Help - how do I buy this house?

typeractive

Fire_Fox wrote: »

If the house is not mortgageable then I suspect it isn't worth the price you have agreed with the vendor. The value of a property is what it's worth on the open market in it's current condition NOT (as many people think) the price of the house completed minus the cost of the work needed to make it habitable.

All comments prior to my survey: I do believe this house is worth the agreed figure. Within a mile radius houses are up for around £100k in comparison...though a bedroom less, without a garage and most without a garden. Albeit, yes the condition of them is much better and indeed habitable. As you say the property is not the house + figure of rennovation = current value. Though I'm looking to buy a home - and it's worth it to me. Perhaps in the future this home may turn into an investment - that is where being savvy now and taking such steps of action may pay off. Incidently there are not many 4 bed houses within a 3mile radius under £140k...some 50% more than I'd be buying for - many of which (mostly actually) I'd not even consider living in the area.

This house isn't worth much on the open market if you are the third prospective purchaser to have problems getting a mortgage. In it's current state it will only sell to a cash buyer at auction.

I'm anticipating I will have a problem with the mortgage, hence the research I am carrying out. Therefore I am in negotiations to overcome this from the outset. Perhaps my meticulous nature will prevail where others have given up / failed. Nothing ventured, nothing gained and all that. (Don't get me wrong it is nerve wrecking, yet exciting at the same time)

You can have the valuation surveyor come out twice, but you will have to pay him twice. Have you discussed this situation in depth with the estate agent? If the vendor isn't willing to do any work, then what do they expect to happen?

No I haven't. The EA have proved to be absolutely more than useless. I knew more about the property than they did on my first viewing - figure that one out. I also know more about other stuff than they do on the property and the area (or ceratinly than they have told me). Good point though - why hasn't it gone to auction yet? Why hasn't a cash buyer stepped in yet? Am I mad...perhaps? It could all end in tears - though let's hope not.

Thanks for the reply though - good to make me question myself from all angles!

Fire_Fox

You can't compare the price of an un-mortgageable property with mortgageable properties. Nor should you take this house's potential value from the inflated for sale price of other houses locally. You need to look at sold prices of others in the street/ vicinity. Are you saying you have offered £100K but think it will be worth £140K+ done up? It will surely cost you £30K to £40K to get it right, so where is the profit margin?

This house hasn't gone to auction because it would sell for peanuts: in fact many auction properties are going unsold. Cash buyers are few and far between, and they won't generally pay estate agent prices for a house. They will buy at auction or they will buy a repo.

I understand you want this to be a home more than an investment, but do you actually have enough cash in the bank to do this up? Or are you relying on more borrowing or your salary to fund it? What happens if you are made redundant, fall ill or your partner is PG? If you pay too much now and then have to sell before it's completed you could end up in negative equity.

typeractive

Fire_Fox wrote: »

You can't compare the price of an un-mortgageable property with mortgageable properties. Nor should you take this house's potential value from the inflated for sale price of other houses locally. You need to look at sold prices of others in the street/ vicinity. Are you saying you have offered £100K but think it will be worth £140K+ done up? It will surely cost you £30K to £40K to get it right, so where is the profit margin?

Yeah, I get ya. I have looked at the surrounding streets for sold prices. The nearest are all in 2008. Within closest 4 streets, there was only one sale per street:

Street 1 - smaller and less desireable to live: £98700
Street 2 - smaller houses (generally) £92000,
Street 3 - (same street) £100000
Street 4 - no sales

2007 - same streets

Street 1 - smaller and less desireable to live: avg £85280 (5 sales)
Street 2 - smaller houses (generally) £107750 (2 sales)
Street 3 - (same street) £115000 (2 sales)
Street 4 - bit nicer (same postcode apparently), mostly semi's not terraced £126000 (1 sale)

Agreed £69k, probably (hopefully) around £25k to do up / get right)), no idea on targeted profits. I guess going on 2008 prices it would be around 6k and 21k on 2007 across the averages. However it's irrelevent as my averages are very basic - not accounting for the changes in number of rooms / size, garage, terraced or semi (couldn't quite get hold of that info for like to like properties on the sites).

