Please help me make an offer!

[flow4]

Hi all, I bought my first house nearly 25 years ago and stayed in it. I am finally ready to move (with 2 teenagers now) and have found a house I like, but I feel really inexperienced and out of my depth - since I have only ever bought a house once and it was so long ago! I am a single parent too, so I have no-one to share the decision-making with... So I'd very much appreciate some opinions and advice! :)

The house I like is on the market for £132,500. It's a 3 bedroom semi on the fringes of an ex-council estate in a pleasant enough mixed area. It's in good condition with good sized garden and detached garage. Its kitchen and bathroom are under 2 years old. A neighbouring house which is in the middle of a row of 4 rather than a semi, and not so well situated or pleasant, is on the market for 129K. Overall, I'd say it's quite a desirable house - among the best of its type.

The market in our area is pretty flat. My current neighbours' house has been on the market for 2 years. Lots of other houses have been on the market for a year or so. But of course 'desirable' properties sell more quickly... And there's always the anxiety that the market may pick up at any moment!

I am (subject to final official mortgage offers via a broker who is on holiday) in a position to offer up to the asking price (and perhaps a bit over) without needing to sell first - effectively like a FTB. I know in theory this puts me in a strong position to negotiate...

I also know - or have been told - that the vendor is in no great hurry to move, is looking to move to a smaller property in a more expensive area which could potentially be above the asking price for this one, and has not yet found the house she wants. I also know she bought the house herself six years ago (when the market was a bit healthier) for £125K.

Stamp Duty is a bit of a psychological barrier - it's obviously not insurmountable, but it's in my head... My first instinct is to offer £125K (subject to survey) - which is just over 94% of the asking price. But because I'm inexperienced, I'm unsure about how to 'play the game'... Will the vendor expect me to move up from my first offer? Should I go in lower and offer, say, 90% of the asking price (119,250) or would that just be insulting?!

Thanks in advance to anyone who's more experienced at this than me, and who's kind enough to offer me any advice!

[middleagedspread]

I'm no expert..but have sold & bought a couple of houses in the last few years.
You are in a strong position & I would go in with a cheeky offer & take it from there.
If the vendor paid £125K I can't imagine she's accept less, but who knows. Although you've been told she hasn't found anywhere it may be because she doesn't know how long it will take to sell her existing property. Especially if the market is locally flat.
I think I'd be tempted to offer £121 but of course don't indicate to the agent that you'd be prepared to go higher. Buyers like you are very desirable & you should use it to your advantage.
I know it's scary!

[flow4]

Thank you mas. :) It's really rather terrifying!

She told me herself that she hasn't found anywhere. But she also mentioned that she could move in with friends temporarily... I think she's still psychologically preparing herself for the move, and wavering, which is probably why I'm hesitating to make a 'cheeky' offer which might put her right off.

Why £121 specifically, btw?

[middleagedspread]

Well it's over 90% & I would guess she's got 'not below £120' in her head. Of course you won't know until you try!
My feeling is that a house is worth what someone is prepared to pay for it. If you really love it, have looked extensively and can afford it then you could offer top whack. But, remember your strong position.

[flow4]

Yes, I can see a definitely logic to 'not below £120'... She may well have 'not below £125' in her head, given that's what she paid for it...

Is it generally considered better to offer lower and be prepared to rise; or offer a bit higher and drop if the survey shows problems? I wonder whether the second approach makes me seem a more 'serious' buyer...

"Remember my strong position. Remember my strong position". >> practices new mantra

[jammybean]

I think lowering an offer after survey is pretty risky...What if the vendor won't accept the drop in price? Potentially the vendor could pull out when you've spent hundreds on surveys, solicitors fees etc.

IMO starting low and negotiating up is usually a good bet. Or making one high best, final offer if you want to cut the back and forth negotiating.

[flow4]

Thanks jammy. On my one-and-only house purchase, all those years ago, I offered the asking price, then dropped 5% when the survey came back with lots of things that needed doing. It worked, but then the vendors had found a house they wanted and were afraid of losing... I think you're right, and that tactic wouldn't be a good one here...

[MrsJamin]

Just remember to take your time when negotiating. I'd say offer £121. And if its not accepted, just wait a little while to offer any more. They may come back to you and suggest an offer they would accept, then you have some negotiating space. Taking your time asserts your power in the situation, which you do have. Good luck!

[flow4]

Thank you MrsJ. :) 'Take your time' is good advice (if nerve-racking!) Given that the house only came onto the market a week or two ago, would you say I should hold my nerve and not even make an offer yet? Or should I make an initial offer early, and then take my time about revising it...?

[middleagedspread]

Id really agree with MrJ, make an offer & even if it's refused hold your nerve for a few days. If you don't immediately make a counter offer she might well come back to you. Be firm with the EAs too, hold your cards close to your chest.
Do let us know how you get on.

[middleagedspread]

Also, keep looking at other properties.
There's never only one perfect house.
You'll get a good idea of what you can get for your money & what the competition's like. Also the EA will know that you haven't pinned your hopes on just one house & can advise the buyer that you're looking elsewhere too. You're an Agents dream & he will want you!

