this is really going to stretch me, but 'xxx' is a fair price would be the way to go. They can only say no.

Edited September 1, 2006 by cheeseandbeans

[iLegallyBlonde]

Have you had the baby Christened yet ? could he be the godfather

I tink you have to be honest and offer what you can afford without crucifying yourself.

[BufferBear Bitcoin Bull]

With limited financial security do you really believe it is a good time to buy? It sounds as if you will be left with few savings for emergencies or even for a decent standard of living.

Are you in a position to increase your earnings in the near future?

Can you 'afford' to be in negative equity?

Could you handle it if you end up stuck in a one bedroom flat for the next 5-10 years as a result of NE?

Think about the impact this would have on your relationship, it could push it to breaking point. Is it really worth taking the risk when you believe the market is going to fall, IMO, quite substantially? Would it be feasible to 'suffer' your current circumstances for another 24 months? This is likely to make a difference between buying a 1 bedroom flat and a 2 bedroom flat / house. When the falls come, they will be relentless. We have 2 children iand live in cramped conditions. It is all for the greater good as we are strengthening our financial position and our children's prospects for the future.

Hang on in there!

Edited September 1, 2006 by Buffer Bear

[bugged bunny]

How long do you think your family could live in the flat? I think it'd be prudent to look at the financial feasiblility of letting out the flat and moving to a larger rented place, should you be unable to trade up to a larger place if and when you need it.

It seems you have a very kind friend who is helping you out. Good luck.

[lewissheridan]

With limited financial security do you really believe it is a good time to buy?

Not particularly, but I don't think there will be a good time, not for another 5 years or so.

It sounds as if you will be left with few savings for emergencies or for a decent standard of living.

Are you in a position to increase your earnings in the near future?

I work in IT, not overly optimistic in such a volatile industry, but i'm progressing well salary wise to age at the moment, but i take nothing for granted. Probably nominal growth inline with age.

Can you 'afford' to be in negative equity?

Well all things being relative then I suppose I can. Mortgage repayment represents 40% of net monthly salary.

Could you handle it if you end up stuck in a one bedroom flat for the next 5-10 years as a result of NE?

That would be a diaster.

Think about the impact this would have on your relationship, it could push it to breaking point. Is it really worth taking the risk when you believe the market is going to fall, IMO, quite substantially. Would it be feasible to 'suffer' your current circumstances for another 24 months. This is likely to make a difference between buying a 1 bedroom flat and a 2 bedroom flat / house. When the falls come, they will be relentless. We are and have 2 children in cramped conditions. It is all for the greater good as we strengthen our financial position and children's prospects for the future. Hang on in there!

Like I say it's tough, i have to make the right decision for my family, and this seems like the right decision at this point in time. Otherwise i will never get started, renting for 5 years isn't a strategy for me - uncertainty of the landlord selling the property like this one has done from underneath us, paying rent to buy-to-letters, having quarterly inspections on whether we're living according to 'EAs' standards of acceptability...

Thanks for the advice, you paint a very vivid angle on the real aspects of buying right now. As much as i hope for a fantastic crash/correction, it won't be for a longwhile yet.

[Dr Doom]

As much as i hope for a fantastic crash/correction, it won't be for a longwhile yet.

Is this actually based on anything other than gut-feeling?

[lewissheridan]

Is this actually based on anything other than gut-feeling?

Well extrapolating current boom and bust graphs would show 3-5 years in any decline, but still nothing considered significant in my opinion. And yes gut feeling after living on this board and renting for the least 3 years. Prices should normalise, they should drop - but they haven't. I want a crash as much as the next first-time buying seeking to buy a home. I'm not extending myself to stupid levels, I could afford a 2% rise... if it gets worst then that then cest la vie... i'm sick and tired of paying other peoples mortgages and not having a home.. this represents an opportunity, and something i have to seriously consider.

[BufferBear Bitcoin Bull]

Like I say it's tough, i have to make the right decision for my family, and this seems like the right decision at this point in time. Otherwise i will never get started, renting for 5 years isn't a strategy for me

But is it the right decision for your family? Would you like another child? If you buy now this would make it extremely difficult. Is it realistic for you to rent for another 2 years as a compromise. I would even consider renting a one bedroom to save money over that period. I seriously think changes are afoot and 2007 will be the year that sentiment really turns. You may be too young to remember how swiftly it went wrong last time.

I do understand the need to do what is right for your family but what seems right in the short term may actually have a detrimental impact on the quality of their life over the longterm. There are 3 things I always remember:

• The point you enter the housing cycle determines your lifetime wealth.

• Always remember, today's bargain is tomorrow's price!

• If your not embarrassed by your offer, you have offered too much.

