Help needed on undervalued home

rlc22

geordiepaul2001 wrote: »

Currently waiting for the valuation to be faxed through. Curiosity is getting the better of me as to what is on it.

I thought that they didn't give a "reason" on the valuation form as to why they valued it at that price.

The way the valuations work is that the surveyors find what similar properties have sold for recently and base the valuation on that - assuming that the house doesn't have any major obvious structural issues.

You should definitely go back to the vendor and get the price down - the only way they will sell it otherwise is with a cash buyer. You're the one with the bargaining power here - and don't worry about the fact that you like them, this is essentially a business transaction.

Wickedkitten

cpdc1030 wrote: »

Thats exactly the problem. One of the interested parties is the landlord that I am currently renting from, and no, he wouldn't need a mortgage.

Is it really such a bad idea to be overpaying slightly for a property that I know I'll be happy with (I have lived in the same block for 2 years already)? Outgoings will be about £180 pm cheaper with mortgage compared to renting a flat that is exactly the same. Sure, I could hold out and wait, but then I'm still throwing money away on rent and may not end up getting a property that I'm happy with in the end. Or maybe I'm crazy, who knows.

You don't want to "throw money away on rent" yet you are perfectly happy (by the sound of it) to pay more than the market value in a falling market after the biggest housing bubble in history, on a flat that is still probably losing value by close to £400 per week?

penguine

cpdc1030 wrote: »

Is it really such a bad idea to be overpaying slightly for a property that I know I'll be happy with (I have lived in the same block for 2 years already)? Outgoings will be about £180 pm cheaper with mortgage compared to renting a flat that is exactly the same. Sure, I could hold out and wait, but then I'm still throwing money away on rent and may not end up getting a property that I'm happy with in the end. Or maybe I'm crazy, who knows.

What will your outgoings be when interest rates go up? Because they will at some point -- they certainly can't go down much further.

And if you've overpaid "slightly" and end up in negative equity you're going to have a hard time remortgaging, you'll be stuck on the SVR.

So yes, it is a bad idea.

cpdc1030

penguine wrote: »

What will your outgoings be when interest rates go up? Because they will at some point -- they certainly can't go down much further.

And if you've overpaid "slightly" and end up in negative equity you're going to have a hard time remortgaging, you'll be stuck on the SVR.

So yes, it is a bad idea.

Prices will have to go down 25% more (from the valuation of 165k) for me to be in negative equity. Or about 51% from the market peak. My mortgage is for £123k.

So you're all telling me don't bother, just keep paying £866 a month in rent? And then maybe I'll find a similar property if I time the market bottom exactly (which of course very few ever will do). Or maybe I won't.

Wickedkitten

The only thing that we are saying is that at this point, paying more than a house is actually valued just on some "I'll never find another house like this EVER AGAIN" notion is madness.

thegibdog

cpdc1030 wrote: »

Prices will have to go down 25% more (from the valuation of 165k) for me to be in negative equity. Or about 51% from the market peak. My mortgage is for £123k.

So you're all telling me don't bother, just keep paying £866 a month in rent? And then maybe I'll find a similar property if I time the market bottom exactly (which of course very few ever will do). Or maybe I won't.

That's clearly a lot of money to be spending on rent but don't dismiss the notion that flat prices may fall more than 50% from peak, they already have in some places.

RobertoMoir

Wickedkitten wrote: »

She might get a similar offer, but at the end of the day, unless she strikes gold and happens to get a buyer that doesn't need a mortgage, her house is only worth what a bank is willing to mortgage it for.

She will either have to face the fact that its worth less than she thought it is and accept a lower offer, or end up digging in her heels and lose more in the long run.

Hmmm not sure I agree with this totally. While house prices in general are dropping sharply, there are localised reasons (perhaps even localised to the individual house itself) why a particular property might still generate a fair amount of interest and therefore value.

geordiepaul2001

Looking at the report it seems to be based on comparative house prices, namely the repossession that sold for 75k last year.

poppysarah

geordiepaul2001 wrote: »

Looking at the report it seems to be based on comparative house prices, namely the repossession that sold for 75k last year.

Well I look at repo prices. Once you've had a couple of low prices on a road - you have to assume it's setting a new level.

geordiepaul2001

The trouble is its only a small cul-de-sac with around 5 house sales in the past 10 years.
Unfortunately it doesn't look like the seller is going to budge on price so we will probably sit and build a bigger deposit over the summer, and see if the asking price has dropped towards the end of the year.