House prices - specifically 'Offers Over'

MidlandsGrimpeur2

Currently looking at a new house.

Seeing increasing number of 'offers over' houses in my area, which I guess may well be due to the market cooling off and vendors trying to cautiously test what potential buyers may be willing to pay.

I know each vendor will be different and there is no straight answer to this, but interested in general experiences in relation to a few main points.

1) Do vendors doing this have a baseline figure they would accept (in which case, why not just give an asking price)?
2) What % above the base price do houses generally achieve in this instance? My thought is around 5% as anything above and surely you would list it at a higher price i.e. if you put offers over £350k and actually wanted £380k you would surely start off at £370k or thereabouts.
3) If you really want the house is it worth going in under the list price with the view to negotiating up if needed?

webboo

When we selling our house, one of the estate agents recommended this approach. They suggested that offers over price was actually lower than what they thought the house was worth and what we eventually get. They idea is that potential purchasers start a biding war.
On the 2 occasions with different estate agents this was suggested we went with different agents.
I can see how this works in areas of high demand for houses but where the market is slower you could get an offer just over the offers over price and then what do you do.
When we have bought houses and we have bought a fair few. My missus always goes in below the asking price and takes it from there.

monkimark

I am currently looking to buy a house and the last two I have put offers in were bid on by multiple people, followed by 'best and final' offers a few days later where I'm guessing everyone offered above the asking price.
At that point, the highest bid wins so no more negotiating upward. I missed out on both but we were offering 3% ish more so I guess the 5% figure is reasonable (although the winner may have gone in at 50% more for all I know, i get the impression we were pretty close)

I had a few offers on mine and we just picked the best one, I think the estate agent possibly did a bit of negotiating prior to me getting the offers but there was no more back and forth after that so going in low may be a risk if there are other offers on the table.

twotoebenny

this is how they sell houses in Scotland - with a view to achieving as much as possible... IME there isn't generally a % above, its almost trial and error and some vendors will come back and ask for more! Market of late has been crazy with houses being bought tens of thousands above valuation.
If you really want the house in Scotland you basically put in your best bid and cross your fingers.

Stevo_666

I've not come across it before in my own house buying or selling, but seems to be not uncommon. I guess a key point is what the amount is that the seller want more than and where that sits in relation to what buyers see as the fair market value.

The danger of putting a bid under the amount is that you get knoocked straight into touch for not answering the exam question - especially if you're not the only offer and the stated amount isn't well over the FMV.

One other point not related to price which worked our advantage back in 2021 when we bought our current place and the market here was hot - quite a few sellers prefer cash buyers for obvious reasons, or buyer who already have their own houses under offer. We had one purchase fall through as the seller decided they didn't want to sell after all, but after we had all the survey and legal prep done - basically we were a week away from exchanging. Luckily the buyers of our house were not selling their place and were happy to wait for us to find somewhere else. So went back looking and saw a house come on the market about a week later (normal asking price type arrangement and not 'offers over') which we really liked - the estate agent had something like 25 viewings lined up so decided to put in an offer a bit below asking price but not cheeky, expecting to have to make a better offer in the next round of what looked like an almost certain bidding war. Next day we had our offer accepted - turns out we were the closest to a cash buyer and the sellers were already committed to a the purchase of their new place, but had to re-market their house as the chain had collapsed. So naturally they wanted to avoid having to take bridging loans and the stamp duty double whammy that would both come with them owning 2 properties at the same time. And here we are...not sure if that helps you but thought I'd put it out there.

MidlandsGrimpeur2

Thanks for the comments so far, some interesting things to consider.

@Stevo_666 agree that anything under offer comes with a risk of being excluded from the process.

We are chain free and in a good position which I think does add weight to any offer we may put forward on a house (although we have put in offers before and EA's tend to claim that they miraculously have loads of other buyers who happen to be in the same position!).

