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Has anyone purchased or sold a house recently? Or is there anyone 'in the industry'? We're looking to make an offer on a house tomorrow. However, I don't know where to pitch our initial offer. We've got a cash buyer for our house, and we've also got an Approval In Principle from the mortgage company (so we're in a great position). The problem is, the mortgage company will only loan us enough to allow us to make an offer of 5% under asking price of the house maximum. The other problem is we wanted to spend £15k building a garage, which means we'd have to take a further £15k off the asking price. So we're getting into the region of being able to pay 10% under asking. My understanding of this process is you go in with an offer, they counter-offer, and you increase, rinse, repeat until you agree. The problem is I don't want to go in so low as to 'offend' them, make them stubborn on the asking price, or think we're not being serious. Logic says to go in about 15% under with a view to end up paying 10% under. Has anyone been through this recently, and can offer any sort of advice? To be honest, I hate all of this messing about and would rather just be up front - but if I go in with our maximum offer they will, by default, try to increase it. One last thing: The vendor want to sell, but doesn't *need* to sell. Other people are apparently interested, but no one else is in the same position as us (sold their house and ready to go). It's also being sold by a developer rather than a homeowner. [MH] |
House negotiating advice
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Mike_Hunt 23,524 posts
Seen 2 years ago
Registered 19 years ago -
InfiniteFury 864 posts
Seen 2 years ago
Registered 16 years agoDon't do it via online shopping??? -
silentbob 29,527 posts
Seen 1 year ago
Registered 19 years agoI'l be honest, if you really do want it, go in with a single final offer again emphasising your strong buyers position and your budget constraints. As long as you're happy with the price you're paying, then all this 'ooooh must haggle' stuff doesn't really matter.
Having said all that, I've only ever bought one house and would hate it if you lost this one due to shite advice from me..gif)
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chopsen 21,958 posts
Seen 33 seconds ago
Registered 16 years agoMike_Hunt wrote:
The problem is I don't want to go in so low as to 'offend' them,
Who cares?
10% under the asking price is nothing. It depends on the vendor. If they're keen to sell they might take quite a low offer.
However, if it's a developer, apparently they're likely to just stick to the price so I've heard. The don't negotiate and will stick around till the get the asking price. -
InfiniteFury 864 posts
Seen 2 years ago
Registered 16 years agoOn a more helpful note, the hardest part is once you've agreed everything in principle.
At that point you need to get friendly and nice with them while somehow communicating that, while you won't dick about with the offer going downwards, any hint of that from them in the opposite direction will result in an immediate withdrawal.
If you find a diplomatic way of doing that, please let me know. -
You have two choices: (a) go in at 10k less than your absolute upper limit and risk being told to get lost; (b) go in at your absolute upper limit and stick to it.
FWIW we've just bought a house, it was about the fifth that we'd put in an offer on, and this time we just went in at our top limit rather than go through all these mind games. It was accepted straight away. I wouldn't go with all this 'offer 15% less then 10% less and settle for 5% less' bullshit; if you like the house and plan to live there for a serious length of time then just pay what you think it's worth and what you can afford and that's that.
Where you might want to play a bit though is in terms of making your offer conditional on it being accepted within a given period of time - give them overnight to think about it or something - but don't let them play you by waiting for other offers. We were pipped a couple of times by other people who came in with an offer above our initial offer but below what we were prepared to pay, because they insisted on an instant yes or no from the seller. -
mrpon 37,367 posts
Seen 2 days ago
Registered 15 years agoJust bought my third off a developer, new build. I always haggle, only managed £5k off the asking this time but wangled carpets and tiling thrown in.
See what other similar houses are going for and base your opening offer around that. Worth noting how long it's been on the market, how much interest in the property etc.
Cash buyers are in very good positions.
Good luck. -
mrpon wrote:
Yeah that's what we figured. But sellers prefer an offer that's 2,000 higher than yours even if it comes from some numpty in a chain with an 80% mortgage. It really depends on the local market, if houses are selling then you just need to make a realistic offer and be done; insist on a rapid response and stick to your guns, walk away if they don't give you an answer within your deadline.
Cash buyers are in very good positions.
But yes, definitely do your research, see what similar houses in the immediate neighbourhood have been selling for: http://www.houseprices.co.uk/ -
mrpon 37,367 posts
Seen 2 days ago
Registered 15 years agoAlso check http://www.mouseprice.com as well for Land Registry sold prices, has a better sorting mechanism as well. -
Mike_Hunt 23,524 posts
Seen 2 years ago
Registered 19 years agoInfiniteFury wrote:
Rightmove & e-conveyancing baby!
Don't do it via online shopping???
[MH] -
Mike_Hunt 23,524 posts
Seen 2 years ago
Registered 19 years agosilentbob wrote:
Yeah, that's what I'd like to do, but because he's in the business I think he'll expect a haggle and try and increase. I think he'll be the game player.
I'l be honest, if you really do want it, go in with a single final offer again emphasising your strong buyers position and your budget constraints. As long as you're happy with the price you're paying, then all this 'ooooh must haggle' stuff doesn't really matter.
