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What Kind Of Discount Would You Want To See To Buy This Place?


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Great little thread this.... I think the real dilemma for our prospective purchaser is not at what price he should buy at but what price he can get the seller to accept. He has suggested £520k.... many seem to think this is too high for all sorts of reasons... some have suggested £300k some £250k I think some even £100k.... just shows the range of views.... personally I doubt if the seller has it on the market at £630k odd that he'll get them to lower it beyond £500k currently.

But really it all comes down to this... is it worth £520k to the buyer and will the seller let it go for that.... if either is not a yes then its not going to happen. This states the bleeding obvious..... but then again he's as likely to get it for £300, £350 or even £450 as oil reverting to $10 a barrell anytime soon.... the real debate is buy now at whatever price or continue to stomach renting for another two or three years at which time we'll see where prices will really end up. For many waiting is not what they want to do, they realise prices may fall in the short to medium term but equally they realise that prices will go up again to current levels or further in the longer term.... in the meantime if you are happier owning a home and have the cashflow to finance it then where house prices go short to medium term is really not an issue.

I do also think its worth remembering that if the current falls do overshoot trend by a significant amount then the boom that will surely follow has a chance of being even bigger and quicker than the one we have just been through, personally I'd prefer a slowdown to trend and then yearly trend increases but I think most of the data supports the view that markets like the one in the UK becasue of supply issues go through phases of boom and bust and will continue to do so until housing supply is normalised.

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Great little thread this.... I think the real dilemma for our prospective purchaser is not at what price he should buy at but what price he can get the seller to accept. He has suggested £520k.... many seem to think this is too high for all sorts of reasons... some have suggested £300k some £250k I think some even £100k.... just shows the range of views.... personally I doubt if the seller has it on the market at £630k odd that he'll get them to lower it beyond £500k currently.

But really it all comes down to this... is it worth £520k to the buyer and will the seller let it go for that.... if either is not a yes then its not going to happen. This states the bleeding obvious..... but then again he's as likely to get it for £300, £350 or even £450 as oil reverting to $10 a barrell anytime soon.... the real debate is buy now at whatever price or continue to stomach renting for another two or three years at which time we'll see where prices will really end up. For many waiting is not what they want to do, they realise prices may fall in the short to medium term but equally they realise that prices will go up again to current levels or further in the longer term.... in the meantime if you are happier owning a home and have the cashflow to finance it then where house prices go short to medium term is really not an issue.

I do also think its worth remembering that if the current falls do overshoot trend by a significant amount then the boom that will surely follow has a chance of being even bigger and quicker than the one we have just been through, personally I'd prefer a slowdown to trend and then yearly trend increases but I think most of the data supports the view that markets like the one in the UK becasue of supply issues go through phases of boom and bust and will continue to do so until housing supply is normalised.

Good points and you've hit the nail on the head. Getting the vendor to sell below £500k is highly unlikely and the issue for me has been at what level does the purchase become sensible for both parties. There's been enough of an increase in the value of the property for the vendor to be able to move towards the £500k mark. On my part I'm going to stay in the next house I buy for the long term so very short term losses aren't important. I have the cash and if within the next few years we do decide to move outside of London a little then we would just buy a second home and I'd keep this one for a London pad. Once our little fella grows up a little we'd likely move back into London and then keep the country place as a holiday home. However I don't want to be in a situation where I buy now at a higher price than I should be. The question was to draw opinions from others to see how far off the mark I was with a £520k offer. In the end I made my decision. This kind of property is not going to drop below £400k anytime soon. Even if it does it's not a major issue because again, I'm looking at this from a long term point of view. So I think I could probably get a property like this at just below the £500k mark in the next 12 months. I know the current vendor won't accept less than £600k so I'm happy to wait it out and see what happens. I'm in a pretty good position. I've just rented a lovely place and can jump back into the property market for a family home at any point.

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sorry, I see it was friday talking about newly qualified ages, and he/she was referring to the lpc, not the cpe - ok, so maybe they are 24. They all just look very young to me. Does it really matter whether they are 22 or 24 - the same point applies - they are earning over 50k upon qualification, and as soon as they leave university / law school they hit around 27k immediately as trainees before they qualify. And these guys are the bottom of a very large pyramid of salaries. The City of London and its impact on resi prices around it is unique. I dont want to be given cack advice on this site by other people, and so I think other people interested in the london market equally shouldnt be given cack advice.

