Revising a "walkaway figure".

Drakon

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I've read it on this forum, and elsewhere, and heard it given as advice, that a prospective house buyer should set a "walkaway figure" on every property before the first offer is being submitted. This figure is the maximum that the buyer is willing to pay for that property. The purpose of it is to prevent the buyer continuously submitting further and further bids well beyond what was originally intended, i.e. setting a limit in advance.

However, I've discovered a flaw with this.

I put an offer on a house last May. The asking price (POA) was €300k. Based on Daft, PPR, rebuild costs, et cetera, I estimated the house to be worth about €250k. My wife arrived at a similar figure and a friend who is an architect but not familiar with the area came up with €280. We set our walkaway figure at €255k, then submitted our first offer at €225.

Three further offers have us up to €238,850; the seller is at €280k. In the meantime we've started looking at other houses. However, we've come to realise that the quality of the other houses is quiet poor. Housing estates that we thought were of better quality (than others), aren't that much better. Other houses look fine on the web or even during a drive-by; but when you're in the property this isn't the case.

Given that we based our walkaway figure partially on other houses in the area, (the asking prices or sale prices), we've decided that our walkaway figure was actually short of the mark.

My wife has suggested revising it upward by €10k; I think it should probably be increase by up to twice that. I am interested to know if other members have had a similar experience, or what other members' thoughts are.

Thanks.
 
However, we've come to realise that the quality of the other houses is quiet poor. Housing estates that we thought were of better quality (than others), aren't that much better. Other houses look fine on the web or even during a drive-by; but when you're in the property this isn't the case.

Given that we based our walkaway figure partially on other houses in the area, (the asking prices or sale prices), we've decided that our walkaway figure was actually short of the mark.
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You set that walkaway figure in May. Now three months later, prices may have increased in your area. You also have additional information. So you may well have to increase your offer.

There is no point in setting a walkaway figure a lot lower than the property is really worth.
 
I've read it on this forum, and elsewhere, and heard it given as advice, that a prospective house buyer should set a "walkaway figure" on every property before the first offer is being submitted. This figure is the maximum that the buyer is willing to pay for that property. The purpose of it is to prevent the buyer continuously submitting further and further bids well beyond what was originally intended, i.e. setting a limit in advance.

However, I've discovered a flaw with this.

.

The flaw is in the valuation criteria and methodology you have used to set the walkaway, especially in a frothy rising market.
The idea is not flawed, it is in many cases the only prudent approach, especially at auctions.
 
Sorry, one thing I forgot to mention, I've been looking in a rural area. The property market hasn't bottomed out yet.
To take Daft as a barometer, of the handful of properties that have had a price change, only one of these has increased in price.
 
Not sure I understand. There are currently bids in at €238k. Your walk away price is €255k so you are nowhere near your current walk away amount. If you think the house is potentially worth more than €270k, why don't you offer the €255k and then make a decision if you want to walk away.
 
The advice usually given is to choose a walkaway figure and rigidly stick to it. But in my scenario I realise that I'd set it too low. In which case it's necessary to revise it.
Other posters have pointed out that in a riding market it should also be revised.
Maybe it should only be rigid in a static market? In a rising ( and maybe falling?) market it should move with the market. If the market has increasing by 1pc per month, then so should the walkaway figure?

...why don't you offer the €255k and then make a decision if you want to walk away.
Because I'm haggling to get the lowest price I can. I'd prefer to pay €238k than €255k or €300k.
 
The walkaway figure is what is this particular house is worth to you having considered affordability, market research and individual requirements having seen the house.
Some similar houses are 'worth' more to you because they are in a better location or serve your individual purposes more.
We upped our walkaway figure for the house we eventually bought because it had a big garden and was in a cul de sac with a green area that was safe for kids to play in. I wrestled doubts about having paid too much for it, but when the kids went straight outside to play with the other kids the first day we moved in, that was worth the extra 20k.
Don't lose a house that you can afford and would really suit you over trying to stick to a rule. The walkaway figure is really to help people to really think about what they can afford, and not be upping their bids every hour like we used to see pre-2006. Make sure and go back and see the house again if you are going to bid more.
 
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