Having said all that, I've only ever bought one house and would hate it if you lost this one due to shite advice from me.
[MH] -
Mike_Hunt 23,524 posts
Seen 2 years ago
Registered 19 years agoChopsen wrote:
Perhaps 'offend' was the wrong word, but I didn't want to get off on the wrong foot and then mess up the rest of the negotiations.
Mike_Hunt wrote:
The problem is I don't want to go in so low as to 'offend' them,
Who cares?
10% under the asking price is nothing. It depends on the vendor. If they're keen to sell they might take quite a low offer.
However, if it's a developer, apparently they're likely to just stick to the price so I've heard. The don't negotiate and will stick around till the get the asking price.
My concerns is also that he'll stick to the asking price, or near as damnitt on principle. However, in the current market I really don't think 10% is unreasonable, and from what I hear the market is due to go pear shaped again soon.
[MH] -
mrpon 37,367 posts
Seen 2 days ago
Registered 15 years agoWithout wanting to offend, anyone who offers full asking is a fool. Sellers always inflate asking prices, expecting to be chipped. I know because I did exactly this on two I've just sold last month. -
Mike_Hunt 23,524 posts
Seen 2 years ago
Registered 19 years agootto wrote:
Cheers for the advice. I'd like to go in with a genuine offer. However, I suspect he's a game player. Still there's nothing stopping me being stubborn I suppose.
You have two choices: (a) go in at 10k less than your absolute upper limit and risk being told to get lost; (b) go in at your absolute upper limit and stick to it.
FWIW we've just bought a house, it was about the fifth that we'd put in an offer on, and this time we just went in at our top limit rather than go through all these mind games. It was accepted straight away. I wouldn't go with all this 'offer 15% less then 10% less and settle for 5% less' bullshit; if you like the house and plan to live there for a serious length of time then just pay what you think it's worth and what you can afford and that's that.
Where you might want to play a bit though is in terms of making your offer conditional on it being accepted within a given period of time - give them overnight to think about it or something - but don't let them play you by waiting for other offers. We were pipped a couple of times by other people who came in with an offer above our initial offer but below what we were prepared to pay, because they insisted on an instant yes or no from the seller.
It's complicated by the fact that he's a developer/builder, and one option my wife and I had discussed was that we would be willing to pay up to near 5% less than asking if he'll include a garage for that price (remember, we want to go 10% below so we can afford a garage). The problem is I don't know how the hell you'd work that out with regards to conditions of sale, contracts, holding back some cash, ensuring that it's built to a good standard and in good time etc.
Arrggh!
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Mike_Hunt 23,524 posts
Seen 2 years ago
Registered 19 years agomrpon wrote:
Thanks. Again that's my issue. It's quite a hike up in price compared to our current house, so 5% and 10% are rather large figures in terms of £k's, which is why I'm a little nervous.
Just bought my third off a developer, new build. I always haggle, only managed £5k off the asking this time but wangled carpets and tiling thrown in.
See what other similar houses are going for and base your opening offer around that. Worth noting how long it's been on the market, how much interest in the property etc.
Cash buyers are in very good positions.
Good luck.
It's been on the market for 9 months, people seem interested (I believe) but most people just aren't in a postion to sell at the moment.
[MH] -
mrpon 37,367 posts
Seen 2 days ago
Registered 15 years ago9 months?! It's in the bag Mike! -
mrpon wrote:
Without wanting to offend, anyone who offers full asking is a fool.
No offence taken, but you're wrong. Ish. It depends entirely on the local market. We paid only 5,000 less than the full asking price for the house we just bought. But we knew that it had previously been on the market for 40k more; and we also knew that there was a real dearth of property on the local market in that price bracket, and that houses were selling as soon as they came on the market. So we went in with a very realistic offer, even though it bumped us up into a higher stamp duty bracket, because we knew psychologically that the sellers would not accept a figure under that threshold and that the house was realistically priced and sufficiently attractive that it would be snapped up, if not by us then by someone else. And as it transpired we were right: they got three offers in the first weekend of it coming back on the market, including ours, and they took ours because it was closest to their asking price and because we insisted that they say 'yes or no' right then and there without giving them a chance to go back to the others and get them to raise their offer.
edit - but in Mike's case it does sound as if the seller is in a slightly different position. Definitely nothing to be lost by putting in a cheeky offer if the place has been on the market that long. -
I don't know if you were being serious about the e-conveyancing but I think you'd be nuts to buy without using a lawyer to go over the small print and check all the planning, etc. Especially buying off a developer. -
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Mike_Hunt 23,524 posts
Seen 2 years ago
Registered 19 years agomrpon wrote:
Well the HIP was done in October last year, so I'm assuming that's when it went on. It has been on at the very least 6 months, because it was on when we looked briefly in Jan/Feb.
9 months?! It's in the bag Mike!
Do you really think 9 months is long enough to push him to accept an offer? Of course all situations are different.
[MH] -
eleven63 3,052 posts
Seen 7 hours ago
Registered 17 years agoIts a developer, they have made their money and will look for a quick turn around (bank loans, etc) - they do need to sell and to someone who can prove their worth (as you can).
