Offer on a property - Advice needed!

Evening all,

The situation I’ve got is that I want to buy the house that I’m currently renting and I’m in direct communication with the landlord, rather than through an agent.

I’ve been here for six years and the landlord initially said in conversation a long time ago that he would never, ever sell the house to anyone but since then, he’s been through a messy divorce and has to either re-mortgage or sell the house by the end of this year and has asked my intentions, buy this property or buy one elsewhere – he knows I’m keen on owning my own home.

The problem is, the figure he wants is unrealistically high compared to the others recently sold in the street, plus, it needs a hell of a lot of work done to it.

I have a strong suspicion that he’s either in the shit financially, or is about to be. Reason for this is the divorce, plus he owns a business that is known to be failing big time.

He’s a genuinely nice guy and I can’t tell if he’s naïve or greedy.

I do want to buy the house as I think it’s got a lot of potential and am thinking of putting an offer in about 10% lower than the asking price.

As I said, he knows I want to buy my own home, I’ve been very cool and cagey when he’s asked me over the years if enjoy living here/like the place etc. and have always given neutral answers.

I’m getting a home buyers report soon which comes with a valuation and I expect it to be valued at much, much lower than he thinks it’s worth.

My question is: How should I best approach the situation after I receive the home buyer’s report, bearing it in mind that I think they'll be in shock/disbelief with what the report says.

Thanks all! :thumbup:

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Originally Posted by B. Oddie

Evening all,

The situation I’ve got is that I want to buy the house that I’m currently renting and I’m in direct communication with the landlord, rather than through an agent.

I’ve been here for six years and the landlord initially said in conversation a long time ago that he would never, ever sell the house to anyone but since then, he’s been through a messy divorce and has to either re-mortgage or sell the house by the end of this year and has asked my intentions, buy this property or buy one elsewhere – he knows I’m keen on owning my own home.

The problem is, the figure he wants is unrealistically high compared to the others recently sold in the street, plus, it needs a hell of a lot of work done to it.

I have a strong suspicion that he’s either in the shit financially, or is about to be. Reason for this is the divorce, plus he owns a business that is known to be failing big time.

He’s a genuinely nice guy and I can’t tell if he’s naïve or greedy.

I do want to buy the house as I think it’s got a lot of potential and am thinking of putting an offer in about 10% lower than the asking price.

As I said, he knows I want to buy my own home, I’ve been very cool and cagey when he’s asked me over the years if enjoy living here/like the place etc. and have always given neutral answers.

I’m getting a home buyers report soon which comes with a valuation and I expect it to be valued at much, much lower than he thinks it’s worth.

My question is: How should I best approach the situation after I receive the home buyer’s report, bearing it in mind that I think they'll be in shock/disbelief with what the report says.

Thanks all! :thumbup:

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Shouldn't you tell him that you're getting a home buyers report, especially as it's his property, and i presume that you're going to use the report as leverage in order to get the price down? good luck though.

Show him the report, show him comparables and explain people wont be buying at the moment.

at worse let him put it on the market but explain any agent is looking at 1% minimum and even then people will be looking for a deal.

Just be honest and upfront. Say you may be interested in purchasing the property, if I can raise the finances. So is it okay if i get an independent valuation.

to be fair 10% is not alot of money under the asking price, i got £75 K off mine and £25 K off the field at the rear (owned by the seller, though they did try and screw us over on the field, as we struck a deal and at the last min that upped the field price, we were prepared to walk away from the sale ) earlier this year

the housing market is not exactly doing great, so a good time to get it wrapped up imho

Sorry lads - I should have said that I have already stated my intention to get the Home Buyers Report. He paused and seemed a back taken aback before saying something along the lines of "It won't make any difference".

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Originally Posted by B. Oddie

Sorry lads - I should have said that I have already stated my intention to get the Home Buyers Report. He paused and seemed a back taken aback before saying something along the lines of "It won't make any difference".

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If its not close suggests he puts it to market. Not many buying at the moment and those offering may not get the mortgage they need.

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Originally Posted by B. Oddie

Sorry lads - I should have said that I have already stated my intention to get the Home Buyers Report. He paused and seemed a back taken aback before saying something along the lines of "It won't make any difference".

