Buying tactics

[GoSeigen]

Wondering if anyone has good ideas on how to deal with a relatively unmotivated seller? Here's the approximate scenario: the Seller bought his house a few years back for 580k (notional figures) and based on other properties he overpaid significantly. He fell behind on bank payments and the bank advertised it at 400k but the seller had final say on the price and didn't want to sell anywhere near that price. I offered 360k and didn't even get a reply. Property then came off the market and I heard on the grapevine that he'd paid the bank enough to get them off his back.

Today his agent called and said he was still looking to sell, asked if I was still interested, I said yes, if he'd enter into a genuine negotiation. She says he's rejected other offers around 350-360k. So she calls him and comes back to me saying he wants 650k(!) because that is what he needs to pay off the bank and selling expenses!!

In all honesty I'd be happy to pay 500k because reasons (it's a neighbouring property), but do I have any chance of working him down to that level?? I doubt anyone else would go near that price at the moment. Seller clearly owes a lot of money and is psychologically anchored to his buying price. Is it just a matter of waiting patiently? Incidentally seller doesn't live there, he let it out for a while but it's been empty for almost 18 months now,

GS

[murraypaul]

Sounds like he is still in denial, and you won't have any luck until he reaches acceptance.

He understandably won't believe you telling him that the price is too high, as you clearly have your own reasons for wanting to pay less.

His estate agent really should be trying to get him to understand what a realistic price is, at the moment their time is being wasted, they aren't going to get paid if the house doesn't sell.

Give your offer, make it clear that it remains on the table, and wait.

[gnawsome]

Sounds like he is still in denial, and you won't have any luck until he reaches acceptance...

His estate agent really should be trying to get him to understand what a realistic price is, at the moment their time is being wasted, they aren't going to get paid if the house doesn't sell.

Give your offer, make it clear that it remains on the table, and wait.

I would not leave any offer on the table - it gives him a backstop!
I would suggest you get some aquintaces to put in low-ball offers to shake him
up and see if he sees sense.Otherwise walk away

[modellingman]

Sounds like he is still in denial, and you won't have any luck until he reaches acceptance...

His estate agent really should be trying to get him to understand what a realistic price is, at the moment their time is being wasted, they aren't going to get paid if the house doesn't sell.

Give your offer, make it clear that it remains on the table, and wait.

I would not leave any offer on the table - it gives him a backstop!
I would suggest you get some aquintaces to put in low-ball offers to shake him
up and see if he sees sense.Otherwise walk away

The low-ball offers are an interesting approach but, if the agent is any good, are likely to be of limited effectiveness. A decent agent will look with a fairly critical eye at any offer and assess whether it is proceedable. In particular, what is the offeror's financial position and how will they actually pay if their offer is accepted? Do they need a mortgage and, if so, have they got an offer of mortgage? Do they need to sell their own house and, if so, have they put it on the market? Etc, etc. Although agents are legally obliged to pass on any offer, a good agent will qualify any offer and advise whether it is realistic. (A bad agent will, of course, just waste everyone's time and emotional energy.)

All the OP can realistically do is make their offer and wait until the prospective seller sees the reality of the world as it is and not as they would like it to be. Keeping in touch with the agent to the point of almost becoming a pest would be my suggested tactic. People do react to such pressures and it might just get the agent to work a bit harder at getting their client to be a bit more realistic about the selling price.

[GoSeigen]

Sounds like he is still in denial, and you won't have any luck until he reaches acceptance...

His estate agent really should be trying to get him to understand what a realistic price is, at the moment their time is being wasted, they aren't going to get paid if the house doesn't sell.

Give your offer, make it clear that it remains on the table, and wait.

I would not leave any offer on the table - it gives him a backstop!
I would suggest you get some aquintaces to put in low-ball offers to shake him
up and see if he sees sense.Otherwise walk away

The low-ball offers are an interesting approach but, if the agent is any good, are likely to be of limited effectiveness. A decent agent will look with a fairly critical eye at any offer and assess whether it is proceedable. In particular, what is the offeror's financial position and how will they actually pay if their offer is accepted? Do they need a mortgage and, if so, have they got an offer of mortgage? Do they need to sell their own house and, if so, have they put it on the market? Etc, etc. Although agents are legally obliged to pass on any offer, a good agent will qualify any offer and advise whether it is realistic. (A bad agent will, of course, just waste everyone's time and emotional energy.)