[flow4]

Good point... I'll arrange some other viewings today if I can... :)

[Yfronts]

A house is only worth what a buyer is prepared to pay - which isn't necessarily the asking price. A house bought in 2007 was bought at the peak of the housing market. If it cost 125 then, it's only going to be worth about 113 now. I think it's quite reasonable to offer lower when a market is so stagnant. 121 is far too high for a first offer.

[flow4]

Thanks Yfronts. I'm not sure I have the nerve to offer less than £121K on a house which is newly on the market at £132.5K!

[pinkdelight]

I think you're being too careful about her feelings here. It's a lot of money and you have to be businesslike about it. As someone else said, just because she paid 125k, it doesn't mean it's automatically worth more now. We paid 279k for our last house in 2007 and sold it last year for 280k, despite having done 40k rennovations - and that's in London. That's just how the market is now and it sounds like the market is even tougher near you if things sit on it for two years. I would assume that anything priced near the stamp hold threshold would be fairly optimistic/deluded to expect people to pay over the threshold. So yes, I'd start at 119k to test the water and then take it slowly and keep your nerve. You're the one in the strong position and just because you can afford the asking price, doesn't mean you should pay top whack when it's not actually worth that much.

[MrsJamin]

I think 119k looks like you're not serious about the property- its less than 10% of the asking price. £121k doesn't look too cheeky but is a good starting point.

[ILikeBirds]

Anything 10% or less under asking doesn't really count as cheeky imo. We made an opening offer of 97 on a house with an asking price of 115

[MrsJamin]

I'd have laughed at that kind of offer. It really depends on how long the vendor has been on the market and how much of a rush they're in to sell.

[ILikeBirds]

Well they sold the house to us, so nothing lost

[Sillyoldbagpus]

I'm not sure if I'm offering good advice here, but I am of the opinion that if it is your 'dream' home and its a one of a kind house, then consider offering asking price or very close. Get it off the market and enjoy living there.

If you are willing to loose it and there are likely to be others like it then offer under. Did the estate agent give you any idea of the number of viewing etc? Have they phoned back for feedback? I wouldn't make an offer on a Friday, if there are people viewing at the weekend you don't want them viewing with an offer in the table.

[AliceWChild]

I tend to agree with baguss. I'm in the process of buying a house. We played the game a bit and got some reduction on the price, but not much. I wanted the house, I'm buying a home. I probably paid more than I could have. Meh, don't care. The difference on mortgage repayments won't be huge. I'm planning on living there a while by which time that money will immaterial. Life's too short. Obviously there can be situation where every penny counts, or you might enjoy 'playing the game' but unless you're in that position I don't find the messing around and stress worth it. I also tend to think if you behave in a dog eat dog way, the vendor might eat you back at some point. Of course you might be dealing with someone who will eat you anyway but it makes me happier to assume better. I'm sure I paid more as a result, but I feel happier.

[flow4]

Thank you all :) I've been busy with brokers and mortgage details all day... Can't quite switch off now!

I've had a second viewing so they know I'm interested. I've played it as cool as poss with the EAs (which isn't especially cool, cos I'm not very good at that! ) and told them I'm interested and considering making an offer, but waiting to sort finances, and still viewing other properties (all of which is true).

I am so rubbish at all this money/negotiating stuff; I don't think I have it in me to be 'hard nosed'! This represents quite a lifestyle change for me - going from having no mortgage to having two and being a landlord, and it's rather scary!

Alice, I like this thing you said: "I'm planning on living there a while by which time that money will immaterial. " I think that's a key question for me... I need to decide whether it's somewhere I'll want to stay - in which case, a couple of thousand here or there won't matter. :)

[Jaynebxl]

It is really tricky, isn't it? And depends so much on the area. Round here things sell really fast generally, so long as it isn't ridiculously overpriced, and if you see a house you like you have to move fast and offer the asking price or someone else will beat you to it. We put ours on the market on the Wednesday and had two asking price offers on the Saturday. So it is hard really for anyone to give accurate advice without really knowing the local market.

[flow4]

Yes, of course that makes sense. It's generally much slower around here. A friend's house sold today after 2 years on the market, and at just 75% of the original asking price. My neighbour's house has been on the market since Christmas 2011. On the other hand, 3-5 houses sell most months in this area, and if this is the house for us, I don't want someone to beat me to it! My finances are now sorted and we're viewing again on Thurs eve (she can't make tomorrow) - this time I'm taking a builder friend to cast a slightly more practical eye over things :) All being well, I'm then planning to make an offer - but I still haven't decided how much!

[Jaynebxl]

Will be watching with interest tomorrow then!

[AliceWChild]

Exactly, that's the thing flow. Speculating on what happens to other houses and how much they go for wont help if someone else is interested in the same as you. You can't miss it and then get it back through reference to the average stats. That's why I pay less attention to that stuff. I'd rather just be happy with the house I wanted.