Relax. I wasn't doubting you but just checking if there was something I'd overlooked. And I was trying to gauge news of supposed heavy job losses at one firm, against your rosy information, to determine if there any implications for legal firms up north.

A few months back I did read some London firms were actually cutting trainee pay, or even not taking on as many trainees, if any at all, but recent reports suggest starting salaries for trainee solicitors in 2008 is now more than graduate starting salaries at investment banks - but a situation unlikely to last with investment banks being ahead of the trends.

http://www.thelawyer.com/cgi-bin/item.cgi?id=133746

Many of the larger employers in the legal sector, however, pay their first year trainee solicitors above the AGR average despite a number of large City firms announcing below inflation pay rises for their junior lawyers.

As highlighted in the Lawyer2B.com salary index magic circle firms Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer and Linklaters pay their new joiners £37,000, £37,400, £39,000 and £37,400 respectively.

US firms, including Bingham McCutchen, Cleary Gottlieb Steen & Hamilton and Debevosie & Plimpton pay their first year trainees £40,000, while trainees joining Weil Gotshal & Manges and White & Case will receive starting salaries of £41,000.

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If you can afford it easily, go ahead! If you're going to be in debt... are you nuts!? I've seen MUCH nicer places up here in Scotland for £230k!!

I know but I don't work in Scotland! Seriously, I saw a lovely place in the Cotswolds the other week, really nice but I need to be close to London for work. Otherwise how would I feed the family and cat? :)

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That's cool, I was just pointing out (not harshly, I don't mean to offend or anything) that there are lots of other houses which could be nicer and cost less. The one I was talking about (just for comparison) has 4 large bedrooms, a study, 2 living areas, a huge open-plan kitchen, conservatory, back + front garden, two garages, two levels/floors, two en-suites, is a detached house and you can even keep the in-built room ipods/ tvs built into the walls and bathroooms! The only bugger is that it's in Fife, and I work in Edinburgh lol!

Go for it if you're happy with it, but make sure it makes financial sense :) That's all anybody asks :)

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I wouldn't get into mega debt but it's interesting that you mention a 3.5 multiple. I doubt £60k for people living on that road is realistic. Probably £60k each with a £100k deposit. So on that multiple that would be £420k + £100k deposit = £520k.

That's not a bad way of thinking about it actually. That would make my £520k reasonable. Of course I might be underestimating the deposit, it's probably nearer £150k. Hmmm.....

Which would hardly leave them stretched, 7k total net monthly income vs 2.5k on a 25 yr repayment @ 5.5%, 4.5k left over for bills & fun.

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Not in London no. As an example my friend graduated the same time as me in 1997. The housing market was a lot more sane then. He managed to get a graduate job and bought a two bedroom maisonettei n Tooting, a scary part of London.

He and is wife are now both middle managers, I am guessing earning well over 40K each, (and both had pre-bubble purchased maisonettes to sell) but they can still could still only afford a two bedroom semi in an average part of North East London.

Even that meant taking out quite a large mortgage to start with. When I graduated in 1998, well located maisonettes in Kingston (much cheaper than Wimbeldon) were already over £100k. In those days, £20k was good going for a new graduate in a non financial services job, so to buy one of these maisonettes was already 5x salary unless you had a good deposit. Buying with a partner was normally the way to go even then unless you wanted to push yourself.

Forward to 2008, and I don't see that there are any FTB properties at all in reasonable parts of London that are available to single new graduates without significant parental help. Even studio flats out here in zone 6 are the best part of £150k - way more than 3.5x a £25-£35k starting salary.

Edited by worried1
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Great little thread this.... I think the real dilemma for our prospective purchaser is not at what price he should buy at but what price he can get the seller to accept.

Really? Here's the real dilemma.:

I'm interested in purchasing this place:..
It's not a time for amateurs like me or you to be investing.

and in case you haven't noticed that's just three days between posts.