We moved to our place almost a year ago - cutting a long story short, we bought at around 15% under the original asking price, despite 'other interest' and 'being in no hurry' - a good offer is a good offer...
Be ballsy and go for it -
mrpon 37,367 posts
Seen 2 days ago
Registered 15 years agoIt's clearly got an inflated price, otherwise it would've been snapped up. I can imagine a new build would be fairly desirable if finished to a good standard, nice location etc.
You have to ask yourself why hasn't it sold? -
Yeah developers are not like real people, they just want to make a quick sale and minimise their losses. Nothing ventured nothing gained, is it such an amazing place that you simply have to have it? Another one will be along in a minute, just offer and see what happens. -
Mike_Hunt 23,524 posts
Seen 2 years ago
Registered 19 years agoeleven63 wrote:
His situation, and I don't know if it's true, is that he bought a barn to develop as part of a pension fund investment. The barn is split into 3 properties, and the other two are rented and are therefore commercial. He claims that the law states that he can't own a residential property as part of a pension fund and therefore has to sell.
Its a developer, they have made their money and will look for a quick turn around (bank loans, etc) - they do need to sell and to someone who can prove their worth (as you can).
We moved to our place almost a year ago - cutting a long story short, we bought at around 15% under the original asking price, despite 'other interest' and 'being in no hurry' - a good offer is a good offer...
Be ballsy and go for it
I'm not sure about whether this is true (whether he's being honest, or whether the law says that). I don't believe he's *desperate* to sell because he's not been pestering us or been prompt with replies to our questions. But I believe he *needs* to sell. If that makes any sense.
I don't think he's losing money on it, or paying off loans, but I do think he wants to sell to release some funds which in can invest in a future development.
[MH] -
Mike_Hunt 23,524 posts
Seen 2 years ago
Registered 19 years agomrpon wrote:
Having viewed pretty much every house at around that price in that area, I believe it's not far off a fair price (but then I believe every other house we've seen is greatly overpriced).
It's clearly got an inflated price, otherwise it would've been snapped up. I can imagine a new build would be fairly desirable if finished to a good standard, nice location etc.
You have to ask yourself why hasn't it sold?
I think in a good market/normal conditions it would've sold by now. He may have had to accept an offer, but it would've sold.
I think he's probably expecting an offer of around 5% less. But then he's just got to ask himself what's worth more, an offer of 10% less now or a potential offer of 5% less from another buyer in the future. I know what I'd choose.
either way, I've decided to go in with an initial offer of what equates to about 12.5% less than asking, via the estate agent. If he responds and say's that we're way out then I'll simply lay my cards on the table and explain our maximum price of what (after using the calc) is 8% less than asking isn't negotiable from our perspective. Or that we'd pay 5% less than asking if he were to build the garage for us.
That way, if he wants to play games I've got some flexibility. Or if he doesn't I can go in with our maximum price + conditions and it's not that far from our openning offer.
[MH] -
mrpon 37,367 posts
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Registered 15 years agoSounds like a plan, hope it all works out for you. -
Mike_Hunt 23,524 posts
Seen 2 years ago
Registered 19 years agootto wrote:
We've been looking in earnest over the last 3 months, and on and off over the last two years (things were put on hold for a while after the arrival of son number 2).
Yeah developers are not like real people, they just want to make a quick sale and minimise their losses. Nothing ventured nothing gained, is it such an amazing place that you simply have to have it? Another one will be along in a minute, just offer and see what happens.
In that time it's the 2nd house we've even considered making an offer on. So yeah we really like it. But I think we're really fussy!
If it falls through, then we're going to have to move into rented or we'll lose our buyers (and we're lucky to have a cash buyer who's paid asking price).
[MH] -
If you think his asking price is more or less reasonable then I wouldn't waste time and goodwill going in so much lower, I would put your cards on the table right from the off, given your situation. -
Mike_Hunt 23,524 posts
Seen 2 years ago
Registered 19 years agoActually, while I'm thinking about it. If we want him to include a garage in the house sale (and increase our offer accordingly). How the hell can we hold him to that?
Do we need to speak to a solicitor and get them to write something in to the terms of sale? Can we withhold some money (say £15k) until the garage is completed? Will the mortgage company be ok with something like that? It just sounds complicated, but in an ideal world I'd like it to work that way as the mortgage company will effectively be loaning us the money for the garage, rather than us having to find £15k after we've bought the house (which will be nigh on impossible I should think!).
[MH] -
otto wrote:
I don't know if you were being serious about the e-conveyancing but I think you'd be nuts to buy without using a lawyer to go over the small print and check all the planning, etc. Especially buying off a developer.
Yeah, you might be right there. Especially if we're talking about complications such as including a garage in the house price.
E-convayancing does come in a fair bit cheaper, and many of the bigger companies get very good reviews. Also, when we bought our current house we used a solicitor who lived 100 miles away and that didn't complicate things at all.
But, yeah, I agree with you in this instance, it is probably worth the premium.
[MH]
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