How much is 'cash' worth in the current housing market?
Discussion
In terms of the discount off the asking price for an immediate sale? I am not talking first time buyer, but further up the market in the 4/5 bed detached.
The vendors of a couple of recent houses I have viewed showed some signs of being pretty keen to complete within 2 or 3 months and in 2 cases had overtly offered a 5% or 7% discount for completion by 28/2 or 31/3. Given the current market that didn't impress me as I was expecting to offer at least 10% under their asking price anyway, but an extra 5% or 7% might be worth having.
It seems worth renting out my current house, getting a mortgage agreed to top up my cash and then making a silly offer for a 6 or 8 week completion (assuming I can get a tenant).
TBH cash isn't important at all, doesn't matter to a seller if you're paying cash or via mortgage. The ability to complete quickly, ideally in a chain free position is worth far more and it's being int this position that will enable you to really push the cheeky offers.
We purchased recently (completed in November) and our offer was on the proviso a 4 week turnaround could be achieved, the vendors were divorcing and needed to go their separate ways. During our search we saw a number of houses we liked go under offer, only to re-appear a couple of months later as chains fell through.
We purchased recently (completed in November) and our offer was on the proviso a 4 week turnaround could be achieved, the vendors were divorcing and needed to go their separate ways. During our search we saw a number of houses we liked go under offer, only to re-appear a couple of months later as chains fell through.
Zippee said:
TBH cash isn't important at all, doesn't matter to a seller if you're paying cash or via mortgage. The ability to complete quickly, ideally in a chain free position is worth far more and it's being int this position that will enable you to really push the cheeky offers.
We purchased recently (completed in November) and our offer was on the proviso a 4 week turnaround could be achieved, the vendors were divorcing and needed to go their separate ways. During our search we saw a number of houses we liked go under offer, only to re-appear a couple of months later as chains fell through.
Do you think the ability to complete in a short space of time brought the acceptable offer down, and if so by what % do you think? Perhaps 'cash' was the wrong phrase, I meant not being in a chain and being able to proceed directly.We purchased recently (completed in November) and our offer was on the proviso a 4 week turnaround could be achieved, the vendors were divorcing and needed to go their separate ways. During our search we saw a number of houses we liked go under offer, only to re-appear a couple of months later as chains fell through.
Offer price should come down how much you want that PARTICULAR house, the circumstances of the seller and the attractiveness of your offer in terms of chain, timings etc
As a guide I have a 5 bed detached house in the “outer metropolitan area” (just outside of the M25 in Hertfordshire)
I was recently made an offer on my house by a cash buyer – no chain etc my house is not officially for sale but it is on rent and the prospective buyer viewed it on this bases but decided that they would ideally like to buy.
As the house was not officially for sale there was no “asking price”....however as a guide I used the price we paid, plus the nationwide house index (by region, year/quarter) to establish how much it would be worth today.
The offer was – 6.5% below the nationwide valuation (NWV).
About 12% below the peak NWV (2007) and about 5% above the lowest value on the index (2008)
The estate agents rough valuation was only .5% above the nationwide suggested valuation - I did not need to sell so declined the offer - to have bought it the buyer would have had to give me the nationwide value.
As a guide I have a 5 bed detached house in the “outer metropolitan area” (just outside of the M25 in Hertfordshire)
I was recently made an offer on my house by a cash buyer – no chain etc my house is not officially for sale but it is on rent and the prospective buyer viewed it on this bases but decided that they would ideally like to buy.
As the house was not officially for sale there was no “asking price”....however as a guide I used the price we paid, plus the nationwide house index (by region, year/quarter) to establish how much it would be worth today.
The offer was – 6.5% below the nationwide valuation (NWV).
About 12% below the peak NWV (2007) and about 5% above the lowest value on the index (2008)
The estate agents rough valuation was only .5% above the nationwide suggested valuation - I did not need to sell so declined the offer - to have bought it the buyer would have had to give me the nationwide value.
ringram said:
Id be looking at 20% off current wishful prices IMO.
Delicate balance between insulting the owner and them damning you, your off-spring and your camels, and you making them an offer they will begrudglingly accept! I did hear that in some areas likle Scotland where they had seen large rises prior to 2007/8 that offers at 20% below are now common.
ringram said:
Id be looking at 20% off current wishful prices IMO.
Good luck - I tried that for the best part of 12 months with cash and got absolutely nowhere. I had a snotty email from a reposession company saying a particular house represented outstanding value for money (£250K offered £225k cash) and any offers below £235K would be automatically rejected regardless of buying position. In the end I bought another reposession and only got 5K off asking for cash. Seller's attitude is they would rather wait 5 or 6 weeks for someone needing a loan rather than take a cheaper cash sale.
Vron said:
ringram said:
Id be looking at 20% off current wishful prices IMO.