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to be fair, a home buyers report is a bit of a joke, Lv 1 and 2 are a joke and you pay a guy to walk around and spot items you can see anyway ( oh look ,its a old roof, it might need replacing, oh look, old soffits, it may contain asbestos, oh look, you have artex, also might contain asbestos, oh look a crack in the wall, might be movement ) they will not move anything to investigate issues

the Lv 3 is ore in depth and should show up issues, often dont and are often fairly if they can see it, so should you be able to


he does sound like he wants to play hard ball though, so test the water with a cheeky bid, he will come up a little, feel he has " got one over on you " and you will both be happy

Just to say mortgages are difficult to get hold of at moment. Be prepared to find at least 10%, may be best to get some agreement in principle.

Only pay him what it's worth. You're not responsible for his financial wishes and the market determines the value of property not just the seller in my opinion. Saying that, if he's only asking a bit more than market value and you love the place then maybe it's worth paying the bit extra.

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Originally Posted by B. Oddie

Sorry lads - I should have said that I have already stated my intention to get the Home Buyers Report. He paused and seemed a back taken aback before saying something along the lines of "It won't make any difference".

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Is the home buyers' report for a mortgage application or separate and initiated by you? The reason I ask is I suspect one linked to a mortgage may reflect the coming market but also your circumstances (financially) and the willingness of the financial institution to loan money at the moment. So you may well get a lower valuation than your own stand-alone version. I just suspect that's all.

This may help you in talking to the owner - I looked at house prices post the advent of the Great Recession in Cardiff recently. It's a reasonable indicator of what's likely to happen in the aftermath of C-19. Wales/Cardiff was experiencing something of a boom pre-C-19, same as in 2007/8. Prices in Cardiff fell by 18% from the relative peak in September 2007 to April 2009 and didn't get back to the same (nominal) level until July 2014. So s/he should expect prices to dip continually for around two years plus from the point the "new normal" emerges after C-19, as a minimum. One other thing, the volume of sales has never got back to that of 2007 so, even with a reduced price, sales are going to take a lot longer to achieve.

If I were you, I wouldn't mention the home buyers report again. I don't think using something as leverage is a good way to start negotiations. Get pre approved for a mortgatge, make him a fair offer and see how it goes from there.

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Originally Posted by chris lee

Just be honest and upfront. Say you may be interested in purchasing the property, if I can raise the finances. So is it okay if i get an independent valuation.

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Why does he need to ask the landlord first? He’s the tenant he can Invite anyone he wants to the house.

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Originally Posted by chris lee

Just be honest and upfront. Say you may be interested in purchasing the property, if I can raise the finances. So is it okay if i get an independent valuation.

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Quote:

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Originally Posted by B. Oddie

Evening all,

The situation I’ve got is that I want to buy the house that I’m currently renting and I’m in direct communication with the landlord, rather than through an agent.

I’ve been here for six years and the landlord initially said in conversation a long time ago that he would never, ever sell the house to anyone but since then, he’s been through a messy divorce and has to either re-mortgage or sell the house by the end of this year and has asked my intentions, buy this property or buy one elsewhere – he knows I’m keen on owning my own home.

The problem is, the figure he wants is unrealistically high compared to the others recently sold in the street, plus, it needs a hell of a lot of work done to it.

I have a strong suspicion that he’s either in the shit financially, or is about to be. Reason for this is the divorce, plus he owns a business that is known to be failing big time.

He’s a genuinely nice guy and I can’t tell if he’s naïve or greedy.

I do want to buy the house as I think it’s got a lot of potential and am thinking of putting an offer in about 10% lower than the asking price.

As I said, he knows I want to buy my own home, I’ve been very cool and cagey when he’s asked me over the years if enjoy living here/like the place etc. and have always given neutral answers.

I’m getting a home buyers report soon which comes with a valuation and I expect it to be valued at much, much lower than he thinks it’s worth.

My question is: How should I best approach the situation after I receive the home buyer’s report, bearing it in mind that I think they'll be in shock/disbelief with what the report says.

Thanks all! :thumbup:

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Be careful! A homebuyers report is not a full survey and I’ve known surveyors do them without even getting out of their car. Just beware that it may not consider cost of getting the house up to a decent spec!

