Strategy for bidding below asking price

whatawaster · 02-12-2022 11:23am #1

Hi,

We are currently looking at a detached property, built in the 1950's, and in need of lots of renovation and redecoration (new kitchen, new floors, new windows and doors at the very least). It is priced at 400k. Our budget is 450k but that includes any works we can do to the property.

The property has been on the market for over 2 months. No offers.

We really love the house, it has a very large (but overgrown) south facing garden. Could see ourselves here forever, etc.

We want to make a bid and we are not prepared to pay the asking price. Just wondering, in today's market, how low is too low, while still being taken seriously?

Was thinking 10% below asking, so €360k. We have some flexibility to go higher than this, but thinking of this as a starting point.

Any advice would be appreciated.

Thanks

Mr Hindley · 02-12-2022 11:28am

It's going to be hugely variable depending on the market, individual property etc., but a starting point of 10% below doesn't seem crazy. Any lower than that, and I'd say your offer will just be disregarded out of hand and won't be seen as serious. But you could start at 10% below, run on the assumption that they're not going to accept it straight away, and then either leave it on the table and wait, hoping that they'll gradually lower their expectations over the coming weeks if no other offers come in. Or use it to trigger a conversation now around 'what figure would they accept to take the property off the market'.

I'm in a similar boat myself and am about to go in at 10% below, so can let you know how that goes down..!

WealthyB · 02-12-2022 11:35am

The maths don't make sense. The asking is 400k, your budget is 450k incl works and your underbid is 460k?

Eitherway I think this house is out of your budget, unless you plan on doing those renovations over years. Even then, the house might need going back to the bare brick and require damp proofing, insulating, re-plumbing, rewiring, a new heating system.. Now add the cost of your new kitchen, replacing all windows with triple glazing, new doors, and a minimum of 10% contingency on top of all this for the unexpected (and there will be unexpected additional costs)...

You could put in a lowball bid stating that you want a quick sale with everything wrapped up in 12-16 weeks; but the fact there's no offers after 2 months - in this market - suggests surveys have already been done and there's something making any prospective bidders run away.

ELM327 · 02-12-2022 11:40am

I went to see a house I knew was on the market for months. Lovely house frame, massive 6 bed with 4 car garage but was not decorated well and the garden was overgrown. Listed at 305, I bid 280 (kindof as a joke really, as I called it, a PFO offer, if they take it it's super low. Property was in a different area totally to where we were looking) and we settled on 290. I'm here about 6 months now.

Strategy: bid what you think it's worth. It will either be accepted or it wont

Allinall · 02-12-2022 11:44am

https://www.boards.ie/discussion/comment/119947853#Comment_119947853

Think it was a typo.

OP is thinking of offering €360k (10% below €400k).

OP- don't be afraid to go in as low as you want. All that can happen is your offer is refused. It might get the vendors to give an indication of what they might accept.

callaway92 · 02-12-2022 11:45am

https://www.boards.ie/discussion/comment/119947853#Comment_119947853

In fairness I think the underbid was a clear typo. 10% of 400k is 40k. So they obviously meant €360,000 as a starting bid, which I think OP is very reasonable to do

whatawaster · 02-12-2022 11:53am

https://www.boards.ie/discussion/comment/119947853#Comment_119947853

Sorry, meant to say €360k! Edited now

Kurooi · 02-12-2022 11:53am

You can underbid and win by being prepared to walk away. If you were to say put a 360k bid the agent might even recommend they take your offer or at least get back and negotiate. Only on the basis that the property has been sitting on the market and there isn't anyone else fighting you for it. You can likewise after the engineer's survey negotiate some price down.

+1 on WealthyBs comment regarding the surveys, it is highly unusual to see a property sit right now unless maybe it's far out in the country.

And don't underestimate the cost of renovations you will uncover stuff you don't see and everything costs double now. Not to scare you off, just be realistic and really sit down with the engineer digest every point they have for you.

whatawaster · 02-12-2022 12:03pm

https://www.boards.ie/discussion/comment/119947853#Comment_119947853

Thanks for the response.

You may be right, the house might be out of our budget even with a below asking price bid. We will see what the survey throws up if we get to that stage.

We are willing to just do some of the work up front and do the rest over the next few years. I think if we could get the kitchen/dining layout sorted (which may require a small extension / walls being knocked) we would be happy to live with everything else.

whatawaster · 02-12-2022 12:14pm

Would it be typical for prospective buyers to order surveys before going sale agreed? Would it therefore be likely anyone has had a survey done at this point?

