A bit of advice/assurance please...

jamiecreek

Hi everyone,

We've been looking for a house since February in the south Bristol area.

We've seen a few 'ok' properties come on every now and then, but generally supply is very low for decent houses without some room simply being unworkable (e.g. a kitchen that can't even fit a fridge).

However, sales are picking up in the area, and prices have jumped in the last month from £180k up to "Offers over £200k" and £210k.

One of those "offers over" houses is a lovely house, all the rooms and the garden are really nice sizes and in great condition. Its been on for a few weeks and apparently had a lot of interest. Its not by any means in a prime postcode, with the streets' house price peak sale in the last 5 years at £212k in September 07. In 2004 the house was bought for £161k.

Anyway, we've done a lot of research and everything we've seen suggests that a fair valuation now would be around £185k. We've spoken to the estate agent and he refused to put our offer of £185k to the seller, claiming "I work for them, I can do what I like with your offer. I *know* they won't go lower than £200k". I subsequently phoned up 3 local (to the property in question) chartered surveyor firms and asked them what they thought was a realistic/achievable valuation for the absolute best 2-bed terrace on said street - their response was a surprising £180k max, with most suggesting £170k was more realistic.

Is it simply that agents are taking advantage of high demand/low supply, and inflating prices even in this market? Do they anticipate buyers to simply fill any shortfall in the valuation with their own money? Can the estate agent genuinely refuse to put an offer to a seller?

It wouldn't surprise me if they went and found a cash buyer for it who didn't care, as its a lovely house. But we simply cannot afford to spend £500+ on a survey to be told what we already expect - that the mortage company won't be able to lend us what we need for this property.

I can see why people say buying a house is one of the most stressful thing you'll ever do!

bryanb

Remind the EA of his code of conduct. He is obliged to pass all offers to the vendor.

Benji_Brown

This may not be the case bryanb. The Vendor may have instructed the Agent not to put any offers forward that are lower than 200k.

The key to buying property is to offer what you think the property is worth. There is always more property out there. I cannot see how prices have increased £20k in the last month, that seems very far fetched. However, I would suggest that this is an instruction taken from the vendor. An agent is unlikely to raise prices because they will only get a slight increase in fee (they may even be payng a set fee) and are minimising their chances of selling the property, therefore it is against an agents best interest.

If I were in your situation, I would put my best offer forward. If they say no, ask them to keep your details on file. If the vendor changes his/her mind, they can then always come back to you.

Good luck what ever happens

jamiecreek

It may be surprising that prices have gone up so quickly.. but I mean we've been looking every day for new properties..

In April, a series of 2-bed terraced houses came on at between £179995 - £184995. We made bookings to view them for the day after we saw them come on, so 2 days after they were instructed. When we went to view them, 3 times, the house sold on its first day and we were told we couldn't see the property on the morning we were due to view.

Basically, it feels like prices tumbled down to the stamp duty threshold, suddenly lots of people could afford to buy in the area, all the houses sold instantly, and naturally prices hiked to take advantage of the surge in interest.

We'll think it through a bit more, and thanks to you both for your advice.

twirlypinky

Knock on the front door and have a chat with the current owners. I'm sure they'd like to know how rude their agent is if nothing else.

cattie

Benji_Brown wrote: »

This may not be the case bryanb. The Vendor may have instructed the Agent not to put any offers forward that are lower than 200k.
/QUOTE]


This is quite likely as it's what I always do when selling a property. I instruct the agent that I'm not interested in offers below a certain figure & ask him not to contact me about them & let the buyers know from the off that I'm not interested. To me this saves wasted effort all round.

Thrugelmir

However, sales are picking up in the area, and prices have jumped in the last month from £180k up to "Offers over £200k" and £210k.

You've answered your own question.

The price paid for a property doesn't have to reflect the value placed on it by a professional valuer. As in any market prices reflect demand. Short supply inevitably drives prices above market rate.

Don't get fixated on what properties sold for previously either. Properties both improve and degenerate over time.

Skyler

Thrugelmir wrote: »

The price paid for a property doesn't have to reflect the value placed on it by a professional valuer. As in any market prices reflect demand. Short supply inevitably drives prices above market rate.

Don't get fixated on what properties sold for previously either. Properties both improve and degenerate over time.

What about your mortgage company? They will only lend on the valuation made by their valuers. If the OP has already contacted chartered surveyors in the area and they have said that in their opinion the house is only valued at £185k max then it would stand to reason that the mortgage valuation would come in with this valuation also.

This would mean that the OP would have to front up the difference on the valuation, which of course would be a really bad move.

Therefore unless someone has the cash to make up the difference the property won't sell at the inflated 'market' price.

Thrugelmir

Skyler wrote: »

What about your mortgage company? They will only lend on the valuation made by their valuers. If the OP has already contacted chartered surveyors in the area and they have said that in their opinion the house is only valued at £185k max then it would stand to reason that the mortgage valuation would come in with this valuation also.

This would mean that the OP would have to front up the difference on the valuation, which of course would be a really bad move.

Therefore unless someone has the cash to make up the difference the property won't sell at the inflated 'market' price.

Providing that the buyer can make good any shortfall in the valuation then the mortgage company is not exposed to any greater risk.

If houses are being offered on within a day or so of being placed on the market then rational logic does not apply. Anybody who wants something bad enough is happy to pay a premium and this doesn't just apply to houses.

bryanb

Benji_Brown wrote: »

This may not be the case bryanb. The Vendor may have instructed the Agent not to put any offers forward that are lower than 200k.

I agree this could be the case, but I would expect the EA to say so if I made an offer.