Suggested Negotiating Tactics House Purchase
Discussion
My daughter has seen a house she likes, she's a FTB. It is just a 2 bed mid terrace probably build in 2005. The area is quite nice really however it is close to railway tracks with high speed trains. Overall it is a solid first time purchase, in a nice leafy area close to town. Only real issue with me is economy 7 heaters downstairs and little electric heaters in the bedrooms, looks like they all need upgrading downstairs e7 heaters look originaland the running costs of electric are going to be significant.
This property is being sold by the landlord with vacant possession has been on the market for 3 months at £280k, agent revealed one offer for £220k.
It needs new windows at some point in the next 5 years, the kitchen is tired but usable, bathroom also tired but usable. Carpets old but clean. Old fitted wardrobes in the main bedroom.
The vendor has said he will replace carpets and lino in bathroom. The upstairs floorboards squeak really badly. We don't want the carpets being replaced without the floors being fixed, so we have made an offer of £230k as is without the carpets.
A comparable property recently sold agent was asking £280k but we don't know how much it achieved.
Another similar end terrace that needed similar work doing to it sold recently for £255k, has a bit more front garden.
The vendors declined our offer no other comment.
I am minded to go back with a counter offer of £235k.
Any tips? Thanks!
This property is being sold by the landlord with vacant possession has been on the market for 3 months at £280k, agent revealed one offer for £220k.
It needs new windows at some point in the next 5 years, the kitchen is tired but usable, bathroom also tired but usable. Carpets old but clean. Old fitted wardrobes in the main bedroom.
The vendor has said he will replace carpets and lino in bathroom. The upstairs floorboards squeak really badly. We don't want the carpets being replaced without the floors being fixed, so we have made an offer of £230k as is without the carpets.
A comparable property recently sold agent was asking £280k but we don't know how much it achieved.
Another similar end terrace that needed similar work doing to it sold recently for £255k, has a bit more front garden.
The vendors declined our offer no other comment.
I am minded to go back with a counter offer of £235k.
Any tips? Thanks!
Caveated on the basis that I don’t know the house/area/market…
As a first time buyer (I.e. no chain), she’s in a reasonably strong position, so given that it’s been on the market for a while, I’d be tempted not to jump straight back in with another offer as you could end up just getting bid up.
If you do go back with another offer then make it very clear it’s a final offer (and stick to your guns)!
There is some risk in this strategy, but assuming that there’s no particular urgency in finding a place, then it leverages their position as a FTB.
Hopefullly the landlord may be coming under a bit of pressure to get it shifted if it’s lying empty and particularly if they are still paying a mortgage on it.
There are a few landlords out there who jumped on the BTL bandwagon and who are now selling up and are now realising that their stellar investment might not have been quite so stellar after all - for some, it might take a bit more time for reality to bite…
As a first time buyer (I.e. no chain), she’s in a reasonably strong position, so given that it’s been on the market for a while, I’d be tempted not to jump straight back in with another offer as you could end up just getting bid up.
If you do go back with another offer then make it very clear it’s a final offer (and stick to your guns)!
There is some risk in this strategy, but assuming that there’s no particular urgency in finding a place, then it leverages their position as a FTB.
Hopefullly the landlord may be coming under a bit of pressure to get it shifted if it’s lying empty and particularly if they are still paying a mortgage on it.
There are a few landlords out there who jumped on the BTL bandwagon and who are now selling up and are now realising that their stellar investment might not have been quite so stellar after all - for some, it might take a bit more time for reality to bite…
You have to go in with an offer bearing in mind what you would have to spend to make it up to standard. things like carpets, flooring, squeaky floorboard are pretty much irrelevant, they're pennies in the expense of buying a house. Factor in the cost of replacing the heating system and the cost of updating bathrooms etc but don't expect the vendor to accept everything. We looked at a house that needed 20-30k of work just to make it livable yet the vendor refused to budge on the price, it did eventually sell for just £5k less than the asking price.
You could get the full structural survey done and use anything from that as a bargaining chip, although if it's 2005 they'll unlikely be any major issues and it'll obviously cost you to get the survey
You could get the full structural survey done and use anything from that as a bargaining chip, although if it's 2005 they'll unlikely be any major issues and it'll obviously cost you to get the survey
Assuming there is gas, a new central heating installation will only cost a few grand, and is pretty easy to install when there is good access to upstairs floor.
New windows on a 2-bed terrace will be 4-6 windows and a door? Again not a vast sum.
Squeaking floorboards is an easy fix. Box of screws solves a lot of squeaks...
You'd have all of that done, with carpets, for £10k... against that backdrop I'm not surprised the owner wouldn't entertain the idea of dropping nearly 20%/£50k, especially as he probably knows what the other ones went for.