ELM327 · 02-12-2022 12:27pm

https://www.boards.ie/discussion/comment/119948040#Comment_119948040

No, we ordered a survey only after going sale agreed. Purely on cost reasons as each one was 500-700 quid.

o1s1n · 02-12-2022 12:34pm

If there are no offers and your starting bid isn't low enough to have a high probability of being initially rejected then you're not going in low enough.

Remember, you can always go higher if they reject your bid. If you immediately go in higher, than you are missing out on the opportunity of them being willing to close at a lower bid.

whatawaster · 02-12-2022 12:41pm

Thanks for all the comments. Great advice.

My next question would be what we do if and when our initial bid is rejected.

Do we, under any circumstances, bid against ourselves?

Say we offer 360k, it is rejected, and there are still no other bidders. Sit tight at 360k or edge up to our maximum.

Mr Hindley · 02-12-2022 12:45pm

Maybe sit at 360 for a couple of weeks to see if they budge, before you consider coming back with a higher offer, and negotiating from there? Accepting the risk that someone else might take an interest in that property during that time.

o1s1n · 02-12-2022 12:50pm

Depends entirely on how urgently you need a house/how long you are willing to wait and how in demand the area is.

If there's no action on it at all and you are happy to wait then you can just sit on the 360k. They might crack after a wait and come back to you or they might be happy to sit on it for years - you just don't know really!

If it were me and I were in your situation, I'd stick in 360k to just get a general feel as to how they react and sit on it for a bit. They might eventually come back with a counter offer under asking. They might tell you to piss off.

If that goes on for too long and there's no movement then go back with a 370k offer.

Try to make it sound like this is as high as you are willing to go each time. Dont want them thinking you've a huge bank of cash you're sitting on.

Claw Hammer · 02-12-2022 1:37pm

Asking price is just a starting point. If it 20% too high to being with you end up paying about 9% more than the property is worth. You have to work out what the market value of the property is and then try to get itr a the lower end of the range. After that, make an offer, let them tell you go bugger. After a month go back with a better offer.

Kurooi · 02-12-2022 6:06pm

https://www.boards.ie/discussion/comment/119948040#Comment_119948040

Usually you do the survey right after they accept your bid. Say within a week , mind that the engineer will also take a day or two to write up the report. It is not in the interest of either side to waste time, and the agent may be reluctant to declare the house 'Sale Agreed' until you're happy with the findings.

https://www.boards.ie/discussion/comment/119948172#Comment_119948172

I'd go back to being prepared to let it go. If the agent responds saying 'Look the seller just wanted a little more' - that's a brilliant sign. they're asking you to negotiate. Your interest was met with a positive response.

I'd probably respond 'I can make it 10k extra if you accept it before next Friday, I'm in bidding process for another property and would like to close as soon as possible, interest rates are going up I'm not going to be waiting around'

If the agent plays hard "Must come in over asking, won't accept bid, not serious" that sort of talk well if there is no other interest in the coming weeks they will crawl back to you and ask if you're still looking. Or they might get a buyer or the owner gets annoyed and pulls the place off market and you won't hear again. Regardless you ask about how to bid under , that's how - you draw a line in the sand and stand your ground, and you recognize the fact that this puts you in a position where you're likely to not get the place.

herbalplants · 02-12-2022 7:26pm

You got great responses above. Definitely go for it at 360k not a penny more. Let them sit on it, don't offer more. They won't accept straight away.

Depends a lot on the vendor circumstances. They may have plenty of money and glad to offload this house.

whatawaster · 02-12-2022 7:35pm

Have bid 360k and will update here if and when I get some feedback. Agent just said they will take it to the seller.

walterking · 02-12-2022 7:42pm

Been there twice.

1 Work out what you think it would get if it was in very good condition. Let's say €500k

2 Get someone to give you a rough cost of renovation to the 500k standard

3 Add 25% to that estimated cost.

4 Deduct the combination of the renovation cost+ the extra 25% from the value you think a good condition version is worth

That is your max limit and your opening bid should be about 8% below this.

So let's say works are 100k incl vat then use 125k for your calculations. Deduct from the "as new" estimate and you are max 375k

I'd start at 350k especially if it needs a lot of work

02-12-2022 11:22pm

I bought a house earlier this years, I was prepared to pay the asking, and more, but bid 50k under.