Edited by Sledgehead
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That's actually terrible, something has gone seriously wrong, unless your sons were looking for a very specific vocational career then the advice they received was bad and someone should be talked to in very strong terms. A first from Bristol and Warwick and a starting of under £20k in London? That's incredible. My sister in law started on £45k and she got a 2:1 from a trad red brick. We wouldn't dream of employing someone at less than £30k. Competition is too high. You can walk into McKinsey on £45k. Heck my brother just started a new job at Pet City or some big pet place and he's never got a qualification in his life. He's on £26k and that's in Basingstoke!

The figures I see banded about re. grad salaries is usually nonsense. It tends to include the thousands of grads that did sociology or American studies at the University of West Ealing :)

Errrrr.... no. I am afraid you are talking absolute rubbish.

I graduated ten years ago from a very prestigious red brick, and the only people I know that have earned over £30K a year since then are those that went into the City, went into law, became a doctor or set up their own businesses.

The average starting salary for an economics graduate is £22K pa. I know. I work in a university.

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Errrrr.... no. I am afraid you are talking absolute rubbish.

I graduated ten years ago from a very prestigious red brick, and the only people I know that have earned over £30K a year since then are those that went into the City, went into law, became a doctor or set up their own businesses.

The average starting salary for an economics graduate is £22K pa. I know. I work in a university.

dont feed the trolls

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I'm interested in purchasing this place:

http://www.rightmove.co.uk/viewdetails-18737575.rsp

Assuming you are renting, would like to buy a new house and have the deposit you need, what kind of price drop would you need to see to make this a worthwhile purchase? Would a 10% drop make you feel happy about buying and not getting into trouble at a later stage? Or 20%? Maybe only 5%? I'm thinking that an offer of £520k in the current climate would be fair but am interested in what others think. Am I being a bit ambitious at thinking about such a drop?

For that kind of money I would do the following

A. Move to Canada

B. Buy a farm type property of around 100 acres

C. Have about 350 grand left over to help the family "adjust"

D. Have a MUCH better standard of living than you will ever achieve in said LITTLE house in toilet UK

You must be totally insane to want to pay that amount of money for such a small inconspicuous pile of bricks. How does the saying go "A fool and his money" :blink:

Edited by Soul Reaver
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Errrrr.... no. I am afraid you are talking absolute rubbish.

I graduated ten years ago from a very prestigious red brick, and the only people I know that have earned over £30K a year since then are those that went into the City, went into law, became a doctor or set up their own businesses.

The average starting salary for an economics graduate is £22K pa. I know. I work in a university.

Ten years ago is not today. I'm sure starting salaries were lower 10 years ago. Today, as long as you do a decent degree at a good university something is wrong if you're not earning £30k+. Indeed, the guy above went to the figures from Prospect to show that at £20k one would be in the bottom 10% of graduate earners. Part of the problem is everyone thinks they have a 'good' degree from a 'good' Uni. Generally they're at Middlesex Uni studying sociology or something.

Anyway, you work in a university, of course wages for those going into education will be lower. As for your average £22k for an economics grad...maybe the one's at your Uni are just poor students? Honestly, there's not one person from my course that earned less than £40k first year.

You also don't leave out many jobs from your list:

" City, went into law, became a doctor or set up their own businesses. "

What else is there? If you've got a 1st or 2:1 from LSE for example then you're bound to work in the city aren't you? What else would you do? Go to a village and sell fruit? My point still stands, if you have a good degree from a good uni and are earning £18k a year as a grad then somewhere, something has gone wrong. Heck my wife studied American Studies and earned more than that in her first job, that was 8 years ago.

I really do believe that there's a lot of bad advice out there for grads. The jobs are there, they can get them, they just need to know where to look and what they should be looking for. With commission you could start in recruitment at over £30k a year. Any numpty can do that.

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Ten years ago is not today. I'm sure starting salaries were lower 10 years ago. Today, as long as you do a decent degree at a good university something is wrong if you're not earning £30k+. Indeed, the guy above went to the figures from Prospect to show that at £20k one would be in the bottom 10% of graduate earners. Part of the problem is everyone thinks they have a 'good' degree from a 'good' Uni. Generally they're at Middlesex Uni studying sociology or something.

Anyway, you work in a university, of course wages for those going into education will be lower. As for your average £22k for an economics grad...maybe the one's at your Uni are just poor students? Honestly, there's not one person from my course that earned less than £40k first year.

