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Guide

What to offer on a property that does not stack

When a deal fails at the asking price, the useful output is not no. It is the price at which the answer would become yes. That number is worked backwards from the end value, the refurbishment cost, the money costs and the return you need, and it turns a rejection into a negotiating position: you can put it to the agent with the evidence behind it and let the seller decide whether they want a sale.

This guide shows the arithmetic, what to check before trusting it, and how to actually use the number with an agent. It is the same calculation PropDetect runs automatically on every failed deal, so the worked example matches what the software shows.

The backwards calculation

Start from the end value, because everything else is subtracted from it. For a flip, the maximum purchase price is the end value minus the refurbishment cost, minus buying costs including stamp duty, minus selling costs, minus finance costs for the months you will hold it, minus the profit that makes the risk worth taking. For a refinance-and-hold, replace the sale with the refinance: the lender's loan at their loan-to-value against the end value has to repay the bridge and leave your target amount of capital in or out.

Two of those inputs do the real work. The end value must come from sold comparables, not from optimism, because every pound of end value error flows straight through to the offer. And the refurbishment cost must come from the property's actual condition, because a 15,000 pound misread on the works is a 15,000 pound overpayment on the offer.

A worked example

A three-bed terrace is listed at 125,000 pounds. Sold comparables support an end value of 150,000 pounds after refurbishment. The photographs support a refurbishment of 18,000 pounds including contingency. Buying costs run 5,500 pounds with stamp duty at the additional-dwelling rate, selling costs 2,500 pounds, and six months of bridging finance costs 6,500 pounds all in. Requiring a 10,000 pound minimum profit for the risk:

150,000 minus 18,000 minus 5,500 minus 2,500 minus 6,500 minus 10,000 leaves a maximum purchase of 107,500 pounds. That is 17,500 pounds below asking, a 14 percent reduction. The deal is not dead, it is mispriced, and now there is a number that says by how much.

Sanity checks before you trust the number

The offer is only as good as its inputs, so check them in order of leverage. The end value first: does the comparable pool actually match the property on type, bedrooms and size, are the comparables recent, and does the price per square foot cross-check agree? The refurbishment second: has anything invisible been assumed away, and is the contingency real? The finance third: is the bridge priced at today's rates and the term honest about how long works and sale actually take?

Then stress it. If the end value comes in 5 percent lower and the refurb 20 percent higher, does the deal merely make less, or does it lose money? An offer that only works if everything goes right is not an offer, it is a hope.

  • End value from sold comparables with the exclusions explained, cross-checked on price per square foot
  • Refurbishment costed from the actual condition, with contingency carried
  • Finance priced at real rates over an honest term
  • Stress test: end value down 5 percent, refurb up 20 percent, and the deal must still not lose money

Using the number with an agent

A low offer with no reasoning is noise, and agents filter it out. A low offer with a one-page justification is a different conversation: here is the end value and the sold prices behind it, here is the refurbishment the photographs support, here are the costs, and here is why the maximum sits at 107,500 pounds. The agent can put that in front of the seller and defend it, which is the only route to an accepted offer materially below asking.

Timing does the rest. A listing in its first week rarely takes 14 percent off. The same listing after sixty days, a price cut and a fallen-through sale often does. The offer price does not change with the seller's mood, so put it in writing, stay polite, and let the market move the seller towards it. Some will never engage, which is fine: the discipline of a maximum price exists precisely so you do not chase deals past the point where they work.

How to calculate a maximum offer on a UK property

Working backwards from end value, refurbishment, costs and target profit to the highest price at which a deal still works.

  1. 1

    Establish the end value from sold comparables

    Filter sold prices for type, bedrooms, size and distance, exclude the poor matches for stated reasons, and cross-check against price per square foot. This figure carries the whole calculation.

  2. 2

    Cost the refurbishment from actual condition

    Room by room from the photographs and floor plan, at regional rates, with EPC works separated and a genuine contingency carried.

  3. 3

    Add every cost of buying, holding and exiting

    Stamp duty at the correct rate, legals, surveys, finance fees and interest over an honest term, and selling or refinancing costs on the way out.

  4. 4

    Set the minimum profit for the risk

    Decide what the deal must make before it is worth doing. On a flip this is usually a fixed sum or a percentage of the end value, not whatever happens to be left.

  5. 5

    Subtract everything from the end value

    What remains is the maximum purchase price. State it against the asking price as a number and a percentage, and put the evidence behind it in writing.

Put the numbers to work

Sources

Frequently asked questions

What is a maximum offer price?

The maximum offer price is the highest price you can pay for a property and still hit your target return, worked backwards from the end value, the refurbishment cost, buying, finance and exit costs, and the minimum profit that makes the risk worth taking. Above it the deal stops working, which is why it is calculated before negotiating rather than during.

How far below asking price can I offer on a UK property?

As far as the evidence supports. The question is not the percentage but the arithmetic: if sold comparables, refurbishment costs and finance leave a maximum price 14 percent below asking, that is the offer, with the working attached. Discounts of 10 to 20 percent are commonly achieved on properties that have sat, been reduced, or fallen through, and almost never in a listing's first week.

Should I tell the agent why my offer is low?

Yes. An unexplained low offer is filtered as noise, while a justified one gives the agent something to defend to the seller: the sold prices, the refurbishment schedule and the cost stack. You are not obliged to share everything, but the evidence is what separates a negotiating position from an insult.

What if the seller rejects the maximum offer?

Then the deal does not work at their price, and the discipline has done its job. Leave the offer open in writing, track the listing, and revisit if it reduces or falls through. Chasing a deal past the price where it works converts a good process into a bad purchase.

See it on a real property

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