I think what Webboo has said appears to be the EA approach, market it at a lower value than the home survey and hope to encourage bids to get to or above this value. Risky for the seller but could work out in your favour as a buyer if you have no other bidders to compete with.

I think a combination of the above might be the best way forward. Work out what we are actually prepared to pay for a given house and take it from there. If you believe the price listed is fair and would maybe go a bit higher, maybe start a fraction lower so as not to exclude yourself and then be prepared to go to your best offer if needed and no more.

I think trying to second guess what may be accepted and offer based on this, is probably going to lead to an offer above what you are really comfortable or just the possibility of overpaying unnecessarily.

Dorset_Boy

Being a cash purchaser is the best situation to be in.
Followed by your house under offer with no or minimal chain.

A good agent will ensure the seller understands that the highest offer is not always the best offer. How 'proceedable' you are is a really important factor.

in a hot market, you won't even get a viewing if you are not immediately proceedable.

DeVlaeminck

My daughter is currently buying a house - some that were asking for offers over were subsequently reduced - others sold for substantially over. I suspect it may be used for different reasons.

webboo

The last 4 houses we have bought we have managed to buy at below the asking price. I can’t remember about the ones before that. All different types property.
Newly renovated ( badly) 300 hundred year old house that hadn’t been lived for 50 years in small village
Modern 4 bedroomed house on small development in small village.
2 bedroomed 150 year old cottage in need renovation in small market town.
Modern 3 bedroomed house in small village. Came with its own sauna.

MidlandsGrimpeur2

@DeVlaeminck I agree, I am sure there are a variety of different reasons behind it. That is why I think there is no point trying to second guess the vendor. If we like a house, decide on a price we are happy with and offer based around that. If we get it great, and if not then so be it.

@webboo there are definitely now opportunities to get under asking price round here. 12 months ago you had no chance, anything reasonable was going in 2-3 days and above asking price. Things have definitely slowed, houses hanging around unsold for 3 months and over is now common. Anything that needs work is slow to sell as people cannot afford to have extra work done (or want to risk price fluctuations of materials and tradesmen).

We went to view a house a few weeks ago, the owners had originally listed it a year back and sold it above asking within a few days. They then changed their mind and decided not to sell. They put it back on a few weeks ago and have had lots of viewers but no offers (as it is priced for the market in 2022 not the current market IMO).

monkimark

The list prices of some houses seem to be completely random. We got sent two last houses last month, both very similar sizes, bedrooms, very close locations but one was finished to a high spec, the other was very dated and needed new kitchen and bathrooms including a bit of structural work to get a decent sized kitched yet was priced £70k higher.

DeVlaeminck said:

My daughter is currently buying a house - some that were asking for offers over were subsequently reduced - others sold for substantially over. I suspect it may be used for different reasons.

wavefront

twotoebenny said:

this is how they sell houses in Scotland - with a view to achieving as much as possible... IME there isn't generally a % above, its almost trial and error and some vendors will come back and ask for more! Market of late has been crazy with houses being bought tens of thousands above valuation.
If you really want the house in Scotland you basically put in your best bid and cross your fingers.

I’d use this as a basis - pay what it is worth to YOU. If you really want it, there’s no reasons why you don’t put in a high offer to secure the place. Only if you can afford it mind.

When we bought our place last year in the Cairngorms, we put in 10% over, and got the place despite 5 others bidding. But I’d never want to know what the next bid was as I’m more than happy and have the place of my dreams. A friend was buying similar time , and they were lost out a few times, where it transpires the winning bids were over 20% more and one place had more than 30 notes of interest. Two years ago the market was hot!

So, go for what YOU think it’s worth to YOU.

MidlandsGrimpeur2

So, go for what YOU think it’s worth to YOU.

Yeah, I think this is the right approach. As I said above thread if someone else outbids us on a particular house then so be it.

Main reason I ask is that we are viewing a house in a few days which is OIEO. Not the same house but a near identical one a few doors down came up a few years ago which I loved but was over budget. This one is within budget now and I suspect we will be making an offer on it (unless it looks/feels completely different in person).

