Offer on house in need of some modernisation

mattdragon2

There is a house I'm about to view on for £180,000 (been on market for 2 months, no price drop since put on). In the title it says in need of some modernisation.

The estate agent is taking me to a house also on sale for £200,000 which doesn't need any modernising (been on market for 6 months, no price drop since put on). Just to see what the 180k house could look like.

Do you offer less on a house that needs modernisation than a normal house? It looks like they have already took the price into account by lowering it to £180k.

I was thinking of offering 165k but wasn't sure if I should be offering less based on it needing work. I realise I should pay for what I think it's worth but I don't want to feel like I have offered too much and missed out on getting it cheaper but don't want to appear cheeky.

Also, is it harder to get a mortgage from the bank if it needs any modernisation? (from the pictures it looks as if it was some old persons home which hasn't change from the 1980's.)

celyn90

mattdragon2 wrote: »

Also, is it harder to get a mortgage from the bank if it needs any modernisation? (from the pictures it looks as if it was some old persons home which hasn't change from the 1980's.)

Banks normally lend on the basis of something being habitable, rather than modern, so provided it has a sink in the kitchen and some form of toilet, decor shouldn't affect your mortgage offer at all.

Do you think the 200K house will sell for 200K? If that has been on the market for six months, I would probably want to know if it is overpriced. What do other houses in the area sell for? It might be worth trying to work that out - then costing the work for the project house, taking off a bit more for fact it is a lot of hard work to renovate something then see what figure you end up with.

Don't be shy, the worst they can do is reject your offer if it is not what they are looking for.

How much do you think it will cost to get the work done on the 185K house?

Can you stand the mess? Is it just stripping wallpaper, or does it need gutting? Is the lack of modern fixtures coupled with a lack of maintanace or has it been well kept and is just dated.

Our project house was still valued at the price we paid for it (over the asking price, but the area I live in is like that) and we had no trouble getting a mortgage. The kitchen consisted of three rotting units, a condemned gas oven and a sink, the bathroom of four rotting units, a smashed up shower quad and a bath with a hole in it. The boiler was kaputt and you could see into the kitchen from the bathroom.

One thing I will say though is it takes nerves of steel and a sense of humour to live in a renovation project. We have only just got the hot water sorted out - and we moved in at the end of June

GAH

Def offer what you think is worth to you. A house that needs modernisation is going to appeal to less people at present than a place that is already modernised.

Do some research on sold prices etc, tot up how much you will need to spend on it and then you can come up with a price you are happy to pay for it.

Offering £165k is not cheeky.

In regards to the mortgage, it will depend on the level of work that is needed. Ie, if the property is a shell and has no kitchen bathroom etc, they may put a retention on the mortgage.

networkmorb

The house me and my partner are currently buying is in desperate need of modernisation. It was on for £150,000 but went in with a very cheeky offer of £135,000. Other houses in the area are going anywhere from £170,000 to £210,000 so had already been reduced because of this. After some rock like negotiating I got it for £138,000. Plan to spend around £10,000 on it to spruce it up.

Like most people will say though, offer what you think its worth. I would go in with £165,000 and see what happens!

DannyboyMidlands

Better to appear cheeky than to pay too much.

Anyway, why are you guys above being so generous? An offer of £165k on an asking price of £180k (or £135k on an asking of £150k) isn't even remotely cheeky. In both cases that's only about 10% below asking. I don't think cheeky starts until at least 25% below.

Remember that if you're not embarassed by your first offer, then it's too high. I'd go in at £150k and then let them sweat for a week.

tyllwyd

We bought a house in need of modernisation - it needed total redecoration, new central heating, and the kitchen and bathrooms hadn't been touched since the 60s. It was still livable in, though (and we did for a few years!) and there was no problem at all with the mortgage.

The vendors will realise that you will pay less for a house that needs significant modernisation, so it is down to you to negotiate what you think it is worth. They will tell you that they have taken money off to allow for the cost of bringing the house up to date, so it is up to you to decide whether you agree with them! I would be cautious, it is easy to underestimate what you will spend - we certainly did.

I would say, though, that in the current market in some ways an unmodernised house is more attractive to certain buyers than one which has been done up, because they think they will be able to get it cheap, so you might find you have more competition than you think.

Rupinder_Khurana

Hi mattdragon2,

On going through the views, I feel that you should go for negotiation and for that matter 165K is not cheeky.

Regards,

mattdragon2

I found out the house next door sold for 167,000 in october 2005. And the house next to that went for 167,00 in 2004.

Also as a previous poster mentioned, the house at 200k(identical house) has been on the market for 6 months without a sale or price change.

It looks like I might need new central heating system as the current one is an old back boiler.

A friend of mine got accepted a house of 165 on offer at 180k too, that was without any modernisation needed so I might try 160k as my first offer instead and see what happens. Also waiting back from the EA to see if there are any other problems I.E. wiring, damp.

Thanks for the help.

Nearly_Old

My son and DIL are just completing their first house purchase - the final missives (it's in Scotland) have just been concluded and the house needs complete modernisation. It is being sold by the executors of a will and the history is:

House first advertised for £190k (Home Report value £200k).
Then after some months dropped to offers over £140k (refreshed HR £150k).
Taking into account the work highlighted in the HR (quotes came in at £15k) they offered £120k to leave themselves a safety margin.
The offer was rejected but a few weeks later the vendor's solicitor called to say that £120k might be accepted.
In the meantime they had been back to the house a couple of times with other builders and found a bit more work (about £7k in value) that really needed doing so in went a revised offer of £100k - rejected but a revised offer of £103k was accepted two days later.

So I would recommend that you offer what you think it is worth taking into account a) the work required; and b) a reasonable risk allownace for those unforeseen things that always crop up.

Caveat_Mortgagor

mattdragon2 wrote: »

I found out the house next door sold for 167,000 in october 2005. And the house next to that went for 167,00 in 2004.

Matt, before you do anything you need to do more in depth research.

What have prices done in your area? Check land registry for sold prices of similar houses. You can get a report that breaks down the average price of flats, terraced, semis and detached houses. Find out what they are now and how they compare to prices in the past.

In my area you would be offering way way way too much. Prices here are back at August 2004 levels.

If you were in this area you would have to ignore the asking price and assume that £167k is the price for a finished house that doesnt need 15k-20k spending on it.

Then you need to factor in a reduction for the fact you will be taking on the hassle of a renovation.

Whilst you may secretly prefer a renovation because you can do the house your way, you should let your offer show that you want some reward for the hassle, so if you need to spend £20k to get the house to a standard of a house selling for £167k, then you want to knock of the cost of renovation plus 5/6/7k for the hassle.

A serious vendor will know they are between a rock and a hard place. Buyers struggle today to have a deposit, even fewer buyers have a deposit and a spare £15-20k to renovate a house.

If you are that person you need to understand your bargaining power. You will effectively be competing with developers who will want/need to make more than £7k or £8k out of the renovation as they will also need to cover buying and selling costs in order to make a profit.

I repeat, a serious vendor will bite your hands off if you offer more than a developer. Dont base your offer on the vendors asking price. Base it on what the market is doing in your area and bid slightly more than you think a developer will.