You also don't leave out many jobs from your list:

" City, went into law, became a doctor or set up their own businesses. "

What else is there? If you've got a 1st or 2:1 from LSE for example then you're bound to work in the city aren't you? What else would you do? Go to a village and sell fruit? My point still stands, if you have a good degree from a good uni and are earning £18k a year as a grad then somewhere, something has gone wrong. Heck my wife studied American Studies and earned more than that in her first job, that was 8 years ago.

I really do believe that there's a lot of bad advice out there for grads. The jobs are there, they can get them, they just need to know where to look and what they should be looking for. With commission you could start in recruitment at over £30k a year. Any numpty can do that.

Are you masterbating?

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Really? Here's the real dilemma.:

and in case you haven't noticed that's just three days between posts.

You can keep pointing it out all you like, I'll keep answering it the same way. I am not investing in property, I am looking for a family home. I do not expect to see any gains from a purchase right now, who would? The fact that you keep specifically targeting something I have said and keep doing so in multiple threads speaks volumes about you. I've now answered your point on multiple occasions, you seem to be missing that and then regurgitating what you've already said. Since coming on this forum I've noticed that it's this kind of behaviour that makes people feel unwelcome and really gives the place a bad atmosphere.

I'm not interested in a 'mine's bigger than yours competition', I'm not interesting in 'winning' anything, I simply like to have a sensible discussion where opposing views are heard and we arrive at a sensible conclusion. If it helps I will even concede that you are more intelligent, funnier, richer and more educated than me. You are right, I am wrong. Now can we move on and stop with the silly comments. I really have nothing to prove. Thanks.

P.s, The same goes for the bloke above, Bloohoo or whatever. Aha, there is an ignore function! Clever stuff.

Edited by schuey100
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You also don't leave out many jobs from your list:

" City, went into law, became a doctor or set up their own businesses. "

The thing is that the City jobs are not available outside the SE. It is not an automatic decision for most people to go into the City if they have ar 2.1 or better degree.

The majority of graduates will work for 'normal' companies outside of the financial services or law arenas. In most industries in the SE, it takes at least 4 or 5 years to work up to a £50k salary from new graduate level, you don't just earn that much straight away.

The City is a very different place with it's £100k per year PAs and £150k junior anaylsts. These institutions employ a very small precentage of the overall workforce, and salaries are generally a fraction of that elsewhere.

At the same time, I do think the post that you responded to was unusual - surely the majority of graduates would be earning more than £30k after 5 years or so? If not, then a degree really is worthless.

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The thing is that the City jobs are not available outside the SE. It is not an automatic decision for most people to go into the City if they have ar 2.1 or better degree.

The majority of graduates will work for 'normal' companies outside of the financial services or law arenas. In most industries in the SE, it takes at least 4 or 5 years to work up to a £50k salary from new graduate level, you don't just earn that much straight away.

The City is a very different place with it's £100k per year PAs and £150k junior anaylsts. These institutions employ a very small precentage of the overall workforce, and salaries are generally a fraction of that elsewhere.

At the same time, I do think the post that you responded to was unusual - surely the majority of graduates would be earning more than £30k after 5 years or so? If not, then a degree really is worthless.

I guess that was my point, if you do have a good degree from a good Uni then you would end up in the city hence those grads get good wages. Where I think the results are skewed is by grads that did a course like sociology at Humberside University or Leeds Met. Those grads are of course going to be struggling to get a wage above £25k. It brings into question why on earth one would do a degree. My brother failed his A Levels and went to work for ASDA. He's now on £30k working for another large department store. He's 24. Why bother going to Uni, earning less than £30k ten years later and coming out with £15k debt?

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The thing is that the City jobs are not available outside the SE. It is not an automatic decision for most people to go into the City if they have ar 2.1 or better degree.

The majority of graduates will work for 'normal' companies outside of the financial services or law arenas. In most industries in the SE, it takes at least 4 or 5 years to work up to a £50k salary from new graduate level, you don't just earn that much straight away.

The City is a very different place with it's £100k per year PAs and £150k junior anaylsts. These institutions employ a very small precentage of the overall workforce, and salaries are generally a fraction of that elsewhere.

