House sellers and their agents might decide upon a price for a property, but it is you and your mortgage lender that decide actual property value, and what you are prepared to pay for it.
Don’t put in a ridiculously low offer. You will lose the respect of the seller and the agent, so when a new house that is perfect for your requirements lands on their desk, they won’t bother letting you know.
That said, what you represent as a buyer affects how much wriggle room you have. Cash buyers, or those without a chain to worry about can offer less because the chances of the deal falling through are much less.
Working out property value
So how do you know what to offer? These three factors are key:
- Previous sale prices for similar properties
- Prices for similar properties on the market
- What house prices are doing – are they rising, falling or staying the same?
The Land Registry records are your best friend. You can find out what properties sale prices in the streets you are looking at and get details of those properties. It is a very useful tool if you can find recent purchases but be warned, it takes three months for information to be posted and any sales that happened longer than six months ago don’t have much bearing on property value.
Going to the Land Registry direct costs £2 but these sites which make it accessible for free:
- Net House Prices – www.nethouseprices.co.uk
- Mouse Prices – www.mouseprice.com
- Our Property – www.ourproperty.co.uk
- Hometrack – www.hometrack.co.uk
- Rightmove – www.rightmove.co.uk
Websites like Rightmove give a picture of the current market as you can see what properties are currently going for.
When the housing market was flying, properties sold for much more than the asking price and nowadays final deals are usually discounted. The discount depends on things like how urgently the seller needs to sell, your strengths as a buyer (see above) and the asking price of similar properties.
Prices aren’t just about the number of bedrooms and how big a place is. These are essential factors, but other issues have varying impacts on the final amount the house or flat goes for. They include:
- the immediate area – you should know what the area is like, particularly at night
- how much outdoor space there is and how usable it is
- the condition of the property
- scope to extend
- garages or off street parking
- bathrooms – are any en suite?
- decoration and period features
- is it detached?
- time left on the leasehold (if applicable)
You should also have an idea about how the market is performing. You’ll find it easy to get an idea of national house prices but working out how your area is affected might be tougher. The best thing to do is stay on top of property websites and agents’ windows. That way you’ll begin to get an idea about how much, say, a three bedfroom flat costs, and whether prices are rising or falling for such properties as months go by.
If prices are rising you should expect to pay more than the latest data but if they are going down, you, the buyer, have control, so long as you are reasonable.