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Originally Posted by B. Oddie

Sorry lads - I should have said that I have already stated my intention to get the Home Buyers Report. He paused and seemed a back taken aback before saying something along the lines of "It won't make any difference".

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In many ways you are lucky because you know the property well. However, you do need a proper survey and valuation to secure a mortgage, to ensure the house is sound, and that you are not overpaying.

Both of you will save on agents fees, so that's good. Can he sell the house should you decide not to buy it? ie what tenants rights do you have. It may be more difficult to sell to someone else with you in situ.

So, I would invest in a survey, check that you can secure a mortgage, then make him an offer based on market conditions and market value. Personally I'd go less and be willing to move up as you'll always need some headroom to negotiate

If you can't agree then start looking around to buy elsewhere, as in time he's going to ask you to move out.

Bear in mind that house prices may drop soon as unemployment rises and the economy continues to struggle.

Just remember you can always up your offer but won't be able to lower it.

You may not get a mortgage if the finance don’t think it’s worth the price he’s asking.
As others have said if comparable properties are for same go see them you may think they are better if they need less work to do

Sounds like you hold all the cards. Say what your willing to offer and sit tight. His options are sell it to you , quick easy sale to existing tennant or out on market which is going to cost him in fees etc. Sounds like he needs the money quick so just see what he does. In the meantime look into what else is available to buy / rent in case things don’t work out.

You mention divorce - is the property in his name alone ? He also has potentially a CGT liability. I'd suggest get a mortgage offer in principle, make a written/email offer to him and see what happens. There are probably many properties you haven't seen which would possibly be just as good for you, so check out what's about..

You are a dream buyer with nothing to sell. If the landlord wishes to sell to someone else there is a possibility any potential purchaser would have to sell something first meaning he could be caught up in a chain or at least may not be able to achieve a hassle free sale. My advice would be to get a couple of independent valuations which you can get free from any agent as long as you operate on the pretence that you are the owner. Prices have dropped recently and agents are marking properties down so they can at least earn some commission. You are in a buyers market so use that to your advantage. Now is a great time to buy for those who are in the fortunate position of having nothing to sell.

Go have a look at the housing market & find another house that you'd like to buy - one that's comparable to the one you're living in. My idea is that you tell him that you'll buy his house at £(insert your offer) but if he sticks to his asking price you'll buy the other house that you just showed him. That should make him realise that he can't dictate the selling price in an open market.

Also, I find its always good to have a backup plan in case he won't drop his price or decides not to sell. And you never know, you might find a house that you prefer!

Good luck.

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Originally Posted by lisvaneblue

In many ways you are lucky because you know the property well. However, you do need a proper survey and valuation to secure a mortgage, to ensure the house is sound, and that you are not overpaying.

Both of you will save on agents fees, so that's good. Can he sell the house should you decide not to buy it? ie what tenants rights do you have. It may be more difficult to sell to someone else with you in situ.

So, I would invest in a survey, check that you can secure a mortgage, then make him an offer based on market conditions and market value. Personally I'd go less and be willing to move up as you'll always need some headroom to negotiate

If you can't agree then start looking around to buy elsewhere, as in time he's going to ask you to move out.

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As you will still need a proper valuation or mortgage survey I wouldn’t worry, this will give him the true value and he might be very happy to take your offer. If he definitely needs to sell he might find it hard as there might be plenty of other people forced to sell post Covid so could be a buyers market with many desperate to sell. Play it cool, don’t make out you are super keen and you might even look elsewhere....

My friend wanted to buy a particular house that he felt was vastly over-valued, ok it helped that his wife was a surveyor, but they worked out the cost per Ft2 and compared it to others in the area and presented it to the Vendor. They managed to use this to negotiate a far more realistic price....hope that helps....

And don't forget if the landlord sells to a tenant he will be able to save on Estate Agency fees of around 1.5% of the selling price. A decent landlord would take into account these and other savings especially in your case if you had been paying rent for 6 years. My inclination, if the landlord insists selling at an inflated price, is to start looking elsewhere and tell the landlord that you either buy the alternative house for £X or his house for £Y. If he decides to evict you that would cost him a packet if you refuse to go. That's another reason to sell to a sitting tenant.

