realistic selling price?

split_second

hi all asking a quick question on behalf of my parents:

they have lived in the same house since the late 80s, now need to sell as the stairs are getting a bit much for my mum after she had a stroke and issues with her knee, plus its a bit big now me and my sister have moved out. they are mid 50s but very young minded so the house is very modern, they had 4 estate agents value it and all of them said to put it on at 165k expect a bit less but thats fine, they want a quick sale so they can buy a bungalow.

they have been on the market about 2 weeks and got their first viewing and then an offer- 140k :eek:

is this realistic or a p take?

the problem as i see it is the area is the sort where people move to in order to bring their kids up and end up staying there till they either leave the earth, go into a home or something similar, the neighbours next door have been there for 30-odd years, the other side 10 (and the woman they bought the house from 30 odd as well) and lots of the original owners from the houses being built in the 60s are still there, when the houses are sold they are often in need of being modernised, not run down just old folks lived there.

nearest houses are 160k, same size but some very loud and garish colour schemes, original 60s front porch bit still on (lots have had these taken off) and not had a new roof (my parents and the houses around have all needed and had new roofs in last 3 or 4 years), hasnt had driveway extended, which a lot of others have.

other house is 144950, is very original (60s) inside, and a corner plot (seems smaller than the others), will need lots of modernisation but no-one seems to mind that round here as everyone that moved their families up here had to do that.

is this first offer realistic or not? thanks

go_cat

What are the Sold prices nearby that is what you should base your decision on not selling prices

split_second

the majority of houses are smaller nearby or ones that needed work

145k for a doing up one in 2009
174k for a similar one done up in 2008
116k for a doing up one in 2003

they dont come on to the market much at all, one sold over the road and was like something from 'the money pit' that was a few months ago but no-one can find it on zoopla, rightmove or nethouseprices

go_cat

Does their house need doing up or modernising ?

townendwig

Hi split, thanks for sharing the anecdote

always a tricky one this, but we need to get out of the mindset that asking prices mean anything. Unless of course a willing and able buyer pays that amount.

This is a good example of price discovery. As it stands the true value of your parents home is currently £140,000 and even then only IF the buyer who has offered that amount is proceedable. It may additionally be the case that the buyer isn't able to raise the funds to that amount on that property (ie mortgage valuation comes up short) and that they are only proceedable at £120,000 in which case that is the market value of the house.

You could then raise the asking price to £265,000 it wouldn't alter the market value of the house from the £120,000.

Then a cash buyer may come along and offer £125,000 which would reset the market value of the house to that amount. If you were to negotiate with the cash buyer to increase but no further offer was made, £125,000 is the market price until the market decides otherwise.

Estate agents are guilty of misleading vendors with unrealistic valuations. The fact that multiple agents stick on a similar price tag, does not mean that the price must be about right. It just means they all over value houses.

This can be backed up by statistics albeit very crudely if you take the average initial asking price on rightmove, compared to the average sold price published by nationwide, the asking price figure is somewhere in the region of 30% higher than sold price. I'll try and dig this out as I've seen a monthly graph on this somewhere. This proves estate agents value houses massively above market value.

So you could very crudely say that the market is currently sat at somewhere around £115,000 on a house an estate agent says you should price at £165,000. This is the stark reality of today's housing market and the general mindset of vendors needs to change to wake up to this new reality.:eek:

Obviously with each individual case there are mitigating factors but ultimately the market as a whole is nowhere near the level of initial asking prices.

To sum up, yes the offer is very realistic, ANY offer is realistic in the absence of a higher offer. The offer is the reality!!

The true question should be:
"I have had a (proceedable) offer of £140,000, is the asking price of £165,000 realistic??"

Cheers,
Wig

split_second

go_cat wrote: »

Does their house need doing up or modernising ?

nope, one of the few that has been up for sale on that street that hasnt.

geoffky

140K sounds like the buyer has done some good research...sounds like it is around 140k to 150k because selling prices are 16% on average less than asking prices according to rightmove..

Mayflower10cat

Currently trying to help (far more elderly) inlaws to sell their property so I empathise. Their house is one of three on a quiet cul de sac on the market - the properties are so similar, but they've been valued very differently. Inlaws plot is the largest, but in truth their decor could be updated. They were originally on at the highest price for their road, but dropped by £10k when it was obvious no-one was biting. They've had an offer of a sniff below full asking but that fell through and another they were loath to accept of £5k below the reduced asking price. We keep saying - the lower offer was from a 'Buy to Let' vendor, cash, and with no chain etc, not to be turned down lightly. The simple answer is - how keen are your parents to move? What is the bottom line they'd accept to be able to move? And, as we keep saying to the inlaws, you can negotiate hard on the price of the property you wish to buy, so don't worry about accepting an offer lower than you'd hoped. But sadly my inlaws haven't bought/sold for a long time and this proved a hard concept to digest! I wish you all the best of luck.

dawyldthing

you'll definately be getting offers 10% off less anyway generally i recogn, so that would make it 148.5 k. I'd say no and see if they will go higher, aiming to get 155k roughly i'd imagine

townendwig

geoffky wrote: »

140K sounds like the buyer has done some good research...sounds like it is around 140k to 150k because selling prices are 16% on average less than asking prices according to rightmove..

Hi geoff, I don't recognise the 16% figure... do you know which sold prices index is this taken from?

Using nationwide sold prices vs rightmove initial asking prices for March data 163,327 vs 236,939 = 31% reduction!

which would suggest a figure of £115,000 is a fair price :eek:

cheers
Wig

split_second

to be honest they havent seen a house they have fallen in love with yet, they last bought and sold in 1989, and helped me as a ftb with a repo in 2009, but as i am sure you can appreciate a repo and half the size of budget they are dealing with now is vastly different

worst situation i can imagine is that some sellers will drop and some will sit and wait for the price they want to the penny