Ended up settling with the vendor for 25k under the asking.

It all depends on what the vendor is willing to accept, and the level of interest in the house. Each case is different, 2 other houses I bid the asking but was outbid.

Marcusm · 03-12-2022 1:09am

https://www.boards.ie/discussion/comment/119948040#Comment_119948040

In your case you need to understand what work needs to be done and that needs to figure into your bid. Even the 90k you propose to “hold back” wouldn’t do that much on a 1950s house if it needed windows, a kitchen, insulation and bathrooms.

03-12-2022 10:12am

Don't underestimate the cost of work needed.

I have seen a huge increase in the last four years when I renovated my previous house

Dante · 03-12-2022 3:27pm

https://www.boards.ie/discussion/comment/119949799#Comment_119949799

Thats where I am at the moment. I offered asking price on a house and the estate agent called me saying the seller wants up to 60k over asking (which is a complete piss take). He said there is room to negotiate but it would have to be well over asking. Is this basically the agent trying to squeeze more money out of me?

Oscar_Madison · 03-12-2022 3:39pm

In terms of bidding against yourself:

Ive done it the past and got what I wanted and have no regrets- it was at a time when market was only coming out proper from recession- I upped my bid by 5000 euro on basis the house went sale agreed and advertising and viewings stopped. I made about 70k by selling the property on 5 years later.
If that’s not possible then state you’re still interested in the house but you’ll await further offers and are well placed to continue bidding- and do phone the estate agent a week or so later to see what news there is

You’ll never know the real reason for the sale but 400k for something that needs a lot of work should be in a fairly good area, good transport schools shopping etc ? Remember, in excellent condition this should be a 550k house or more- do you see that? If it’s not, this might be why no takers so far- so do check its location location location - that’s all that really matters. If you’re happy it’s in an area commensurate with the asking price albeit a bit more than it should be them I wouldn’t at all feel bad about putting in an offer 15% lower.

Mr Hindley · 03-12-2022 3:50pm

Just to share experience - I've just put in a bid 10% below asking on a property; agent came back pretty quickly saying no, used the phrase 'the vendor just can't make the figures work at that price... is there a bit more in the pot on your side?' I prodded the agent for guidance who implied that somewhere ~halfway between my bid and the asking price would seal the deal. That's higher than I think the property is worth, so am planning on sticking where I am for a little bit, say that I'm viewing other properties, before I come back with something a bit higher.

pinksoir · 03-12-2022 4:16pm

https://www.boards.ie/discussion/comment/119952599#Comment_119952599

I know this is the world we're in and all, but this kind of carry on is absurd. Why do we need to play guessing games with asking prices? In no other market for goods that I'm aware of do we list items for significantly less than what we want to sell them for, with the understanding that people will contact us and then we'll have to tell them that the price actually isn't the price, but the actual price is something else.

Fucking list it at a price you'd be most happy to get for it and go from there.

It's like some bizarre social more that we all just go along with lol.

Dante · 03-12-2022 4:26pm

https://www.boards.ie/discussion/comment/119952731#Comment_119952731

Yeah it really is bullshit to be honest. Even the agent said they won't get near what they are now looking for. I'm considering another bid slightly above asking and telling them to take it or leave it. I have no interest in getting involved in that nonsense.

Dav010 · 03-12-2022 10:52pm

https://www.boards.ie/discussion/comment/119952731#Comment_119952731

You have never heard of an auction?

The price a seller is willing to sell for is usually the maximum value the market puts on a property, how do they find out what that value is? By letting people bid on it.

Why is this so fuucking hard for people to understand? When you sell your house, you won’t want to sell it for an arbitrary price some EA puts on it if someone is willing to pay more than that.

Mandzhalas · 04-12-2022 6:36pm

We seen house for sale middle of nowhere asking for 385. On the market for couple of months, no viewings no offers, but house worth that money.

Viewed and offered 365 on Friday. We were willing to pay asking, but wanted to get irmt cheaper.

Buyer thought about until Monday and said that they not willing to accept 365, no counter offer. We immediately offered 380 and offer got accepted right away.

walterking · 04-12-2022 6:56pm

https://www.boards.ie/discussion/comment/119952599#Comment_119952599

In a case like this just tell the agent "thank you" but you'll move on.

This lowball asking price and not willing to negotiate unless its substantially over should be outlawed. It is not permitted if you are selling at auction, so it should not be permitted in a private sale either

Strategy for bidding below asking price

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