How much value was added ?

harrup

Catblue wrote: »

The fact that this house is flanked by terraces either side would probably move the value downwards, compared to having other detached houses (each on a reasonable sized plot) on the road.

That's our main reservation. How much could we sell it for if things don't pan out as planned. Or rather: would we at least get what we paid for it? And I just can't see that we would.

Just to clarify : we are merely looking for a comfortable home not a profitable investment. This particular house fits most of our criteria of what we want from our home. We have the money to purchase it outright. So that ain't a problem either

However, we don't know that village/neighbourhood. As this property is somewhat of an oddity given the different style of the adjacent terraced houses, I'm unsure that we would ever get our money back if we don't like it there.

I'm explaining it spectacularly badly, I know. But the property market has changed significantly. 10 years ago, 5 years ago buying a house was a very different kettle of fish. Unless one was spectacularly unlucky and/or foolish it was neigh to impossible to LOOSE money on a house. But now?

harrup

real1314 wrote: »

What it comes down to is this:-

Look at a prospective property. Decide what you could do it it to maximise it's value. Determine what the value would be once you've done that.

Work out the cost of the work, work out the price you'd pay for the property. Decide on what minimum profit you want. Add these up and if they are equal to/below the final vlue, then buy it, do it, sell it.

If the profit is bigger than someone else might think it should be it's irrelevant. Sometimes a developer gets lucky, sometimes they see an angle no-one else did. Other times they lose out - in those cases they can't move the final price up to compensate, so in the cases where they get lucky, they don't move it down either.

Brilliant, clear explanation - thanks.

But....I think this could well be a case where the developer miscalculated/misjudged....but are still holding out for a price and profit which they would or should have achieved...IF the market hadn't changed. Or the expenses run away with them. OR they had a particular buyer/niche in mind which hasn't materialized as yet.

Just a total rookies guess, mind you....:)

Still, either way.....I guess it's not the right property for us. Too many "if'"s and "but"s and uncertainties.

Many thanks for your help

harrup

real1314 wrote: »

There is no single specific factor; in no specific order:-

1. The overall market price change
2. The condition of the property
3. Square footage
4. Number of rooms
5. Layout
6. Facilities
7. Imponderables
8. Intangible features
9. Desirability
10. Fantasy

You are asking a question that no-one can give an answer to. YOU have seen the property, YOU know what it means to YOU to buy or pass on it.

Compare it to others in nearby streets full of detatcheds, does it compare in price?

You won't find a list of 165,000 things each valued at £1. Unless you accept that simple rule, there's no point trying to buy a house as you will most likely feel disappointed with what you end up with.

I specifically like # 7 and # 8 on your list!!!! "Imponderables", now there's a factor I haven't pondered on before.....

Yes, comparing it to detached houses which are located on a road full of equally detached houses - the price IS comparable. But that is a moot point - since it ain't located on THOSE roads!

real1314

harrup wrote: »

Brilliant, clear explanation - thanks.

But....I think this could well be a case where the developer miscalculated/misjudged....but are still holding out for a price and profit which they would or should have achieved...IF the market hadn't changed. Or the expenses run away with them. OR they had a particular buyer/niche in mind which hasn't materialized as yet.

Just a total rookies guess, mind you....:)

Still, either way.....I guess it's not the right property for us. Too many "if'"s and "but"s and uncertainties.

Many thanks for your help

I think you've come to the conclusion that was always in your head. In the current market I'm fairly sure most people can find what they want at the price they want to pay.

When I last moved I paid 15% more than my target price. I wanted to pay £45k for a new home (it was some time ago) and ended up paying £52k for a home in a street I didn't think I could afford, but where the property was way ahead of what I'd been looking at.

You need to deceide on a few issues:-

1. How long do you expect to stay in this home - the longer that is, the less relevant price change is - you'll recoup more value from enjoying where you are in 10 years than you might lose in £££s

2. What are the factors most important to YOU - decor? room sizes? layout? location? external space? - which of these can you change easily (I can change any room, some layouts; by diy at reasonable price, others cannot, yet others could add an extension themselves which i cannot.)

3. What will you be doing in 3/7/10/15 years - same family size? same job location?

4. Is this puchase an investment where you want to make a profit? or one where you want to avoid a loss?

5. How much risk are you taking in buying at this price? If it's comfortable, you can worry less about price changes, but if you are stretching yourself (to the limits) then is the worry of re-possession worth the extra space/room/better location?

harrup

real1314 wrote: »

I think you've come to the conclusion that was always in your head. In the current market I'm fairly sure most people can find what they want at the price they want to pay.

When I last moved I paid 15% more than my target price. I wanted to pay £45k for a new home (it was some time ago) and ended up paying £52k for a home in a street I didn't think I could afford, but where the property was way ahead of what I'd been looking at.

You need to deceide on a few issues:-

1. How long do you expect to stay in this home - the longer that is, the less relevant price change is - you'll recoup more value from enjoying where you are in 10 years than you might lose in £££s

2. What are the factors most important to YOU - decor? room sizes? layout? location? external space? - which of these can you change easily (I can change any room, some layouts; by diy at reasonable price, others cannot, yet others could add an extension themselves which i cannot.)

3. What will you be doing in 3/7/10/15 years - same family size? same job location?

4. Is this puchase an investment where you want to make a profit? or one where you want to avoid a loss?

5. How much risk are you taking in buying at this price? If it's comfortable, you can worry less about price changes, but if you are stretching yourself (to the limits) then is the worry of re-possession worth the extra space/room/better location?

