Will developers (or maybe buyers!) never learn

QTPie

I went to see a rental property today (we are currently selling - hoping to exchange contracts this week - will probably rent this house back from the investment buyer, but I am viewing a few other rental properties as back-ups). The rental property is also available for sale.

We could never afford to buy it (at £1.25million), but we could comfortably afford to rent it (at £2000pcm). Am I the only one to think that wierd? They ARE being cheeky on the purchase price.

The location/plot/gardens/views are divine, but are the same as when it last sold (Nov 2007) and the footprint of the building is the same (no planning applications have been filed for the property in the past 9 years): they haven't extended at all, but have added quite a large decking area. The house has been gutted, possibly some internal walls removed downstairs, rewired, new good quality kitchen and bathrooms, new double glazing I THINK (might not be - might have been done by the previous owners). There is a TV in the ensuite bathroom, a nice feature fireplace in the lounge and a well spec'd kitchen, but otherwise no amazing whizzy gadgets (no ceiling/wall surround sound, no wall mounted sunken TVs etc). I would hazard a strong guess that they spent between £50k and £100k doing it up (they are experienced developers - so they wouldn't overspend)

It is a reasonably nice house (but I have seen a lot better and have seen many better finished - the small utility room has plumbing for a washing machine and tumble dryer - not even a sink or cupboards...) - but only two double bedrooms (largest of which was about 14' by 11' ) and two singles. The plot, gardens, views and location are divine, but the house is not a £1.25m house...

So they bought a house at £750k at the very height of the market, spent £50/100k on it and are trying to sell it for £1.25m :eek: (when most figures will say that house prices have fallen by about 20%).

They have had quite a bit of interest and second viewings, but no offers that they want to accept yet - hence they have started to look at renting it out. At £2k pcm I think that it will rent VERY quickly - there is nothing like it for a similar price (or even £500pcm more) in the area...

I just really don't understand it... maybe someone WILL - at some point - offer that sort of price for it, but it just doesn't make sense...

QT

Cannon_Fodder

Enjoy the views while you can, then put a cheeky offer in, in 12 months, when its still not sold...!!

mark5

Maybe they accept that no one will offer the asking price in the current market but by overpricing someone who decides to make an offer say 30% below would be hitting the target price in mind!

If they ask £750,000 ppl will offer £500,000
If they ask £1,250,000 someone might offer £800,000 thinking they are getting a good deal.

paulsin

Houses at that end of the market have not been effected as much as the rest. When your talking millions, then the people looking to buy those houses, will still be around. Its the whole luxury market. Yes its been effected a bit, but not on the same scale. i would guess that spending 50/100k on a 750k property would add 100-200k, otherwise it wouldn't be worth it, so I think they would be willing to consider offers around the 1kk mark, but I don;t think the list price is unreasonable, as the majority of prospective house purchases for that property will either not need a mortgage, or have massive ltv so won't find it difficult to get a mortgage.

lostinrates

paulsin wrote: »

Houses at that end of the market have not been effected as much as the rest. When your talking millions, then the people looking to buy those houses, will still be around. Its the whole luxury market. Yes its been effected a bit, but not on the same scale. i would guess that spending 50/100k on a 750k property would add 100-200k, otherwise it wouldn't be worth it, so I think they would be willing to consider offers around the 1kk mark, but I don;t think the list price is unreasonable, as the majority of prospective house purchases for that property will either not need a mortgage, or have massive ltv so won't find it difficult to get a mortgage.

Actually I am following a few houses in that price range and some are having hefty price reductions.

QTPie

mark5 wrote: »

Maybe they accept that no one will offer the asking price in the current market but by overpricing someone who decides to make an offer say 30% below would be hitting the target price in mind!

If they ask £750,000 ppl will offer £500,000
If they ask £1,250,000 someone might offer £800,000 thinking they are getting a good deal.

No, from what the owner (developer - not a resident owner: the house is empty) was saying, they are looking for close to the asking price... (they may well have had a cheeky offer and turned it down - I didn't want to pry too much, well I did want to, but... ).

It has been marketed since 3rd July 2008 - with no price drop at all. If they were motivated to sell (as a developer it is unusual not to be, you would expect to see some movement)...

I am just surprised that, at the moment, property developers still expect people to pay SO MUCH over the odds for a property...?

QT

Cannon_Fodder

If the type of cases demonstrated below continue to occur, then you could find a "proper" Million pound property for a bargain price...

http://www.thesun.co.uk/sol/homepage/news/money/article1716701.ece
http://www.sundaymercury.net/news/midlands-news/2009/01/25/earl-of-coventry-s-mansion-is-repossessed-66331-22771555/
http://www.dailymail.co.uk/femail/article-1110866/I-stole-repossessed-home-How-woman-squatter-house.html

kudos

A house is worth what people will pay for it - recession or not. They obviosuly feel that they can now get the asking price after the renovations and the profit is their reward for risking a large sum of money.

Whether they get it or not is a different story.

QTPie

Possibly, although it is probably a £600k house on a better plot.... There are quite a LOT better and bigger houses in this area on good plots for under £1m...

If it was priced just under £1m, I think that it might draw some serious offers, but at £1.25m....

QT

N79

QTPie wrote: »

We could never afford to buy it (at £1.25million), but we could comfortably afford to rent it (at £2000pcm). Am I the only one to think that wierd? They ARE being cheeky on the purchase price.

I'm not going to comment on the prices but one reason for the 2000pcm rent could be because this is the highest the rent can be while keeping the tenancy subject to the various housing acts. If the rent is any higher then there would be no S21 procedure (for LL to gain possession) and no statutory periodic tenancies which mean LL could not get Ts out for the duration of the tenancy. This would be a bit difficult if they wanted to sell in the near future.

An AST can, of course run periodic with LL able to give two months notice after 6 months. Much more convenient for a LL also trying to sell.

thriftybabe

lostinrates wrote: »

Actually I am following a few houses in that price range and some are having hefty price reductions.

A few houses in our area at top end of spectrum are starting to reduce. One has reduced by over £100k. It is a sought after area where people want to live but houses have been on for a while.