All the OP can realistically do is make their offer and wait until the prospective seller sees the reality of the world as it is and not as they would like it to be. Keeping in touch with the agent to the point of almost becoming a pest would be my suggested tactic. People do react to such pressures and it might just get the agent to work a bit harder at getting their client to be a bit more realistic about the selling price.

Thanks, the agent has a few people interested around the 350k mark but seller's blown them all off. The agent likes me and is one of the few people I know in any sort of contact with the seller, so I'll keep working with her. She thinks the guy is crazy. The loan on the property must be burning a hole in his pocket, there are no tenants and the property is deteriorating. Strange situation.

Thanks to everyone for the input.


GS

[Dod101]

Sounds like he is still in denial, and you won't have any luck until he reaches acceptance...

His estate agent really should be trying to get him to understand what a realistic price is, at the moment their time is being wasted, they aren't going to get paid if the house doesn't sell.

Give your offer, make it clear that it remains on the table, and wait.

I would not leave any offer on the table - it gives him a backstop!
I would suggest you get some aquintaces to put in low-ball offers to shake him
up and see if he sees sense.Otherwise walk away

The low-ball offers are an interesting approach but, if the agent is any good, are likely to be of limited effectiveness. A decent agent will look with a fairly critical eye at any offer and assess whether it is proceedable. In particular, what is the offeror's financial position and how will they actually pay if their offer is accepted? Do they need a mortgage and, if so, have they got an offer of mortgage? Do they need to sell their own house and, if so, have they put it on the market? Etc, etc. Although agents are legally obliged to pass on any offer, a good agent will qualify any offer and advise whether it is realistic. (A bad agent will, of course, just waste everyone's time and emotional energy.)

All the OP can realistically do is make their offer and wait until the prospective seller sees the reality of the world as it is and not as they would like it to be. Keeping in touch with the agent to the point of almost becoming a pest would be my suggested tactic. People do react to such pressures and it might just get the agent to work a bit harder at getting their client to be a bit more realistic about the selling price.

Thanks, the agent has a few people interested around the 350k mark but seller's blown them all off. The agent likes me and is one of the few people I know in any sort of contact with the seller, so I'll keep working with her. She thinks the guy is crazy. The loan on the property must be burning a hole in his pocket, there are no tenants and the property is deteriorating. Strange situation.

Thanks to everyone for the input.

So you are now at an impasse. You said you would pay £500,000. He paid £580,000 and is clearly not happy to take a loss. He appears to have rejected all offers around £350/360,000. So if you are keen to buy, then offer him your best price (up to £500,000?) and give him say 7 days to accept, but leave it until he gets the message that no one else is happy to pay more than £350,000 or so. It takes two to tango but he appears to be in no rush to sell and you cannot force him to. If you really want the property you will have to pay for it. Your risk is of course that someone else comes a long a gives him his price. It happens.

Dod


GS

[Mike4]

Wondering if anyone has good ideas on how to deal with a relatively unmotivated seller? Here's the approximate scenario: the Seller bought his house a few years back for 580k (notional figures) and based on other properties he overpaid significantly. He fell behind on bank payments and the bank advertised it at 400k but the seller had final say on the price and didn't want to sell anywhere near that price.
GS

This bit does not ring true to me. My own understanding is for the bank to advertise it, the bank must have repossessed. If he really did have the final say, then I think he must have paid off his full debt to the bank including the original mortgage, all arrears and penalties and had it released it from repossession. Unusual I believe as once in repossession then process is not normally reversible, but I stand to be corrected on that.

Regarding negotiating tactics, I'd say he is hoping to shake £600k out of you as he thinks YOU are his whole market, you being a neighbour, or possibly you and any other adjoining neighbours with whom the properties could be combined to make a larger and more productive development plot. I'd say the pair of you are both waiting acceptance from the other, and neither of you has any particular need to deal so you might as well just forget it.

The fact it has been empty 18 months rather than let with rent coming in suggests to me the seller's circumstances changed for the better at some point in the story.