Edited September 1, 2006 by Buffer Bear

[grey shark]

Like I say it's tough, i have to make the right decision for my family, and this seems like the right decision at this point in time. Otherwise i will never get started, renting for 5 years isn't a strategy for me - uncertainty of the landlord selling the property like this one has done from underneath us, paying rent to buy-to-letters, having quarterly inspections on whether we're living according to 'EAs' standards of acceptability...

Thanks for the advice, you paint a very vivid angle on the real aspects of buying right now. As much as i hope for a fantastic crash/correction, it won't be for a longwhile yet.

Sounds like he wanted to be a bear , but was controlled by his present situation , he is just another hard working innocent caught up in this whole housing game , he knows the property is to much but he says to himself " i've got to have some stability for my family and that comes first " so he persuades himself to buy - a classic case of caught between a rock and a hardplace .

Lewis , if and when negotiating with your friend , politely remind him that dealing direct with you he will not incur any estate agent fees which say they are 1 and half % on sold price of 130k that would be £1,950 plus VAT so that would be almost 2,300 , goodluck .

[Dr Doom]

Well extrapolating current boom and bust graphs would show 3-5 years in any decline, but still nothing considered significant in my opinion. And yes gut feeling after living on this board and renting for the least 3 years. Prices should normalise, they should drop - but they haven't. I want a crash as much as the next first-time buying seeking to buy a home. I'm not extending myself to stupid levels, I could afford a 2% rise... if it gets worst then that then cest la vie... i'm sick and tired of paying other peoples mortgages and not having a home.. this represents an opportunity, and something i have to seriously consider.

My main concern is you keep complaining about paying other peoples' mortgages,

which would suggest that you haven't grasped the concept that the market rent for

most places doesn't actually cover the mortgage payments (interest-only at current

price-levels).

But I can perfectly understand that you are pissed off with the harsh realities

of renting, and are prepared to pay a premium to have your own place.

[lewissheridan]

Sounds like he wanted to be a bear , but was controlled by his present situation , he is just another hard working innocent caught up in this whole housing game , he knows the property is to much but he says to himself " i've got to have some stability for my family and that comes first " so he persuades himself to buy - a classic case of caught between a rock and a hardplace .

Lewis , if and when negotiating with your friend , politely remind him that dealing direct with you he will not incur any estate agent fees which say they are 1 and half % on sold price of 130k that would be £1,950 plus VAT so that would be almost 2,300 , goodluck .

Hi thanks for that post - certain does sum my situation up well. To give you an idea of my friend, he said to me, he is not interested in money, and I can have the EA fee that will be saved. Rock and hard-place is very apt.

[grey shark]

But is it the right decision for your family? Would you like another child? If you buy now this would make it extremely difficult. Is it realistic for you to rent for another 2 years as a compromise. I would even consider renting a one bedroom to save money over that period. I seriously think changes are afoot and 2007 will be the year that sentiment really turns. You may be too young to remember how swiftly it went wrong last time.

I do understand the need to do what is right for your family but what seems right in the short term may actually have a detrimental impact on the quality of their life over the longterm. There are 3 things I always remember:

• The point you enter the housing cycle determines your lifetime wealth.

• Always remember, today's bargain is tomorrow's price!

• If your not embarrassed by your offer, you have offered too much.

BUFFER BEAR , " changes are afoot in 2007 " like me your a hardend bear ,but also like me you were probably saying changes are afoot back as early as 2003 and we're still f/ing waiting , and i'll still be waiting in 2007 , cos round my way in North London the houses have been stagnant at BEST since 2003 , and where we want to move to theyv'e only gone up a tad in that time . We have to let some people make there own choices and let them learn the hard way if need be .

Hi thanks for that post - certain does sum my situation up well. To give you an idea of my friend, he said to me, he is not interested in money, and I can have the EA fee that will be saved. Rock and hard-place is very apt.

Caught between a rock and a hard place

OR

Caught between the devil and the deep blue sea

Personally i'd take my chances with the sea

goodnight .

Edited September 1, 2006 by grey shark

[lewissheridan]

My friend offered the place to me for £135k. I accepted, i'm a bit apprehensious about being able to get that money for mortgage. Since i checked a 'how much you can borrow wizard' on the barclays site and was told i can borrow £80k, or with zero expenditure, £124k. I have £5k cash, ltv = 95%, salary 31k, mad isn't it!!! but it's a bargain for the area. Which is chertsey, surrey.

[Monopoly]

My friend offered the place to me for £135k. I accepted, i'm a bit apprehensious about being able to get that money for mortgage. Since i checked a 'how much you can borrow wizard' on the barclays site and was told i can borrow £80k, or with zero expenditure, £124k. I have £5k cash, ltv = 95%, salary 31k, mad isn't it!!! but it's a bargain for the area. Which is chertsey, surrey.