Stevo_666

Dorset_Boy said:

Being a cash purchaser is the best situation to be in.
Followed by your house under offer with no or minimal chain.

A good agent will ensure the seller understands that the highest offer is not always the best offer. How 'proceedable' you are is a really important factor.

in a hot market, you won't even get a viewing if you are not immediately proceedable.

That is essentially how we got the house that we now live in - we were the most proceedable offer (not sure if we were the best). My post above said it in a more long-winded way.

MidlandsGrimpeur2

Just to update. This went to best and final offers and we missed out. Someone put in a daft, way over the odds offer, which was always my worry when it went to final bids.

Did the right thing though, decided on our limit and stuck to it.

Got the impression the EA isn't that confident in the offer actually going through. We'll see what happens.

monkimark

We had one last week, put in a offer at asking price, fully expecting it to go to 'best and final'.
It never did because someone put in such a ridiculous offer that it was accepted on the spot (there were quite a few other offers on the table as well). I got the impression from the agent that it was around the £100k more than asking price!
They must have been really desperate, a very similar place with an extra bedroom and generally much nicer went for way less a few weeks back.

MidlandsGrimpeur2

£100k over! The thing that annoys me with stupid offers like that is they skew market prices. Once an agent sells at a daft price like that it sets a new market value and pushes everything up.

Stevo_666

monkimark said:

We had one last week, put in a offer at asking price, fully expecting it to go to 'best and final'.
It never did because someone put in such a ridiculous offer that it was accepted on the spot (there were quite a few other offers on the table as well). I got the impression from the agent that it was around the £100k more than asking price!
They must have been really desperate, a very similar place with an extra bedroom and generally much nicer went for way less a few weeks back.

Whereabouts was that out of interest?

wavefront

MidlandsGrimpeur2 said:

Just to update. This went to best and final offers and we missed out. Someone put in a daft, way over the odds offer, which was always my worry when it went to final bids.

Did the right thing though, decided on our limit and stuck to it.

Got the impression the EA isn't that confident in the offer actually going through. We'll see what happens.

Well done with sticking to your own limit. It sucks that you didn’t get the place. Wait a while tho…..

On one of our moves we made an offer at asking, on condition the house was taken off the market immediately. It was accepted but then a day later we were gazumped by another higher bidder. Imagine our delight a week later when we found out (purely by accident from another agent we’d made a good impression on!) that the gazumping buyers were now asking to view other properties. We sensed they’d bid more than they could actually afford and we waited. And waited. Then we nudged the original agent to say we’d heard on the grapevine the buyers weren’t serious. A frantic call then ensured from the agent to the buyers and they came clean they’d bid too high and pulled out.

We were then asked if we were still interested. We said not at asking price with all the games that had been played and made a reduced offer. They accepted!!!!!

Hoping you get a call like that soon!

MidlandsGrimpeur2

Cheers @wavefront. I have heard of a few similar instances of people over bidding and then pulling out. I am not going to get carried away and too hopeful but you never know how these things may pan out.

Would be great if we ended up in a similar situation to yours, glad it worked out for you. The EA actually asked if we would still be interested in keeping our offer open "should things not work out" with the accepted offer. Hence my impression they weren't convinced by the offer that was accepted.

pblakeney

MidlandsGrimpeur2 said:

Cheers @wavefront. I have heard of a few similar instances of people over bidding and then pulling out. I am not going to get carried away and too hopeful but you never know how these things may pan out.

Would be great if we ended up in a similar situation to yours, glad it worked out for you. The EA actually asked if we would still be interested in keeping our offer open "should things not work out" with the accepted offer. Hence my impression they weren't convinced by the offer that was accepted.