[GoSeigen]

Wondering if anyone has good ideas on how to deal with a relatively unmotivated seller? Here's the approximate scenario: the Seller bought his house a few years back for 580k (notional figures) and based on other properties he overpaid significantly. He fell behind on bank payments and the bank advertised it at 400k but the seller had final say on the price and didn't want to sell anywhere near that price.
GS

This bit does not ring true to me. My own understanding is for the bank to advertise it, the bank must have repossessed. If he really did have the final say, then I think he must have paid off his full debt to the bank including the original mortgage, all arrears and penalties and had it released it from repossession. Unusual I believe as once in repossession then process is not normally reversible, but I stand to be corrected on that.

Not UK. Process differs a bit, in the seller's case he had a sweetener from the bank if the property sold but he still retained the right to choose to sell or alternatively to cough up to the bank himself.

Regarding negotiating tactics, I'd say he is hoping to shake £600k out of you as he thinks YOU are his whole market, you being a neighbour, or possibly you and any other adjoining neighbours with whom the properties could be combined to make a larger and more productive development plot. I'd say the pair of you are both waiting acceptance from the other, and neither of you has any particular need to deal so you might as well just forget it.

Like a ransom strip...
Truth is I don't know how canny he is -- unlike you who have guessed pretty well above! You're right that I don't have a strong need to deal. The property would be nice to have but is not indispensable.

The fact it has been empty 18 months rather than let with rent coming in suggests to me the seller's circumstances changed for the better at some point in the story.

Could be. Certainly COVID is over now, so business maybe has recovered a bit -- but to me his keeping it doesn't make financial sense. OTOH it's not that far removed from the scenario on our own (commercial) property which for now is loss making. Main difference is that we bought really cheap compared to asking price on his portion. So maybe he's just hoping an upturn in the economy will save him...

In the end maybe I should try shooting for 600k and think of the additional 100k as an unavoidable 20% buyer's fee/commission for getting the deal over the line?

GS

[Hariseldon58]

You could try a gradually falling offer, it’s 600k today, 599k tomorrow, 598k the day after …

You need to inject fomo…

[Gerry557]

How to find a balance between seller and buyer. Obviously you think you know the situation but it could differ from what you think.

Him wanting a better price isn't unusual. A buyer wanting a discount isn't unusual either. It sounds like a low ball offer hasn't worked, I don't know why and you may never find out. Maybe he's terminal ill and the life insurance is going to make sure his family are looked after or a ton of other reasons you don't know.

Normally there is a reasonable chance of working out ball park figures and then it's down to two sets of individual circumstances and emotions.

I ended up paying £15k more for a property. The misses fell in love and it looked like it was falling through. There was the exact same house brand new cheaper but she didn't want that one.

Fortunately when we sold the same reasons affected the buyers and we were also able to sell at a premium with a bit of luck along the way.

You can't force them to sell at your price but if circumstances are as you think it might end up on the market as a forced sale with a committed seller and a reduced market price. It might take time though.

[GoSeigen]

You can't force them to sell at your price but if circumstances are as you think it might end up on the market as a forced sale with a committed seller and a reduced market price. It might take time though.

Thanks, Gerry557, this is what I'd hoped for when it appeared on the market recently, but it turned out not as forced as I'd imagined! Maybe next time lucky, and I am fairly patient.

I suppose there could be a weird reason for the seller hanging on as you say. The seller is in his forties and not obviously sickly! The motivations that I imagine are foremost are:

1. Maybe family support/wishes
2. The economic environment is poor, he is hoping for an improvement
3. Local area is gradually being upgraded, he is hoping that will lift values
4. As Mike4 suggests... he has targeted me as his main market!
5. He feels trapped by his debt.
6. He can't accept that he overpaid/the property is worth less now than when he bought.

Property values here really have been on the floor with houses sitting on the market fro months or years without movement.

You could try a gradually falling offer, it’s 600k today, 599k tomorrow, 598k the day after …

You need to inject fomo…

Not sure if I'm cheeky enough to try that! Nice idea though.


GS

[Mike4]

You could try a gradually falling offer, it’s 600k today, 599k tomorrow, 598k the day after …

You need to inject fomo…

I would instantly recognise that as false and arbitrary and ignore it, were I the seller.

A more credible way is needed, such as perhaps "I have (say) £500k in the bank to invest in property and I'd like to buy yours, but if you won't sell to me then I'm actively looking for another house to buy instead. Let me know if you change your mind", as an idea. Needs finessing though...