New windows on a 2-bed terrace will be 4-6 windows and a door? Again not a vast sum.
Squeaking floorboards is an easy fix. Box of screws solves a lot of squeaks...
You'd have all of that done, with carpets, for £10k... against that backdrop I'm not surprised the owner wouldn't entertain the idea of dropping nearly 20%/£50k, especially as he probably knows what the other ones went for.
Advice that was given to us by our (selling) estate agent was to put in an initial 'round' offer (eg 230k) and then if turned down, put in a more exact number to make it look like they'd pushed us as far as possible (eg 237590).
Not sure of the psychology behind it, but it worked in our case!
Not sure of the psychology behind it, but it worked in our case!
Even a 2 bed house run using electric heating is going to be expensive. A refit for gas, if you can, is going to be £5-10k, probably close to the latter and quite a mess in the process.
In the end you offer what you feel it is worth but generally adding a bit and getting it done is often better than still looking 6-12 months later.
In the end you offer what you feel it is worth but generally adding a bit and getting it done is often better than still looking 6-12 months later.
Thanks all, there is no gas in the estate so stuck with electric. The property is in Letchworth seems to be a common thing. I said to my daughter don't buy a house without wet gas heating, they say a friend in the same close has bills of £150 a month I am sceptical about that!
We have upped our offer will let you know how we get on.
We have upped our offer will let you know how we get on.
My advice would be, if it's your daughter buying the house, it should be your daughter deciding how much she's prepared to pay for it.
Worst case, it's her who will be in negative equity paying double-digit interest rates for the next 5 years, not you!
You need to know more than just the asking price, you need to know the local market for comparable places.
Around here, some things are priced quite low compared to a few years ago, some things are priced quite high.
I'd have thought there would be choice at that price level, so you need to evaluate some comparisons and understand why various houses are getting various offers.
There are a lot of people who will sit tight and maybe take the place off the market if they don't get what they think the place is worth, if you think a place is overpriced, there is sometimes no point trying to reason with the vendor if they are not desperate to sell.
Other times, you make an offer they initially feel is too low, but then they make a similarly reduced offer on their next place and come back and ask if your offer is still on the table.
If you want to play the 'it's a buyers' market card', then you need to have a choice of a few houses in your sights, if you can't buy house x for £y, you'll buy a different one. If you've only got one target house, you're close to being a desperate buyer, because prices in some sectors could easily be higher next year.
Worst case, it's her who will be in negative equity paying double-digit interest rates for the next 5 years, not you!
You need to know more than just the asking price, you need to know the local market for comparable places.
Around here, some things are priced quite low compared to a few years ago, some things are priced quite high.
I'd have thought there would be choice at that price level, so you need to evaluate some comparisons and understand why various houses are getting various offers.
There are a lot of people who will sit tight and maybe take the place off the market if they don't get what they think the place is worth, if you think a place is overpriced, there is sometimes no point trying to reason with the vendor if they are not desperate to sell.
Other times, you make an offer they initially feel is too low, but then they make a similarly reduced offer on their next place and come back and ask if your offer is still on the table.
If you want to play the 'it's a buyers' market card', then you need to have a choice of a few houses in your sights, if you can't buy house x for £y, you'll buy a different one. If you've only got one target house, you're close to being a desperate buyer, because prices in some sectors could easily be higher next year.
Get a high bid in, go with cheapest legals you can find etc, then gazunder at the last moment before exchange months down the line.
Ok not a nice tactic, but a tactic
In the end just stick to your principles and pay what you’re happy to pay.
Singing the same song and being consistent with it is the best tactic really.
If you flip flop around it shows you’re able to be moved around and then the vendor will take advantage imo.
Ok not a nice tactic, but a tactic
In the end just stick to your principles and pay what you’re happy to pay.
Singing the same song and being consistent with it is the best tactic really.
If you flip flop around it shows you’re able to be moved around and then the vendor will take advantage imo.
Mr Whippy said:
Get a high bid in, go with cheapest legals you can find etc, then gazunder at the last moment before exchange months down the line.
It works both ways. If the buyer has got everything in order, they will be wasting their time as well.If a buyer tries that with me, I will counter offer with a (very) small reduction, but time limited to exchange within 2 working days or no deal.
lost in espace said:
Update. A house on the estate with an identical layout, but end of terrace and slightly better parking has just come on. It all also has newish bathroom and kitchen, and is in better condition overall. Price is £275k. Going to have a look today. Daughters offer not responded to yet.
