How low can you offer without insulting the seller?

[regina]

Hi All,

My husband and I are considering making an offer for a commercial property to rent in London (Bow area). The size of the unit is 805 ft² or 75 m². The asking price is £15 per square feet which amounts to £12,075 per annum.

The property is finished to a developer's shell only so we will have to undertake our own fitting out works including plastering, flooring, WC's etc. There's water and electricity supply but no gas. We were told by the estate agent that we will have to deal with installing the gas supply ourselves so that would be an additional hassle/expense on our part.

We were thinking of offering £10.50 per square feet (or £8,452.50 per annum) to begin with to give us room for negotiations later but do you think this is too low/laughable? How much do you think it should be? less 20% from the asking price???

We don't need a mortgage and can actually afford the asking price but we would of course still like to rent it as low as possible as we will be spending a lot in fitting out the shop.

Thanks in advance ;-).

Regina

 

[Root 66 Woodshop]

Firstly, I'd look at how much it would cost to fit out the shop with all of your requirements.
Then, I'd ask myself...

"Is gas really needed for the business to run?"

Thing is, if it's not actually needed, why make that commitment? you'll only loose out in the end. If it is needed, weigh up the costs of this then make an offer minus this amount, as it would be a bonus to him either way... include some of the costings to kit out the property with carpets, floorings etc etc

1. he'll have a gas supply to the property when you leave.
2. He'll have a tenant - in the current climate, everyone needs a tenant in their properties otherwise it's costing them to be without.

Top and bottom line, there is no harm in asking.

Just my thoughts

 

[Bumblebuzz]

What was said above ^^^
Weigh up the costs, minus most of it from what they want.

House's aren't exactly the same... however - few years ago, I rented a place. Asking price was £900 p/month. My price... £550
A very cheeky offer indeed! But they liked me(us)

So.. it's definitely worth a shot. Just try and "sell it to them". Why should they reduce the rent?

 

[Deleted member 138423]

I always go in with a price that almost makes me cringe initially and go from there! They can always say no and the art is the delivery of the price imo. If thro a third party I explain that I'm deadly serious and not a time waster. If direct, I keep a neutral face and act very professionally.

You can never go down from your first offer!

 

[TheEngineer]

Is this one of many similar units? If so, how many are let?

A lot of commercial property (depending on the area of the country) is empty and you may get lucky.

Depending on how long you expect to be in the building you could also try negotiating a deal based on no rent increases for X years as part of the overall deal.

In the current market I would start with £10/sq ft with no increases for 10 years and see what they come back with.

What is the worst they can do? If they say no then ask them to counter offer.

 

[money24seven]

I know times have changed but when I rented commercial properties if a prospective tenant offered a rent that insulted the property then I simply cut off all negogiation with them.
If the property has been vacant for some time then ask for a 20% reduction with a rent free period at the start.
The landlord will not install gas unless it is a legal requirement but will undoubtedly be very happy for you to do.

 

[businessfunding]

Much good advice above

With regard to insulting the seller, firstly there are possible several steps between you and the seller so any nuances will be lost, however to keep it business-like you should

- Make it absolutely clear that you are a bona-fide buyer (show accounts, business plan and willingness to engage solicitors ASAP)

- Show why you have made that offer in terms of value to you of that property (nearby alternatives, projected rents in plans possible disadvantages to you of that property)

Negotiating can be fun if both parties are engaged in the game!

 

[regina]

Is this one of many similar units? If so, how many are let?

A lot of commercial property (depending on the area of the country) is empty and you may get lucky.

Yes, it's one of many similar units but there are only 2 left available out of the 6. I believe the unit we're interested in has been vacant for the past 5-6 months.

 

[OutsourcedPeople]

Don't be afraid to insult the seller at all. Its your money, you have a right to offer whatever you like. I'd say go in with a completely unacceptable offer, knowing its either going to be accepted and you've got a bargain or its going to be declined a perhaps a counter offer will be presented by the seller (possibly half way between your ridiculous offer and their selling price)

For this to work though, I agree with the quote below;

M
- Make it absolutely clear that you are a bona-fide buyer (show accounts, business plan and willingness to engage solicitors ASAP)

Otherwise they seller may assume your not serious.

Good luck!

 

[OutsourcedPeople]

Yes, it's one of many similar units but there are only 2 left available out of the 6. I believe the unit we're interested in has been vacant for the past 5-6 months.

If its been vacant for this long, go all out and offer something ridiculous. You'd be mad not to, they'll want some form of income from this unit!

 

[Moneyman]

I would go in at a diferent tack. If the landlord has more than one property the last thing he wants is a precident of lower rent.

So...go for a long rent free period. If it has a rent review in say 5 years ask for a drop to say £12 and a six month rent free period to pay for the fittings that you will leave when you vacate.

It seems less of a drop that way

 

[Spongebob]

Times are hard for landlords.

I moved premises five years ago and I thought I was on a pretty good deal at my old place - it was just too big for me. I was paying £650 per month.

This week I got a flyer through the post from the agent managing the industrial estate it was situated on. My old unit is still empty and on offer at £400 per month!

Make your 'insulting' offer. You might just be surprised at the response. I would hazard a guess that the tenants already in the adjacent units also made 'insulting' offers.

Any asking price is meaningless in the current climate. It is the price the market of potential clients is able and willing to pay that is important.

Supply and demand...

 

No such thing as an insulting offer.

The worse that can happen is someone says NO.