[Hariseldon58]

You could try a gradually falling offer, it’s 600k today, 599k tomorrow, 598k the day after …

You need to inject fomo…

I would instantly recognise that as false and arbitrary and ignore it, were I the seller.

A more credible way is needed, such as perhaps "I have (say) £500k in the bank to invest in property and I'd like to buy yours, but if you won't sell to me then I'm actively looking for another house to buy instead. Let me know if you change your mind", as an idea. Needs finessing though...

To be fair buyers/sellers are often not rational.... sometimes its best not to engage, the worst thing is appearing too keen or in this case the seller is convinced the buyer must have it.

My favourite buying technique has always been "I haven't the time or energy to engage in silly games, give me your very best price, I will not negotiate or try and talk you down, just tell me your very, very best price, if its good I'll buy and if not, I will walk away"

You're not giving information away.

When you are keen to purchase, say through an agent, the lack of personal contact, non verbal clues and just not knowing the situation from the sellers perspective leads to overpaying and FOMO.

It works in reverse when selling too, I hugely underestimated a buyers need for something I was selling during the summer, I had hoped to get between £80-£85k and I was offered and accepted £100k...

[1nvest]

Tell the agent you have a suitcase filled with US$575,000 hard cash and that as UK interest rates are likely to rise/house prices potentially fall - with rising interest rates and declining Pound that could relatively quickly rise to being worth over £600,000 (4.3% interest, Pound/Dollar parity) - so a very fair if not over-valuation offer. But that its a one time no haggling offer/needs a fast trade/closure - or otherwise once banked it will soon after be deployed elsewhere. Agent will of course say you can't pay in hard cash (national crime agency criteria) and you'll just say yes I know, it would be paid via bank transfer - just ask if your client if they want that in US$ or £ equivalent.

The Pound is likely to continue on down as the US ramp their interest rates even higher, attracting even more inward investment (stronger US$), as are UK interest rates likely to jump, putting downside pressures on buyers with mortgages. Puts enough maths into the clients head to entice greed, risk of regret at not having accepted the offer. And if they refuse just walk, say OK fine - the money will have been banked and started to be deployed elsewhere by the end of the next working week, so if they change their mind they have until then to get back to you. Next Thursday 22nd September BoE interest rate review and rising rates along with further £ declines (mini Budget on Friday 23rd) and you may very well receive a return call.

[dealtn]

Tell the agent you have a suitcase filled with US$575,000 hard cash and that as UK interest rates are likely to rise/house prices potentially fall - with rising interest rates and declining Pound that could relatively quickly rise to being worth over £600,000 (4.3% interest, Pound/Dollar parity) - so a very fair if not over-valuation offer. But that its a one time no haggling offer/needs a fast trade/closure - or otherwise once banked it will soon after be deployed elsewhere. Agent will of course say you can't pay in hard cash (national crime agency criteria) and you'll just say yes I know, it would be paid via bank transfer - just ask if your client if they want that in US$ or £ equivalent.

The Pound is likely to continue on down as the US ramp their interest rates even higher, attracting even more inward investment (stronger US$), as are UK interest rates likely to jump, putting downside pressures on buyers with mortgages. Puts enough maths into the clients head to entice greed, risk of regret at not having accepted the offer. And if they refuse just walk, say OK fine - the money will have been banked and started to be deployed elsewhere by the end of the next working week, so if they change their mind they have until then to get back to you. Next Thursday 22nd September BoE interest rate review and rising rates along with further £ declines (mini Budget on Friday 23rd) and you may very well receive a return call.

If I were the seller I can guarantee you wouldn't hear from me again. Good luck with those kind of tactics.

[Mike4]

Tell the agent you have a suitcase filled with US$575,000 hard cash and that as UK interest rates are likely to rise/house prices potentially fall - with rising interest rates and declining Pound that could relatively quickly rise to being worth over £600,000 (4.3% interest, Pound/Dollar parity) - so a very fair if not over-valuation offer. But that its a one time no haggling offer/needs a fast trade/closure - or otherwise once banked it will soon after be deployed elsewhere. Agent will of course say you can't pay in hard cash (national crime agency criteria) and you'll just say yes I know, it would be paid via bank transfer - just ask if your client if they want that in US$ or £ equivalent.