An EA has valued the place at £140k,

He is not interested in money but he sells you the place for 135k? He is having you one....even if you would get the place for 7% under asking price..which seems normal..you would be at around 130k. Does not sound like a good offer to me..

[lewissheridan]

He is not interested in money but he sells you the place for 135k? He is having you one....even if you would get the place for 7% under asking price..which seems normal..you would be at around 130k. Does not sound like a good offer to me..

I think in his mind, the flat above sold for £165k, so his flat would be worth something within that region had it been updated etc. £140k which is the EAs evaluation is market rate, so i guess he feels he is giving me a good price. And to be honest, there's nothing within that price range other than retirement homes and so forth, so for the area it is a good price. Life isn't easy and i didn't expect £120k or anything lower - i just have to move forward, and feel that's the best i can do. I agree, i think £140k is market price, £135k is a good price, £130k would be a great price, and anything lower would be superb... but.. it's not like i have options, for location, size etc, it's the best i could of done given the circumstances.

and if i don't buy it, someone else will, and i get no-where, this is the best opportunity i have

Edited September 2, 2006 by lewissheridan

[CrashDive]

My friend offered the place to me for £135k. I accepted, i'm a bit apprehensious about being able to get that money for mortgage. Since i checked a 'how much you can borrow wizard' on the barclays site and was told i can borrow £80k, or with zero expenditure, £124k. I have £5k cash, ltv = 95%, salary 31k, mad isn't it!!! but it's a bargain for the area. Which is chertsey, surrey.

I'll break it to you as gently as I can.

You are a fool to be considering buying a 1 bedroom flat with a child.

You are naive for buying from a 'friend', did no-one ever tell you to never to buy a car from a mate.

You are lazy for not checking prices of 1 bedroom flats in Chertsey (retirement or not), they start off from £95,000 (ASKING PRICE) on 'Find a Property', there will be cheaper one's around if you bother to look.

http://www.findaproperty.com/searchresults...amp;bedrooms=01

You are ignorant if you are unaware of what is happening overseas and the effect this will have on the UK market.

You are irresponsible to take on such large debt with a young family when you are already talking about struggling before you start, with your outgoings only likely to rise and no real expectation of a large income increase.

You must be a simpleton to be happy to go into negative equity for years because you cannot wait to get on the property ladder.

Good luck.

Edited September 2, 2006 by CrashDive

[Monopoly]

I would not do it ether......you already have problems to get the money together...you will be stuck with that one bed for a couple of years.

Better look for a 2 bed were you can sit it out

[bugged bunny]

You are lazy for not checking prices of 1 bedroom flats in Chertsey (retirement or not), they start off from £95,000 (ASKING PRICE) on 'Find a Property', there will be cheaper one's around if you bother to look.

http://www.findaproperty.com/searchresults...amp;bedrooms=01

No - the cheapest flat available on the website you quote has an asking price of £135,000. Retirement flats always seem to be at least 20% cheaper than the rest - yet another shining example of intergenerational inequity.

However, I agree that buying a 1 bed with a baby is a big no no in the current market.

Lewis, the property advertised at £139950 in Laburnam Rd looks a better deal (if you could knock the price down a bit). It's near the train station and as it's on the first floor, you could convert the loft to add another room.

I really do feel that if you buy a 1-bed it needs to have an option to extend either into a garden or a loft.

Or maybe you should look at a 2-bed shared-ownership home, which would suit your needs better in the longer term.

You need to be realistic and accept that should you proceed with the purchase, you will be stuck in the flat for at least 5 years, more likely 10 years, whether the market crashes, plateaus or carries on rising.

I hope you make the right decision.

[christhpc]

My god man, I know you're desperate but you must be barking. If you can back out then by all means get the hell out.

I used to be in IT myself (straight out of university), was on the same salary as you, absolutely hated it and was treated like dirt the whole time. Now it's three years after leaving my day job, and it's now being done extremely badly by Bangalore, but I disgress. I've been renting this place since I left halls after my 1st year of uni, and the rent hasn't shifted since (seven years). I've been bugged by family almost every time we have a family gathering to buy a place, renting is dead money, blah blah, but they can all sod off! They're sitting pretty in their over-valued castles, if they want me to buy into this insane ponzi scheme then they can hand me the readies! The wife has also been hassling me about it, can't quite tell if we have that in common, she's from Tokyo and of course is no stranger to living in an overpriced shoebox, but it doesn't have to be that way here! We're lucky (?) enough to be DINKs but even with our reasonable savings, it's a total fools' errand right now. There's no shame in renting, even though it would be nice to have a 'place to call my own', I absolutely resolutely refuse to tie myself into this utter utter scam.

Rethink it, really.

Edited September 2, 2006 by christh