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I found a flat (say in London) that was advertised a month ago and whose asking price was reduced by 5% yesterday from 500K to 475K. Suppose I make an offer of 450K, i.e. I reduce the price by further 5%. Do I have big chances for my offer to be accepted? (what if I reduce by 7%?)

I am guessing that the chances are quite large, because somehow the seller have shown by their own example that the asking price was too high. But I wonder if my guess is correct. I understand that this might depend a lot on the case, but maybe there are some common patterns or rules.

A more general question, why do sellers reduce the price? Does this increase the chances of the flat to be sold for the price they actually want to get?

PS. By combining the information that you can get from Zoopla and Rightmove I see that in the last two years the difference 15-20K between a the asking price and the final price is quite typical in London for flats around 500K, i.e. the flats are usually advertised for slightly higher price.

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    Worth noting London is highly boom or bust. I've been operating in that market for decades and asking price is pretty fictitious: You can generally get 5-20% under asking bids through in down markets where estate agents are desperate to move inventory and will often have to bid 5-∞% more to have any chance during booms where every house has multiple bidders.
    – Philip
    Sep 29 at 7:48
  • Dear Philip, many thanks for this comment! I imagine that at the current moment it's down market in London? Otherwise the flats would be sold quicker and without discount?
    – aglearner
    Sep 29 at 14:26
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    Correct. Cladding crisis, Brexit and the covid movement of people to the suburbs has definitely hit London flat sales fairly hard. You can probably get away with being quite aggressive with bids on those types of properties as we stand depending on exact location.
    – Philip
    Sep 29 at 14:45
  • The chance is larger than if you offer 425K, and lower than if you offer 475K. It can't be universally predicted.
    – user253751
    Sep 29 at 16:32
  • It doesn't cost you to put in an offer, and your first offer doesn't have to be your final one.
    – Simon B
    Sep 29 at 19:44
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A more general question, why do sellers reduce the price?

Sellers reduce the price for many reasons:

  • They are approaching a deadline, and they need to sell.
  • Hardly anybody even looked at the place
  • Other properties are now on sale, and this lower price positions themselves better.

Of course there are risk when you lower the price. People assume you can go even lower. People assume there must be a problem with the house.

Suppose I make an offer of 450K, i.e. I reduce the price by further 5%. Do I have big chances for my offer to be accepted? (what if I reduce by 7%?)

They might have a minimum number where they can't go below. If they do go below their minimum they will have to write a check to pay off the old mortgage. Or they won't make enough money to afford the new place. Only they know what that number is. If your offer is below that then you have zero chance, but of course they could make counter offer.

If you offer too low of a number, then you might be below other offers and not be considered.

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This is an instance of a buyer's agent being able to provide a very valuable service. Presumably this property has been listed for some time and the seller's agent is very motivated to have it sold. It is likely that they will have a sidebar conversation with the a buyer's agent and know what price will get the deal done. This will be done very unemotionally as the only interest the agents have is earning a commission. If the flat owner and buyers were directly involved in negotiations, it would likely erupt in emotional fireworks.

There is no way to give a direct answer to your question as it requires very specific knowledge.

You should get an agent, and look at the flat. Will it meet your needs? Is it still over priced? Will the sellers come down further? A good agent can help you will all of that. A flat, that does not meet your needs, is almost never a bargain.

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