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  • Property-a-holics

    Countering unrealistic asking prices

    Hi all,

    I've got several properties on my radar as being of interest, but unfortunately, even with a recent round of 'Reduced' asking prices they're still very overly optimistic. These are properties that are requiring light refurb so not quite ready to go.

    For example: property 1 - 3 bedroom semi @£475k. The highest sale price in the street was a 5 bedroom detached @£449k back in 2016. Now imho nothing has changed for the better market sentiment-wise in the last 2 years. Location is good but it's just not worth more than £410k max to me.

    Property 2: 3 bedroom semi @ £430k. Purchased in 2016 again having just been refurbed for £360k. Nothing has been done to it since, so I'm thinking £380k and they'd still be doing well out of it.

    There's several other potentials that are imho £50k over what I'd want to buy them for, and what I feel they're realistically worth now.

    So for those that chip off asking prices, other than having a mortgage arranged in principle and a visible deposit for the selling EA, how do you respectfully inform the EA (and thereby their client) that their asking price is still way out of the question? If I was JC I'd just turn up with my briefcase full of cash and it'd be job done, but unfortunately I don't think I'll be able to do that any time soon!

    I'm not talking about properties that have just come on, these have been on the market for 3-6 months.

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    I think you say what you have just said. You can’t make people sell, but if properties don’t sell then... I’d wait another month then go back with an offer “as per my feedback the market thinks the house is priced too high - I thinks it’s worth this - have you had any higher offers?”

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    Interesting thoughts, thank you.

    So you're not thinking the 'offer what it's worth to me' option is the first one to go for, and then re-visit in a months time? An offer should be better than no offers?

    Level of motivation for the seller I hope would be the key. A couple of the houses on the list are empty, which usually should be a sign of motivation, but one was last 'Reduced' back in October and still available.

    The problem is that deposit + extra stamp duty on a £400k purchase is a serious amount of £££!

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    Your last comment flags that Osborne's tax hikes are biting as desired - hence 5 out of 6 sales now go to owner occupiers.

    As always it is willing buyer/willing seller reaching mutually agreeable compromise.

    As a LL you need the deal to end up giving you a decent yield based on a fixed local rent ceiling - so in effect you are reverse extrapolating from an artificial constraint.

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    We’ve had same problem round here because of purple bricks fooking the market prices up.

    Let’s say Street A, B, C and D — 3 bed houses on these streets are £80k - have been for ages, steady rise over years from £70k. All the houses are identical.

    Now - here is the problem - Street E is a cross over street - a mix of some £80k houses - and then the rest are 3 bed houses at £95k +, because basically - they are better houses, bigger gardens, etc.

    Purple bricks valued one of these £80k houses at £95k — because of the postcode. Obviously no local knowledge - or they would see some of these cheaper houses on a street of more expensive houses, and the reason for the higher prices.

    The seller obviously wasn’t in a rush to sell - because it was on the market for ages. I tried to offer usual price for one of those houses - wouldn’t budge. They wanted the price they’d been told they could get.

    The bad thing was - next time one of these houses came up for sale - someone obviously checked rightmove to see what they were going for in the area - and next one goes up for £95k, then next one, they all seemed to copy each other.

    It was like a crazy jump of £10k on typical prices. They houses aren’t selling - but the sellers don’t want to “drop” the price - as £80k now feels low — when really - that’s what the price should be.

    The odd houses that do come on for usual price - they still sell, but these odd overpriced ones - they are throwing off the prices, and not letting prices go back right. Basically the new price has become the norm - and now the houses don’t sell.

    long story short -  unrealistic prices suck Wink

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    Binman,

    I do love a purpletricks listing, invariably the buyer will be doing the viewings and to win the listing purpletricks will have gone in way over the top. Lots of people will be put off immediately they see the price so if you go armed with your research and justify your offer the vendor will quite often realise he has been hoodwinked somewhat. It may take a few weeks but often they come back and they start to feel bitter that they paid up-front and are not getting much support from their agent, the fee they have paid up-front is often as much of a bone of contention as the price so we often offer to pay their legals to counter this a little. This coupled with the fact we are cash buyers and complete in 21days means we often get the deal.

    Adam_

    The above still applied to your comment but invariable you are probably dealing with a proper agent and if you arent careful going in with a low offer will get you classified as a timewaster, particularly if you do it several times. If you do your research though and provide an offer with sound comparables and reasoning for your offer, they have a proper basis to put your offer to the vendor. It isnt uncommon for the sale price to be the vendors valuation, often if its a deceased estate and 4 beneficiaries it will be a round figure like £400k because they have all decided they want £100k each. Put your offer in with the justification and put a time limit on it, the agent If he thinks you are credible will fight your corner and If you dont get this deal you will be in good stead with him for the next one.  Good luck,

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    Phil Stewardson.

    Stewardson Properties.

    Stewardson Developments Ltd.

    Burson Land Ltd. & Jennings & Gilchreaste Ltd.

    http://www.stewardson.co.uk

    Follow me on twitter - @philstewardson


    I don’t think it matters what people ask. You will always get some buyers who have settled on a number and won’t sell. The trick has always been finding the motivated seller...

    I like properties that sit around and get discounted - by the time the buyer has woken up they are so caught up in negativity they don’t realise when an offer is realistic or cheeky - time is a great pressure factor. If people have kids to move school, care bills to pay, a divorce to sort out, a home they want to move to etc etc rational thought gets thrown out. A seller who has the house in at a reasonable price and no emotional tie to their ‘new life’ will not be moved.

    Like poker - play the opponent first and then the cards...

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    Those sellers are not motivated enough - yet. To buy below market value you have to play the numbers and time game.

    Look at at least 20 properties and you will already sense during the viewing whether a seller is motivated or not. Ask a lot of questions, get in their good books. Regardless of the asking price just put in the offer that makes sense to you and offer something in return, eg 45 day completion or they can stay in the house until they find another one, whatever they need, if they decline make a note of it and call/email them again in 30days.

    Keep following up and don’t dwell on those that don’t accept.

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    Or maybe just have a look at the area next to this one, prices may be less there

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