Negotiating with EA - what to offer?

Lothaar

Registered User
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Hi,
I recently posted about whether to sell/rent or sell/buy. We've decided to try selling and buying. Now, a lot of things have to work out for us to move, such as getting an acceptable offer on our house and getting the new house for an affordable price.

We have not got mortgage approval, but were told by someone in the bank that "it shouldn't be a problem". We're pushing ahead anyway, in the hope we get it. (Should we wait?)

Anyway...

This house has been on the market for about a year - it's in ill repair and will require a major (costly) overhaul. Asking price has been 220K since March. EA says an offer of 180K was refused, but they wouldn't sell for less than 210.

What's my play? :)
 
Only you know the answer to this question.

IMO your play depends on how much you can afford. Ask yourself the following questions:
a) How much will you get for your property – go with the price that you will need to shift it, ie a price lower than any comparable property on your road / in your area.
b) How much will the repairs / overhaul on the new house cost? Could you get a builder in there to estimate this for you?
c) What new mortgage level and monthly repayments are you comfortable with?

Based on these questions you should be able to come up with some sort of price that works for you – that then becomes your maximum bid.
If they have already turned down 180k then obviously you need to go in above that. I would go at less than 210K – it has been sitting there at that price for a while now so the vendors are obviously beginning to realise that the market thinks that is too high.
Logically, I’d probably look at offering 192K and hope to get it at 195k, but as I said at the start, only you know what it’s truly worth to you and what you can pay…
Remember it's not just a house - it's a home and only you know that value.
 
I do have an idea of what we can afford... which isn't much, to be honest!

I guess the question is: should I believe that the other offer is real? If I start the negotiation process by offering above the 180K mark, then I could end up reaching my walk-away figure pretty quickly.

Since I know my walk-away figure, I'd like to negotiate in the hope I can get a good deal on the house.

I don't have much experience with negotiating, though.

If they have already turned down 180k then obviously you need to go in above that.

That was my original thought... then I thought about potential 'ghost bidders'.
 
Why are you thinking about bidding on a house when you have not got your own property up for sale, you don't know how much you can afford as you don't know how much you will have, nor do you know you can sell, and you don't know how much a bank will give you?

As far as I know Estate Agents want to know if people are genuine, are not in a chain (selling) and have mortgage approval in writing.

Don't worry about ghost bidders. You bid what you feel comfortable with and if the estate agent says no, there will always be another house.
 
We put our house up for sale last week. We do know how much we'll have, as we know the minimum amount we'll sell our house for (any less and we can't cover the negative equity). We'll either sell for that minimum amount (hopefully more) or we won't sell. That amount is a fair bit under the going rate for our area, though.

So, yep... we're in a chain. Should that stop us from bidding?
 
The current best advice is not to bid. You are just wasting everybodies time and putting pressure on yourself. And the times we live in, even if you have a purchaser who has signed a contract, it's meaningless, untilyou have the full purchase monies in your account and that money is cleared.
 
Hi,

I'm in the same situation as yourself - selling to buy... At the start was all enthusiastic & looking at properties that we liked - found a few places that we were very excited about - we had mortgage approval (subject to selling) so started the ball rolling... made an offer on one of those places, then other bidder appeared.. we didn't know what we could go to as our own place was attracting interest... but nothing concrete... so we pulled out... that place was sold about 5 weeks later... Our place is still up for sale...

Guess what I am saying is that there is stress associated with all this ... & at times, stress for nothing, as Bronte says.. "putting pressure" on yourself... When you have money in your back pocket, you are in a MUCH stronger position to buy... House prices won't be going up in the short term, so if you can't "find that special" place if /when you sell your place, then rent for a few months, in the area you want to move to... A house will come along that you want to call home...
 
I also agree with Bronte - maybe best to wait till you've sold your own place and got the money.
Otherwise you are going to put yourself under alot of pressure in relation to things you can't influence.
 
Sorry, I'm a noob at this game :) I'm not sure I understand how I'd be 'putting pressure' on myself.

I'll give a little more background... our house is in negative equity. We have a bit of savings, which we plan to use to cover the negative equity and a deposit on a new home.

We took the remaining amount left on our mortgage and subtracted our (savings minus deposit). This gives us the minimum amount we can afford to sell our house for. That minimum amount is about 25% less than the asking price for similar houses in the area, so I feel there's a good chance we'll sell.

If we can't sell for that amount... we can't sell. We'll have to sit tight and save up what we can to offset any further drop in the price of the house.

But, if we DO sell... then we know how much we can afford. We'll basically have bought ourselves out of negative equity, with enough left for a deposit.

By the way, our mortgage approval letter was waiting for me when I got home last night! It's subject to selling, though.

My initial plan (before reading the advice here!) was to make an offer on the basis that I know what I can afford IF my house sells at greater than or equal to our minimum amount.

What am I missing?
 
The problem here is that you are not actually mortgage approved. i.e. you have to wait until you have sold your own house and redeemed your existing mortgage before you are. No estate agent should be taking an offer from you until you are mortgage approved.
 
'What am I missing?'

you're missing a concrete offer, so therefore you won't be entertained. You can make an offer without something to back it up. Even if the EA accepted your bid, the house would stay on the market until someone that could close the deal came online.
If you just concentrate on selling your own first, get mortgage approval and then you are in a better position to negotiate, because you will have what the vendor wants, money.
 
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