Putting in an offer on a probate & a land registry query...

R&C

We have fallen in love with a house that needs a LOT of work doing to it, it belonged to an old lady that passed on last year and there are two beneficiaries. We dowloaded the 'title register' document from the land registry website and it says that on the 28.10.2008 the property was valued at £210,000. I presume this was when the lady died and her daughters had to sort out her estate. Anyone have any idea how the property is valued? Is it guesswork, or do they have to have an independant surveyor do it? or an estate agent? I am really interested to know hoe credible a valuation it was, because that will give us an idea of how far off the mark we are offer wise. Anyone know any good websites that tell you how much property prices have fallen since last october? we are in Surrey.

I'm asking these questions because the property is up for a staggering £235k and the work required includes a full re wire, boiler, kitchen, bathroom, internal doors, general re decoration including ceilings and skirting, some roof attention and probably more. We would also like to pay for the bathroom to be moved upstairs although that is more of a preferance than a must! There is a house round the coner up for £240k which has a brandnew kitchen and first floor bathroom, 120ft garden, off street parking for 2 cars and a garage. The property we like has a 60ft garden, no off street parking and no garage.

Based on this we offered £190k, a whopping £45k below their asking price, or £20k below what it was valued at 8 months ago. It was rejected, as expected. We went back in with £195k which was also rejected today. We are looking to go in with a final offer of £197,500, do you think that sounds fair? How long would you leave it before offering again? should we make them sweat a few days? It has been on the market for a couple of months, a fair amount of viewings but no offers due to the work needed. We are in a good position I think, we have buyers for our flat and we are due to exchange in 2 weeks time.

Thanks in advance!:D

Geenie

OP, can you give some indication of where the property is? The markets are varying in different parts of the country...some faring better then others.

silvercar

Often the benificiaries will try to obtain as low as valuation as would be reasonable, for tax reasons. I wouldn't take much notice of the figure to be honest.

00ec25

probate valuations are done from one of two directions:
a) get the lowest possible value to avoid paying inheritance tax, or
b) get a market value to minimise the potential for subsequent capital gains if the intention is to sell it later (and the total value of the estate is below IHT threshold)

in either case HMRC will require evidence to support the probate valuation which can consist of either price info assembled by the executors themselves (eg local paper extracts for similar properties, web records of same house recent sales values etc) or get a local EA to do a valuation. In the latter case the EA may be "persuaded" to value high or low to suit the executors needs for a) or b) above, but HMRC will always assess the valuation offered against its own records and since they are out to collect tax, HMRC will not miss gross errrors in undervaling.

Given the info you provide, the fact it is being sold so soon after death means it is within the timelimit for the beneficiaries to avoid CGT and their IHT liability (if the estate has one) will be reworked based upon whatever the house now sells for. The real probate value will now be established de facto by its actual market value when someone now buys it, consequently the probate value is to an extent irrelevant.
Also without knowing, in this case, whether the deceased's estate was subject to actual IHT liability, its impossible to guess how diligent HMRC would have been in checking the original probate valuation, since the IHT threshold is £325k, so a fair gap from the value granted and thus might not have been questioned if there were few other assets or cash in the remainder of the estate.

In my own case I got our local EA to do a value, he knew our road having dealt the only 3 houses to have sold in the last 5 years, so the valuation was realistic market value at time of my father's death and there was plenty of evidence to support that. My probate value therefore was market value but that relates only to me and although I'm Surrey also, it was a fair time ago

Megsmum

You are in a really good position - have you stressed this ?
They may think you have a leasehold sale (and they sometimes take longer than they should) to tie in. Stress that your sale is really well progressed.
Its not unreasonable to offer £197 ish but remember = the beneficiaries have never had this money, they don't owe on the property. they could sit on it for the hope of the best price possible (could take a while). what are the selling agents saying about your offers ? some constructive feedback from them might be a help to you..at least then you might be able to ascertain whether you are wasting your time on this one ..
good luck

00ec25

R&C wrote: »

Anyone know any good websites that tell you how much property prices have fallen since last october? we are in Surrey.

use google!!!!!!!!
for example "surrey house prices" as the search term gives as its second hit a BBC NEWS website updated in May showing quarterly rates for each Surrey council area by house type. I think you can do some work for the rest as I'm going to bed now so won't post the link, but my council area increased its prices between Jan - March 2009

Ian_W

How long would you leave it before offering again? should we make them sweat a few days?

Make who sweat? The daughter may be sorting out the estate but do you actually know how many beneficiaries there are? She may be the only one or there may be several and if one disagrees with the sale then it becomes very awkward to sell - not impossible but at least very protracted.

Also there is often an emotional element as the property may well have been a very happy family/childhood home for those making the decision which can often cloud judgements - not just greed, though that can also be in play. You also don't know if they need the money or can manage without and wait for months for the price they believe it's worth - even if it isn't.

Bottom line - you can't make them sell. Make your best & final offer, point out your excellent position for early completion, the comparison with the house nearby and if they say NO, walk away. The "valuation" for probate and how much house prices have dropped in Surrey really mean jack !!!!!! - they will either sell for what you offer - or they won't.

BTW, given that you're offering near £200K and the work sounds to be +/- £20K on top - have you thought of making a low offer on the seemingly much better prospect around the corner?

R&C

Thank you everyone, very helpful! Interesting to hear that the £210k isn't neccessarily correct, we suspected it might have something to do with inheritence tax.

Ian_W wrote: »

Make who sweat? The daughter may be sorting out the estate but do you actually know how many beneficiaries there are? There are 2. She may be the only one or there may be several and if one disagrees with the sale then it becomes very awkward to sell - not impossible but at least very protracted.

Also there is often an emotional element as the property may well have been a very happy family/childhood home for those making the decision I was worried about this, I though our offer of £190k sounded like we were trying to take the !!!! and I didn't want to offend! which can often cloud judgements - not just greed, though that can also be in play. You also don't know if they need the money or can manage without and wait for months for the price they believe it's worth - even if it isn't.

Bottom line - you can't make them sell. Make your best & final offer, point out your excellent position for early completion, the comparison with the house nearby and if they say NO, walk away. The "valuation" for probate is neither here nor there.

BTW, given that you're offering near £200K and the work sounds to be +/- £20K on top - have you thought of making a low offer on the seemingly much better prospect around the corner? The other property has just had another offer accepted on it and even if it was available we can't afford it! The max we can go to is around £205k... we only have a small budget to do up the house but enough to do the major things like the rewiring and will live with the rest to do up as and when we get more cash (yearly bonuses and such like). Our small budget for this area would just about get us a 2 bed in an ex coucil area, so our only way of affording a 3 bed is buying one that needs renovating.

R&C

Well we got the house for £197,500. Very Happy!! Thanks to all :-)