 

[mhall]

i discovered recently that when Barclays open a branch they start with a thirty year lease and then try and get the first ten years free. It works quite often apparently

 

[Talay]

I would go in at a diferent tack. If the landlord has more than one property the last thing he wants is a precident of lower rent.

So...go for a long rent free period. If it has a rent review in say 5 years ask for a drop to say £12 and a six month rent free period to pay for the fittings that you will leave when you vacate.

It seems less of a drop that way

By the same mark, ask the other tenants of similar / identical buildings in the same development what terms they agreed, if they will tell you.

If you know when they signed, you can adjust your offer relative not only to the current market and the fact that it has been empty for some time but also with knowledge of what other tenants are paying.

 

[tony84]

Go in with your price, they may say no or they may come back with a counter offer.

If you have to offer higher again go a bit higher, once your getting close to each others price then you can say ill take it but i want the first 2 months rent free whilst i do the place up.

 

[moneybaker]

Hello , If you are not going to give them what they want then you should email or write a letter to the owners of this commercial property!

That way you can remain anonymous and not offend anyone. Then when you actually know that they won't budge you simple give them what they want in person.

Great advice once passed to me: Think of other people and what they want and you will get what you want.

Good Luck

 

[Mike W]

There's no harm in putting in a very low bid. There is a balance though, as you realise, between a low bid and an insulting one. The amount you've mentioned doesn't sound insulting to me.

 

[regina]

Hey guys, thanks for all your advice/suggestions .

We are planning to put in an offer 40% below asking price (£9 per square feet or £7,245 per annum) to test the water. Our reason to justify this reduced offer is because we will be spending a lot of money to fit out the unit (it's for a cafe/restaurant). The savings we can get will cover the initial outlay we will spend on new gas supply installation and extraction system etc. Also, when we leave the property, there will be a gas supply for the new tenants.

I hope this would be a valid enough reason and hope the seller/s won't completely dismiss us with this lowball figure and refuse to counter.

Any ideas on how we can make it attractive and prove that we're not time wasters? We are planning to tell them that:
1) We already have the finance in place (we don't need a mortgage).
2) Solicitor is on standby.

Anything else?

Thanks so much in advance.

 

[David A]

I have heard, but not tried it myself, that commercial leases have to be registered with HM Land Registry nowadays.

If so, then getting a copy of the lease may well show what others are paying.

 

[Talay]

What is this repeated reference to a mortgage or the lack of one ?

You are renting the place, not buying it.

Where is your surveyor, commercial, not residential ?

 

[regina]

What is this repeated reference to a mortgage or the lack of one ?

You are renting the place, not buying it.

Where is your surveyor, commercial, not residential ?

Sorry, I meant a loan.

I asked on another thread if I need a surveyor before or after making an offer but didn't get any replies.

 

[Tom McClelland]

There is never any harm putting in a "ridiculous" low offer IMHO. The worst thing the seller can do is laugh and ask for a better offer. If they're so offended that they won't deal with you because you put an "insulting" offer in then probably they'd have been prickly nightmares to deal with anyway and you're better off not buying from them.

 

[David A]

There is never any harm putting in a "ridiculous" low offer IMHO. The worst thing the seller can do is laugh and ask for a better offer. If they're so offended that they won't deal with you because you put an "insulting" offer in then probably they'd have been prickly nightmares to deal with anyway and you're better off not buying from them.

There may be genuine reasons why they will reject your offer (they might need to keep to a minimum rent-to-property-value ratio). If so, then when you increase your offer, increase the rent-free period also to negate the difference.

As in the case of the Barclays example above, some landlords are more negotiable about rent-free periods than the base line rent figure.

 

[Mike W]

There is never any harm putting in a "ridiculous" low offer IMHO. The worst thing the seller can do is laugh and ask for a better offer. If they're so offended that they won't deal with you because you put an "insulting" offer in then probably they'd have been prickly nightmares to deal with anyway and you're better off not buying from them.

Disagree totally! They'll quite probably be prickly because of what you've done. Unless you're looking for solace, you certainly couldn't assume they were like that anyway.

Saw a tweet today along similar lines: #WhyDoPeopleThinkItsOkayTo make u mad, then tell you to calm down. Its like stabbing someone and telling them not to bleed

Selling my house years ago, I had someone who, in my opinion, took the p*** with a ludicrously low offer. I was furious! Wouldn't give him the time of day after that, when he tried to come back with something more realistic. Vowed never to sell to him. His loss - was a great, unique house.

 

[regina]

Selling my house years ago, I had someone who, in my opinion, took the p*** with a ludicrously low offer. I was furious! Wouldn't give him the time of day after that, when he tried to come back with something more realistic. Vowed never to sell to him. His loss - was a great, unique house.

So do you think £9 per square feet is too low? Shall I start with £10 instead?

 

[Mike W]

So do you think £9 per square feet is too low? Shall I start with £10 instead?

Like most things it's all about how you pitch it. Pitch it well and £9 might be fine. Badly and £10 may annoy them.

Without trying to teach grandmothers to suck eggs, before you hit them with any offer, you need to talk to them about your interest but also your concerns. Sowing seeds along the way, so that they're fully expecting the low bid, when you do hit them with it, they won't be too shocked or, more importantly, peed off.

At least then you'll have a basis on which to move forward.

 

[brendan70]

20% seems a fair negotiation. If you have to negotiate to 15 or 10 thats okay.

Do not accept his offer.