Good luck - I tried that for the best part of 12 months with cash and got absolutely nowhere. I had a snotty email from a reposession company saying a particular house represented outstanding value for money (£250K offered £225k cash) and any offers below £235K would be automatically rejected regardless of buying position. In the end I bought another reposession and only got 5K off asking for cash. Seller's attitude is they would rather wait 5 or 6 weeks for someone needing a loan rather than take a cheaper cash sale.
ringram said:
It depends who is more desperate, buyer or seller..
Prices must return back to what's affordable, so patience is a virtue.
I think so too. I have seen dozens of 'good' houses but not 'the' house, and often the ones which smack of desperation have some issue when you Google Earth, Street View or delve deeper with the agent. If they are having trouble selling, I guess so would I. I have found a couple of promising development houses where the ownwers have done the basics and then given up/killed each other. Prices must return back to what's affordable, so patience is a virtue.
When I got divorced the difference between telling the agent the valuation was part of a divorce or not, was 10-15% on average.
There seems to be a big disconnect going on in the residential market at the moment. The "true" market price (whatever that means) is, I suspect, someway below the vast majority of prices being sought by sellers who look to the peak of 2007 and think we're still there. Many buyers know this, and also fear further falls in prices (probably quite rightly) in the future. They therefore put in a "cheeky bid". Which the seller duly turns his nose up at.
Two things are different from the late 80s / early 90s. The first is unemployment, which has been remarkable only by its (relative) absence so far in this downturn. Secondly, mortgage rates for those that have jobs are extremely low. Ergo, no one "needs" to sell, and therefore has no need to entertain a "cheeky bid". For as long as this situation persists (and it could be some time) this disconnect will continue. Invest in residential property at your own risk....
Two things are different from the late 80s / early 90s. The first is unemployment, which has been remarkable only by its (relative) absence so far in this downturn. Secondly, mortgage rates for those that have jobs are extremely low. Ergo, no one "needs" to sell, and therefore has no need to entertain a "cheeky bid". For as long as this situation persists (and it could be some time) this disconnect will continue. Invest in residential property at your own risk....
I got a seller down from £1.65m to £1.05m recently, before having a proper look over the place I decided that it wasn't worth that much.
His starting price, though, was ridiculous. What worked for me was that I could move quickly (no chain, mortgage in place, big deposit, but on the place that I'm buying instead I've fought hard to get even 10% off.
His starting price, though, was ridiculous. What worked for me was that I could move quickly (no chain, mortgage in place, big deposit, but on the place that I'm buying instead I've fought hard to get even 10% off.
anonymous said:
[redacted]
My opening bid was actually £1.03m, so he dropped £600k, and I went up £20k. It all took place very quickly, once I'd made clear that we could shake hands on the del, (subject to a closer look at the flat afterwards) or that I'd pull my bid, walk away, and not be responsive to later discussions if he changed his mind.In the end, and on closer inspection, it just had too many little issues, so I'm buying something getter built.
It's impossible to say what cash is worth or what the discount should be as every single house transaction is unique....especially once you get into the 4/5 bed family homes. Those kind of homes vary hugely....it's not like buying a 2 bed flat so many other factors come into play.
If a house is priced correctly for the market, there is competition and the seller is not in a hurry cash is worth very little IMHO.
If a house is priced correctly for the market, there is competition and the seller is not in a hurry cash is worth very little IMHO.
Zippee said:
We purchased recently (completed in November) and our offer was on the proviso a 4 week turnaround could be achieved, the vendors were divorcing and needed to go their separate ways.
The timetable in unenforceable, though, surely? Some people we know are selling and had 2 people competing to buy. They accepted a "cash, with no chain" offer for completion by Friday 16th Dec. That day came and went with the buyer almost daily thinking of a new stupid question to ask. Of course nothing has happened over the holiday period during which time the boiler froze solid and burst despite being left on and they had to pay another month's mortage.
Deva Link said:
Zippee said:
We purchased recently (completed in November) and our offer was on the proviso a 4 week turnaround could be achieved, the vendors were divorcing and needed to go their separate ways.
The timetable in unenforceable, though, surely? Some people we know are selling and had 2 people competing to buy. They accepted a "cash, with no chain" offer for completion by Friday 16th Dec. That day came and went with the buyer almost daily thinking of a new stupid question to ask. Of course nothing has happened over the holiday period during which time the boiler froze solid and burst despite being left on and they had to pay another month's mortage.
Sarnie said:
It's a breach of contract if the deadline comes and goes, therefore they are entitled to ask for compensation to that effect. Although the penalties for missing the deadline should ideally have been set out from the start.
I know they tried to get a hefty deposit up front but their solicitor advised against it. The problem seems to be that, relaistically, all they can do is say the deal's off, but who wants to do that in the current market? The buyer just blames the delay on slow responses to her questions.Gassing Station | Finance | Top of Page | What's New | My Stuff