So £275K, they might settle at £260K. If you've offered £235K for the other one and then spend £25K on it then that's the same money. But the new one has: no uncertainty regarding renovation costs, you don't have the time and trouble to do the renovations and better parking. Is this what they call a no-brainer?Does the mid terrace have rear access? We rented one when moving back to the area a few years ago. To get anything to the garden was through the house. Would have hated to have done any building or landscaping work if it'd been ours. You also got noise from 2 sides. Not always a choice but end of terrace would always be a preference.
What would the house rent for? That tends to put a floor under the value - one of my daughters bought a little house and she only got it as the old couple who owned it took a shine to her and refused to sell it to a BTLer. I still think she overpaid, but the BTLers hold up the values - she missed others she went after as they sweep in with cash.
If the house is too expensive then it'll be down-valued by the lender.
If the house is too expensive then it'll be down-valued by the lender.
I would think £1100 in its present state, at a purchase price of £260k that is about 5% yield. However there is a bill coming for the kitchen, bathroom and windows sometime in the next 5 years. Anyway they turned down the £240k offer. Not upping our offer, they don't seem to want to counter offer.
I think the newly house offers better value at £255/260k anyway, its end terrace. Will let you know how the house viewing goes tomorrow on that one.
I think the newly house offers better value at £255/260k anyway, its end terrace. Will let you know how the house viewing goes tomorrow on that one.
Sheepshanks said:
What would the house rent for? That tends to put a floor under the value - one of my daughters bought a little house and she only got it as the old couple who owned it took a shine to her and refused to sell it to a BTLer. I still think she overpaid, but the BTLers hold up the values - she missed others she went after as they sweep in with cash.
If the house is too expensive then it'll be down-valued by the lender.
I think the number of BTL investors circling for such properties is massively lower than it was a few years ago - more (like the vendor in the OP) are selling than buying.If the house is too expensive then it'll be down-valued by the lender.
I sold a rental 18 months ago, which would have historically attracted good interest as a BTL, but all of the interest and offers we got was from home buyers.
Cow Corner said:
I think the number of BTL investors circling for such properties is massively lower than it was a few years ago - more (like the vendor in the OP) are selling than buying.
I sold a rental 18 months ago, which would have historically attracted good interest as a BTL, but all of the interest and offers we got was from home buyers.
Every month this house sits empty is costing council tax and lost interest, roughly £1,100 a month. I sold a rental 18 months ago, which would have historically attracted good interest as a BTL, but all of the interest and offers we got was from home buyers.
lost in espace said:
Cow Corner said:
I think the number of BTL investors circling for such properties is massively lower than it was a few years ago - more (like the vendor in the OP) are selling than buying.
I sold a rental 18 months ago, which would have historically attracted good interest as a BTL, but all of the interest and offers we got was from home buyers.
Every month this house sits empty is costing council tax and lost interest, roughly £1,100 a month. I sold a rental 18 months ago, which would have historically attracted good interest as a BTL, but all of the interest and offers we got was from home buyers.
But generally, I guess we don’t know the LLs position - if they own the property outright then they might be willing to stubbornly wait it out (even if they are losing income and paying council tax) until the offers match what they believe it’s worth.
Alternatively, they might have a big mortgage to clear and can’t afford (at least in the short term) to sell it below X value (I.e they are in a negative equity trap).
Either way, like many LLs, they clearly want to get out!
lost in espace said:
Cow Corner said:
I think the number of BTL investors circling for such properties is massively lower than it was a few years ago - more (like the vendor in the OP) are selling than buying.
I sold a rental 18 months ago, which would have historically attracted good interest as a BTL, but all of the interest and offers we got was from home buyers.
Every month this house sits empty is costing council tax and lost interest, roughly £1,100 a month. I sold a rental 18 months ago, which would have historically attracted good interest as a BTL, but all of the interest and offers we got was from home buyers.
Went to view the alternative property which is another BTL being offloaded, that is 3 in the same road on of which has sold. Landlord has fully painted the house, parking outside the front, decent double glazing, dishwasher and washing machine being left, floorboards don't squeak like crazy, same silly E7 heating but no gas in street, railway right at end of the garden, a 10 minute walk into Letchworth town centre down a quiet road, nice carpets upstairs which are new, laminate downstairs, kitchen and bathroom much better, being EOT has a window on the landing.
Railway noise would be an issue for me, but my daughter says she isn't bothered. Having said that she grew up next to the A1 which was constant, this is a train every half an hour ish.
They are asking £275k and it went on the market yesterday. We have made an offer. The original property is 100ft further from the railway but mid terrace, needs about £20k of work to bring it up to the standard of this house.
Railway noise would be an issue for me, but my daughter says she isn't bothered. Having said that she grew up next to the A1 which was constant, this is a train every half an hour ish.
They are asking £275k and it went on the market yesterday. We have made an offer. The original property is 100ft further from the railway but mid terrace, needs about £20k of work to bring it up to the standard of this house.
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