All EXELLENT questions to ponder - thanks so much.

The sticky questions for us are #1 & #5.

The answer to the former is: " indefinitely if we like the people in the neighbourhood/neighbours/village....but since we don't know anyone, who knows whether this community is ultimately right for us"

The answer to the latter is " VERY risky. Adding stamp duty and all related house moving expenses.....I cannot seee that we would ever get our money back if we don't like living there. We like the house. A lot. But there is a lot more to living happily in a place than a house alone".

Plus....since we aren't property developers, we would actually LIVE in the place. Meaning we would no longer sell a perfectly pristine house owing to pets, kids, visitors, ect.....and if one takes the gliss of the shiny new glitz away - that house just ain't worth that kind of money."

Summary: too risky. Not for us. Unless the seller accepts a significant price drop. No harm in trying, no?

thanks for helping me sort through my muddled "pros & cons"!!

Doozergirl

harrup wrote: »

let me have a mental stab at it: If you transform a previous ramshackle dilapidated property with a jungle garden into a gracious home with a landscaped garden ....I suppose your initial outlay or expenses are irrelavant since the subsequent buyer pays for your vision, expertise, the convenience of moving into a comfortable home, etc, ect.

I presume that's what you meant?

If so - fair enough. But still - there presumably is a "ceiling" in how much a given property will/can augment, right?

That's sort of what I meant but I don't ask people to pay a special premium for the house, I'm basing it off that ceiling price you mention because it is tangible. There is never really a rule as to how much value certain things add because of that ceiling price. I'm working backwards so the % profit margin is decided entirely by me, not by a magic figure of how much certain works add. If you are adding no floor space to speak of and still make a profit after the cost of work then really, you've just bought well rather than added value. I look at things being wrong as detracting from the value rather than certain improvements adding to it.

But this house should measure up in terms of value to those detached houses you mention which are surrounded by detached houses. And if you feel the street is not as nice or whatever, then perhaps marginally lower in value but if your gut is screaming that it is more expensive simply because of what you can see and how much it costs (without being concerned with how much they spent) then it is too expensive.

If you saw how much I paid for a house then you might balk at how much profit you think I'm making but I'm presenting you with a house that costs no more than anything it can be compared to. So what I paid is irrelevant if you can't find anything bigger for less money than I'm offering it to you for.

Square footage is ultimately where you can most accurately compare house values (I did this for friends and it the differences in price per square foot was astounding in quite a small locality) so have a look at floorplans carefully or compare room numbers and sizes of the different houses you have seen.

Doozergirl

harrup wrote: »

Plus....since we aren't property developers, we would actually LIVE in the place. Meaning we would no longer sell a perfectly pristine house owing to pets, kids, visitors, ect.....and if one takes the gliss of the shiny new glitz away - that house just ain't worth that kind of money."

If you think you are paying for the shiny stuff then it is overpriced. A renovated house shouldn't lose money once you step into it. It isn't a car and it isn't being sold by Persimmon. Renovated well it will still be a great house in 10 years time with perhaps fashion dicatating a change of style to some elements.

If I sold you a house, I'd expect you to be able to sell it on again almost immediately or indeed in a few years time for the same price, allowing for market fluctuations. It's everything that you can't see that makes a good renovation - kitchens and bathrooms are just window dressing; they don't add to the integrity of the building and therefore it's intrinsic value - a new kitchen adds the price of a new kitchen to a house. It's all the upgraded plumbing, electrics roofing, insulation etc that make it a decent investment.

harrup

Doozergirl wrote: »

If you think you are paying for the shiny stuff then it is overpriced. A renovated house shouldn't lose money once you step into it. It isn't a car and it isn't being sold by Persimmon. Renovated well it will still be a great house in 10 years time with perhaps fashion dicatating a change of style to some elements.

If I sold you a house, I'd expect you to be able to sell it on again almost immediately or indeed in a few years time for the same price, allowing for market fluctuations. It's everything that you can't see that makes a good renovation - kitchens and bathrooms are just window dressing; they don't add to the integrity of the building and therefore it's intrinsic value - a new kitchen adds the price of a new kitchen to a house. It's all the upgraded plumbing, electrics roofing, insulation etc that make it a decent investment.

Brilliant message and help!! Thanks so much.

"> ....kitchens and bathrooms are just window dressing; they don't add to the integrity of the building and therefore it's intrinsic value "

HA! Boy, did you ever hit the nail on the head. I knew in my gut that something I couldn't put into the right words bothered me and THIS, in a nutshell, was it. Too much window dressing and not enough....real substance.

For the lack of a better description: it's a Skoda dressed up as and pretending to be an Aston Martin. Ok, not a Skoda. A BMW perhaps

It's a sweet enough place.....but either the vendor - perhaps someone who was a novice property developer? - massively miscalculated on their interior design costs....or assumed that a house looking wonderful inside could warrant any price tag.

Pity, in another setting/surrounding it MIGHT be worth it. But not where it is and what it is.

eco-friendly_2

It's a sweet enough place.....but either the vendor - perhaps someone who was a novice property developer? - massively miscalculated on their interior design costs....or assumed that a house looking wonderful inside could warrant any price tag.

True! most profits in the past were made from HPI, rather from the refurbishment of the property, that's why many developers now rent their properties.

poppysarah

You could ask what square footage they increased the house by to get the increased value.
Answer usually none...