Currently there is a house opposite that is similar in size, and in decent condition, though I think it's missing double glazing, that's up for the inflated price of 130k...I'm not saying this house would be anywhere close (though indeed it would be nice! lol), but to be honest, getting a 4 bed house with garden (albeit a little patch), garage and in a quiet area anywhere under 100k here is bloomin hard to find. Nearest 4 bed house with parking within a 1 mile radius (purely on Rightmove and the asking prices) is 120k - and that house require total modernisation also including windows and central heating (very dated - though a lovely property). It's very difficult to account for the avg value through all this research actually. Perhaps it's only worth what I'm prepared to pay for it. One thing I do know, is that 100k won't get me a house with as much potential in a nice area to live, let alone 69k.

Obviously all my research is pointing to me being very set on this house and I guess it's coming across that I'm adamant on it. Of course I am suspicious of why it's so 'cheap', I guess my survey will tell me that, or I'll indeed find out the very hard way if it doesn't quite pick stuff up.

This house hasn't gone to auction because it would sell for peanuts: in fact many auction properties are going unsold. Cash buyers are few and far between, and they won't generally pay estate agent prices for a house. They will buy at auction or they will buy a repo.

Yeah - my mate who's a civil engineer was just saying the same thing in a convo about it all.

I understand you want this to be a home more than an investment, but do you actually have enough cash in the bank to do this up? Or are you relying on more borrowing or your salary to fund it? What happens if you are made redundant, fall ill or your partner is PG? If you pay too much now and then have to sell before it's completed you could end up in negative equity.

Hopefully my savings will break the big costs of the house (around 25k after deposit). Also make use of salary. I work in a pretty secure job (touch wood), though it could happen to anyone - even education these days. No partner to get PG at the moment, hence looking for low mortgage rates to make them easier to manage by myself. It all depends on the hidden expenses in the refurbishment.

....crikey that's a long post - took me ages to sort that!! :rotfl:

Still welcome your help and feedback!
Thanks

Fire_Fox

It sounds like you are well on the right track and you have done a fair bit of the necessary homework! I still feel it is very overpriced, but I am not saying you should pull out if you love the place. I can't see how you'd get much more than £100K in the current market for it finished ... so £70K when it needs a lot of work and is un-mortgageable is too much and I think the bank will say the same. Still, that is a bargaining tool!

A full structural survey will also help you renegotiate but you really ought to seriously cost the work that you know needs completing - kitchen, bathroom, rewire, central heating, plastering, windows, roof, guttering and pointing are big ones. Unless you have serious DIY skills £25K won't anywhere near finish a large house that needs as much work as you are suggesting.

typeractive

Fire_Fox wrote: »

It sounds like you are well on the right track and you have done a fair bit of the necessary homework!

Thanks - it's coming on here and finding out tips to do such stuf that helps!

I still feel it is very overpriced, but I am not saying you should pull out if you love the place. I can't see how you'd get much more than £100K in the current market for it finished ... so £70K when it needs a lot of work and is un-mortgageable is too much and I think the bank will say the same. Still, that is a bargaining tool!

Roughly how much do you think it's worth if it's seriously overpriced? I'd be interested to know. :-)

A full structural survey will also help you renegotiate but you really ought to seriously cost the work that you know needs completing - kitchen, bathroom, rewire, central heating, plastering, windows, roof, guttering and pointing are big ones. Unless you have serious DIY skills £25K won't anywhere near finish a large house that needs as much work as you are suggesting.

Yeah - just working on getting a recommended person! more difficult than I thought!! It doesn't need all windows - just 2 small ones in the bathroom. Roof,, guttering and pointing should be fine (hopefully). I live with my folks at the moment and could sort this place over time if need be / finances run low. Bathroom's ok - just prefer a new one!