I do a little consulting on commercial negotiations but in all negotiations there are principles and behaviours that are important to know. Probably the most important is knowing where the balance of power lies between you and the seller (In this one I suspect it’s with you)

After that...

1. Know the type of negotiation you are going into... after the deal is done will there be any financial or personal relationship between you and the seller. I suspect not which means that you are going to have a negotiation grounded in hard bargaining or bartering
2. You can’t do too much preparation
3. There is no such thing as ‘fairness’ in a negotiation. In these types of negotiation your best result is the lowest possible price - no matter the impact in the seller
4. Have what is called a BATNA... best alternative to a negotiated agreement....the seller needs to know you have options
5. Unfortunately he has played the first card and preconditioned you with his opening price. It’s too high which is a classic tactic. Your opening offer needs to be equally extreme on the opposite side. You need to get into his head and have a good idea on what his ‘walk away point’ is. You will of course know your own walk away and between those 2 numbers there will be a deal to be done.
6. Be prepared with the things you’ll ask for as conditions for moving your price towards his - there will be tons of variables and your preparation should identify as many as possible (know the ones of highest value to you and lowest cost to him and vice versa.... that way you’re always playing your cards with insight)
7. Even though it’s one of the variables know that ‘time’ is probably the one you can use to exert most pressure

Thanks for all your excellent thoughts and advice lads! Its obviously a massive commitment so its good to talk to people with no vested interested in either party! :thumbup:

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Originally Posted by B. Oddie

Thanks for all your excellent thoughts and advice lads! Its obviously a massive commitment so its good to talk to people with no vested interested in either party! :thumbup:

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I'm a mortgage adviser of 35 years experience, most of it within an estate agency framework. Rightmove have sold prices listed on their website, as does Zoopla, so use them as a tool. Ignore anyone who says that a Homebuyers Report isn't worth paying for, it is, as long as it is carried out by an RICS Chartered Surveyor. If you had opted for a basic valuation then there is a possibility that the surveyor may have done a drive-by or desktop version, which is not what is desired, There are a few mickey mouse "surveyors" advertising on social media and who pop up when doing a google search who aren't RICS qualified (such as Red Kite) who charge slightly less but are crap.Worryingly, anyone can call themselves a "surveyor" :shrug: It sounds like you are upgrading your lender's valuation report to a Homebuyers Report, which will save you money, any surveyor acting on behalf of the lender will be RICS qualifed so you'll be fine with the more detailed report. I can get historical date through the backdoor of the two sites I've mentioned, feel free to message me the address and I'll happily do some digging for you :ayatollah:

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Originally Posted by tomcat

I'm a mortgage adviser of 35 years experience, most of it within an estate agency framework. Rightmove have sold prices listed on their website, as does Zoopla, so use them as a tool. Ignore anyone who says that a Homebuyers Report isn't worth paying for, it is, as long as it is carried out by an RICS Chartered Surveyor. If you had opted for a basic valuation then there is a possibility that the surveyor may have done a drive-by or desktop version, which is not what is desired, There are a few mickey mouse "surveyors" advertising on social media and who pop up when doing a google search who aren't RICS qualified (such as Red Kite) who charge slightly less but are crap.Worryingly, anyone can call themselves a "surveyor" :shrug: It sounds like you are upgrading your lender's valuation report to a Homebuyers Report, which will save you money, any surveyor acting on behalf of the lender will be RICS qualifed so you'll be fine with the more detailed report. I can get historical date through the backdoor of the two sites I've mentioned, feel free to message me the address and I'll happily do some digging for you :ayatollah:

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I have an upcoming mortgage problem, perhaps you could give me some guidance. there might even be a beer in it lol

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Originally Posted by xsnaggle

I have an upcoming mortgage problem, perhaps you could give me some guidance. there might even be a beer in it lol

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. No probs, feel free to message me 👍:ayatollah::

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Originally Posted by B. Oddie

Sorry lads - I should have said that I have already stated my intention to get the Home Buyers Report. He paused and seemed a back taken aback before saying something along the lines of "It won't make any difference".

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I doubt you will change his mind, he probably thinks you want to pay less than it's worth.

I would look for a plan B house in the same street or as near as you can, let him put it on the market and see what happens.