I'd be tempted to say with a 1% discount for every week wasted.

monkimark

Stevo_666 said:

monkimark said:

We had one last week, put in a offer at asking price, fully expecting it to go to 'best and final'.
It never did because someone put in such a ridiculous offer that it was accepted on the spot (there were quite a few other offers on the table as well). I got the impression from the agent that it was around the £100k more than asking price!
They must have been really desperate, a very similar place with an extra bedroom and generally much nicer went for way less a few weeks back.

Whereabouts was that out of interest?

Near Epsom.

I was discussing house prices with my dad (who lives back in Lancashire) and his jaw nearly hit the floor.

Stevo_666

monkimark said:

Stevo_666 said:

monkimark said:

We had one last week, put in a offer at asking price, fully expecting it to go to 'best and final'.
It never did because someone put in such a ridiculous offer that it was accepted on the spot (there were quite a few other offers on the table as well). I got the impression from the agent that it was around the £100k more than asking price!
They must have been really desperate, a very similar place with an extra bedroom and generally much nicer went for way less a few weeks back.

Whereabouts was that out of interest?

Near Epsom.

I was discussing house prices with my dad (who lives back in Lancashire) and his jaw nearly hit the floor.

Ah Surrey - makes sense. Mate of mine lives in Epsom, not cheap.

Tashman

Prices in general are utterly ridiculous. There's no way I'd be able to afford my current house now.

DeVlaeminck

Our first house was £32k, a small 3 bed townhouse in Leicester. I was just going to type I bet they are in the region of £150k now but thought I'd Google - one a couple of doors up the same but with a small extension to the kitchen just sold for £250k !!

https://www.rightmove.co.uk/house-prices/details/england-110177609-14990620?s=676ba6b6a04bd1bb360e5152adbe29187cc4cf973f3da4175cd2a7746e6bac64#/

rick_chasey

Tashman said:

Prices in general are utterly ridiculous. There's no way I'd be able to afford my current house now.

Only going one way

Tashman

rick_chasey said:

Tashman said:

Prices in general are utterly ridiculous. There's no way I'd be able to afford my current house now.

Only going one way

Indeed, feel very fortunate that we were able to clear the mortgage yesterday! 19 years and its gone from £182k to £480k apparently. It's nothing special either

veronese68

Tashman said:

rick_chasey said:

Tashman said:

Prices in general are utterly ridiculous. There's no way I'd be able to afford my current house now.

Only going one way

Indeed, feel very fortunate that we were able to clear the mortgage yesterday! 19 years and its gone from £182k to £480k apparently. It's nothing special either

We've been in ours a little over 25 years now, remortgaged to have a load of work done some years back but it should be paid off soon. Haven't had it valued but we paid £103k, certainly couldn't afford it now. This made me look at what the house that's being built on the plot my parents house was is up for, £4.55m! That's insane.

Tashman

veronese68 said:

Tashman said:

rick_chasey said:

Tashman said:

Prices in general are utterly ridiculous. There's no way I'd be able to afford my current house now.

Only going one way

Indeed, feel very fortunate that we were able to clear the mortgage yesterday! 19 years and its gone from £182k to £480k apparently. It's nothing special either

We've been in ours a little over 25 years now, remortgaged to have a load of work done some years back but it should be paid off soon. Haven't had it valued but we paid £103k, certainly couldn't afford it now. This made me look at what the house that's being built on the plot my parents house was is up for, £4.55m! That's insane.

It's bananas really, we extended 14 years ago getting more living space and an extra bedroom but the market should mean that we should be able to buy something comparable at least when earning more. We're not planning on going anywhere so the actual value is immaterial to us currently, but when my 2 kids are looking to spread their wings I can't see an easy way beyond us bunging them a big chunk of cash should we be able to.

veronese68

Exactly this, we're in a similar position but a few years ahead. Daughter 2nd year of uni and lad is about to finish his masters so will be looking for work. He wants to move in with his girlfriend, between house prices and university fees debts how will they ever be able to afford a house without bumping us off?

rick_chasey

My 68sqm 2 bed house was bought in 2010 for £190k and I bought it in 2018 for £425k.

First house!