Don't get me wrong I am new to all this and ambitious (perhaps crazy?). It's unlikely all the work will be done quickly. I'm not buying to sell soon etc either.

Cheers

Fire_Fox

You seem a lot more realistic than I was with costs and time scales of my first project!! I think you would get this house for £50K at auction tho I suspect they won't take anything so low. Do you know what the vendors paid for it and when? You should be able to clear a 20% profit from the property and I don't think you have that leeway now.

You need to crack on with the survey and costing up everything - the major works, the extra cost of a bridging loan or mortgage retention, etc. Unless you have double glazing already then price up windows for the full house: you can bargain with this figure and then only refit two if you so choose. If the bathroom suite is not white then cost that too as almost any buyer would expect to do this.

You could post on this board asking for a recommended surveyor in your area, or possibly ask your solicitor. Until you have a survey it's pretty hard for anyone to say how much you should renegotiate the price to.

typeractive

Fire_Fox wrote: »

You seem a lot more realistic than I was with costs and time scales of my first project!!

Thanks, though I wouldn't go that far!! I'm new to it all and I know there will be hidden things to jump up and bite me on the !!!!

I think you would get this house for £50K at auction tho I suspect they won't take anything so low. Do you know what the vendors paid for it and when? You should be able to clear a 20% profit from the property and I don't think you have that leeway now.

50k - I really wish!! Though I think you're right and they will not part with it as it's just a sitting asset. It's a part exchange property and I have no idea what they got it for in part ex with the property they sold the people.

You need to crack on with the survey and costing up everything - the major works, the extra cost of a bridging loan or mortgage retention, etc. Unless you have double glazing already then price up windows for the full house: you can bargain with this figure and then only refit two if you so choose. If the bathroom suite is not white then cost that too as almost any buyer would expect to do this.

You could post on this board asking for a recommended surveyor in your area, or possibly ask your solicitor. Until you have a survey it's pretty hard for anyone to say how much you should renegotiate the price to.

Yeah - used the search facility on here and found a chap that was also looking for a surveyor. It's not proved totally conclusive yet - always difficult to get good recommendations as I need this more importantly than anything!!

Cheers

typeractive

Just been speaking to my mate who's been in the building trade for around 15 years, though his family for much longer! He has been to visit the property with me on the first viewing and thinks it's a really sound house. I mentioned about going for the survey etc, and he thinks it's a complete waste of time from his experience of carrying out work for people based upon survey reports (such as recommendation to replace a flat roof in a report - when my friend went to quote teh job it was totally fine and no older than 3 years - the surveyor did not even get up to look at the roof!).

I'm going to arrange my third viewing and my mate is going to come with me with a few little tools and some ladders to have a more in-depth look under fixings and in the loft etc. He really does know what he's talking about, and it's making me wonder if it's worth getting a full survey at the moment? We've been good friends for years and I know the advice will be realistic. Does anyone think I'd be mad to not get a building survey done also?

dopester

All the hassle and stress involved + considerable risk imo.

If it were such a bargain I'm sure a cash-buyer would have snapped it up from this company. Why haven't they put it up for auction?

Why can't the company do the improvements to maximise their selling price?

Are they looking for a mug-punter?

typeractive

dopester wrote: »

All the hassle and stress involved + considerable risk imo.

If it were such a bargain I'm sure a cash-buyer would have snapped it up from this company. Why haven't they put it up for auction?

Why can't the company do the improvements to maximise their selling price?

Are they looking for a mug-punter?

hmmm - good points and I thought about them a few times. If something's too good to be true etc...I do agree the house is more geared to a cash buyer, no denying that. Others have mentioned it will likely go cheaper at auction - could be a reason why they aren't putting it to auction yet. At one point they mentioned to me they were considering putting a kitchen into the property and selling it for more - though I stated I wouldn't be interested in that (prefer to chose my own kitchen). It is a risk - that's for sure, could go horribly wrong, or might just pay off.

Cheers for the reply.