The Pound is likely to continue on down as the US ramp their interest rates even higher, attracting even more inward investment (stronger US$), as are UK interest rates likely to jump, putting downside pressures on buyers with mortgages. Puts enough maths into the clients head to entice greed, risk of regret at not having accepted the offer. And if they refuse just walk, say OK fine - the money will have been banked and started to be deployed elsewhere by the end of the next working week, so if they change their mind they have until then to get back to you. Next Thursday 22nd September BoE interest rate review and rising rates along with further £ declines (mini Budget on Friday 23rd) and you may very well receive a return call.

If I were the seller I can guarantee you wouldn't hear from me again. Good luck with those kind of tactics.

Yep, same with me.

As with the common but naïve internet advice to start with a really, really low offer as you can always keep raising it, it is easy to alienate a seller by treating them like an idiot. What serous buyer ever coincidentally has a suitcase with $575,000 in it lying around, I would be asking myself.

[DrFfybes]

So he wants £650k, he's being offered £350k and declined it, and you're willing to pay £500k?

What does the agent reckon is fair value?

If it is under £500k, offer that, if it is over £500k then tell the agent that is your limit.

If he doesn't accept, then withdraw the offer, but ask the agent to keep you informed of developments.

It looks like neither of you are in a rush, but you have rising interest rates and a stagnant local housing market on your side.

Property transactions are difficult at the best of times, especially once the solictors get involed Paying games with property sales seldom ends in a satisfactory agreement.

Paul

[Mike4]

Just a thought.

Every single one of my best property deals was struck in December.

Sellers expect to sell in Sept and get greedy. October arrives and reasonable offers get rejected. In November everyone's thoughts pivot to xmas and the offers come few and far between. Sellers are puzzled. In December I seem to be the only buyer in the market and sellers losing hope tend to just grab any offer on the table.

Just an idea. Time is on your side.

[Walkeia]

what happened here out of interest? I am currently going through a similar process.

I have offered on a plot of land at 65% of the asking price. Sounds crazy but when the estate agent says 'by the way, this is about 20% over-priced', as you're walking onto site then the alarm bells are ringing (it has been on the market for 7 months so I had guessed that somewhat).

My approach has been pretty straight up - I'd love to build my own house and the site is great but I am not wedded to the idea at any cost. I spent a morning taking data from a lot of houses in the area - square metre footprint, ranking garden, views etc etc. It was surprising but the range per square metre after accounting for different aspects wasn't as wide as I expected. Using this and development costs estimates for different build levels (I used a range from local sources and some comfort margin) I could calculate what I thought was the fair value of the site. I assume that my time / effort in building my own home was compensated by getting exactly what I wanted so I don't need to make a profit on the build.

I sent it all across to the estate agent with my offer and said I was happy to share with the vendor. I will need to spend 3-5k on the site to try and get as comfortable as possible that I will be able to build what I'd like - but I wasn't prepared to do this if they were stuck at the sky high price. They've moved to 80% of the asking and I hope to get surveys done shortly and if positive will increase somewhat. I think the property market on its knees won't be changing anytime soon so don't feel pressure on this front. If someone comes in and pips me I have made peace with the fact this is possible ... it would be a huge gamble in my view but then people do fall in love with houses / sites which can lead to irrational bidding.

So a convoluted way of saying: my advice would be a straight up - here's my position for these reasons, this is what I can offer (with a margin shaved for negotiation; if you're stuck there that's cool, I'll walk on but if you'd like to engage that'd be good too.

Afterthought by the way - if it is a ransom strip you want to get rid of ... is there any chance they would just sell you that if it isn't super important to the existing property. Better to overpay 50 to 75k for a piece of land than hundreds of thousands on a house. And if he sold a strip of land which didn't harm the value of the property too much the vendor could see it as recouping some of the over-payment they made on the initial purchase.

[GoSeigen]

what happened here out of interest? I am currently going through a similar process.

Sorry, I missed your post here -- it helps to post a reply to the named OP on an old thread rather than just a reply to the thread so that a notification is sent.

With the property in the OP, I just moved on, still waiting. Not much has changed except the owner seems slightly easier to get hold of. Someone wanted to ret it recently and managed to sort out a deal with him. Over the next couple of days I am closing a rsidential letting agreement on a similar house which we already own right next door; the gross rental yield is 33% of the price we bought it for about 4 years back, I guess it's time to fix up the other buildings and let them too.

What happened with your plot, did you buy it in the end?


GS