At the same time, I do think the post that you responded to was unusual - surely the majority of graduates would be earning more than £30k after 5 years or so? If not, then a degree really is worthless.

More nonsense about salaries.

35K puts you in the top 5% of wage earners.

It follows, that as about 40% of school leavers are going to Uni, then MOST of those wont make 35K let alone 50K.

Some earn a lot, most earn around 25K many earn less.

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I guess that was my point, if you do have a good degree from a good Uni then you would end up in the city hence those grads get good wages. Where I think the results are skewed is by grads that did a course like sociology at Humberside University or Leeds Met. Those grads are of course going to be struggling to get a wage above £25k. It brings into question why on earth one would do a degree. My brother failed his A Levels and went to work for ASDA. He's now on £30k working for another large department store. He's 24. Why bother going to Uni, earning less than £30k ten years later and coming out with £15k debt?

I agree with that. The problem is that is not how the current system works. When I was at school (admittedly a while ago now!), if you showed any form of mental ability by the age of 16 you were expected to go the A level and degree route regardless of whether you were good enough to get to a top university or could only scrape in to do a Media Studies course at one of the worst ones.

A lot of people that I know would have been far better off training to become a tradesman or going into retail management, but this type of choice was always discouraged regardless of the abilities of the individual. I am sure that the few kids at my school who showed zero aptitude and were therefore not 'forced' along that route are now doing better financially than a lot of the ones who were.

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I agree with that. The problem is that is not how the current system works. When I was at school (admittedly a while ago now!), if you showed any form of mental ability by the age of 16 you were expected to go the A level and degree route regardless of whether you were good enough to get to a top university or could only scrape in to do a Media Studies course at one of the worst ones.

A lot of people that I know would have been far better off training to become a tradesman or going into retail management, but this type of choice was always discouraged regardless of the abilities of the individual. I am sure that the few kids at my school who showed zero aptitude and were therefore not 'forced' along that route are now doing better financially than a lot of the ones who were.

It was exactly the same thing with me, and unfortunately I pushed the same ideas onto my brother. He was never the academic type but I convinced him A Levels and a degree would be a good idea. The problem was he failed his A Levels, he got three Es I think but fortunately he recovered and used his skills properly. He'll be on £45k as an area manager in the near future, much better than anything he could have achieved going to some crappy Uni and reading something easy.

Currently 40% of students go to Uni. In reality only 2% (maybe less?) read good subjects at the right University. We all know it, I know it when the CVs come through the door, it's a shame because many of these kids work hard but will never get the gold at the end of the rainbow because they cannot compete with the guys at the top. So they end up in jobs they never really needed a degree for in the first place. Even worse, they come out on £25k with £15k worth of debts, no decent wage for a deposit on a house or car and end up spending the next 10 years recovering so they can be in a position they were in before they left Uni. I could name 100 courses and ten Universities you should go to, if you can't get in then you really ought to consider doing something else, you will be better off.

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On the subject of the original house, I would expect this type of place to be hit particularly hard by any crash. It goes back to what we were saying about the divide between City and non-City money.

Realistically, there are only two types of people who could afford to buy this house:

1. Young City workers on a £200k++ joint income.

2. Older people who have a good amount of savings, and have perhaps made some equity through selling properties in the 'good times'.

Under 35's on normal incomes (£50-£60k) would not be able to afford this place.

This severely limits the target market for a start, and I think that a lot of the older people would tend to prefer the large, detached houses that £650k would buy them in Weybridge/Guildford or beyond.

If the general wealth in the City contracts, it is clearly not going to affect everyone that works there. There will still be plenty of money to buy those £1m+ houses in Wimbledon & Richmond, but I think it is this next tier down that may suffer.

If there are not enough City workers to buy this type of house, the price has to come down a lot to bring it back into the price range of those working in normal professions. At the same time, this is a nice area so I don't think it will go really low.

I would have thought a reasonable price for this would be £350-£400k.

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I could name 100 courses and ten Universities you should go to, if you can't get in then you really ought to consider doing something else, you will be better off.

I think you have got that number of Universities about right generally, but I know quite a lot of people who have done very well in City careers with degrees from ex-Polys. It is possible, you are just a lot less likely to get the opportunity.

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