Sell As-is, or Renovate and Break Stamp Threshold?

WD40

Hi,

Having done homework to get an idea of houses in the area, you’ve calculated that a relative’s house would be worth around £550k if renovated, and around £480-500k as is. It’s a 4-bed detached, on a desirable private estate, 10 mins from station (20 mins to London), scope for extension, built in 93. It has not been renovated since, so the bathroom / kitchen / glazing look dated. It has a large l-shaped garden (unsually large for estate).

The house next door is also on market (4-bed, much smaller, half the garden) and has just reduced its price to £480k (originally £500k).


The questions is, with the stamp duty threshold at £500k, are you better off selling the house as-is, or renovating and marketing it for around £550k? The house has had numerous viewings, with 2 offers. These offers (one @ £490k) were made soon after going to market and were declined. With market conditions deteriorating, my relative would take £490k now as the house’s been on the market for 6 months.

Personally, I’d prefer to get the house cheaper and fit a bathroom / kitchen etc to my own taste. The smaller house next door has been on the market for even longer… Would you renovate and break the stamp duty threshold, or be patient, knowing that houses in this bracket are highly affected by poor market conditions? The last viewer complained the house needed too much work (according to the agent…). At no point has the agent stated the house 'needs renovation'… In their words ‘people who like the area / house will buy and fit their own features’

Thanks in advance.

hazyjo

At £550k, they'd probably find they'll get offers at £500k anyway. I'd be inclined to sell as is.

But people/developers aren't silly and know if they renovate, it'll probably still be worth £500k so will want to buy for way under £500k.

Jx

WD40

Crikey. People are typically selling houses for 10% off listed price nowadays?

2 agents were consulted and valued the property (the two most local). One wanted to advertise at £499 and take £480, advertising the house as 'in need of renovation'. The other agent valued it at £499, suggesting it be marketed at £525. This was on the premise that a smaller house + much smaller garden on the same street sold for £480 by their company. Since, this house has fallen through and been taken off the market... She went with latter agent as, in general, they have a better portfolio of houses and seem more popular on her estate.

Having said all the above, her house has a garden twice the size of anyone else on her close, with potential to extend lower floor into garage block (other nearby properties have had 1st flr extensions).

Thanks.

katejo

If I were a potential buyer, I would prefer to buy the house without the improvements. I could then use the extra stamp duty money to do the house up as I wanted it.

WD40

So would I, Kate. If the last viewer complained the house needed 'too much work' (it's been painted inside and out, needs no work aside from kitchen / bathroom / glazing being early 90s vintage), maybe she just doesn't have time for it?

I'm now thinking the 1st agent might have had a better idea of advertising the house at a lower price, 'in need of updating'. Do you agree?

The one thing I really hate is the floral curtains in the living room... Laura Ashley circa 1990. Very dubious. But the agent doesn't see a problem, saying they'll change curtains anyway.

pinkteapot

I would say sell as-is. It is really difficult to sell within the 10% band above each stamp duty threshold.

My mum has just put her house on the market. Similar properties in worse condition (without new kitchens, not recently decorated etc) are selling for £250k. Hers has been done up and the agents are saying she'll still get £250k - people just won't go over it. She did hers up over the last five years to make it a nicer house for her to live in so isn't worried about the return on the money.

We bought our house for £230k and got it pretty cheap as the sellers wanted a quick sale. We're doing it up and if we move in the new few years it should reach £250k or close to it. I'm making sure we don't spend any more than £20k on it as we'll never sell for more than £250k (unless we end up staying put for 20 years).

If you can get £500k without doing anything, leave it. If you'll only get say £480k but could hit £500k by spending £10k, then it'd be worth it. Unlikely to get a kitchen and redecoration for £10k for what I'm guessing is a reasonably sized/specced house though...

I would put "in need of updating" on the details so viewers aren't taken by surprise, but if it's liveable at the moment (e.g. has central heating, has a working kitchen, wallpaper isn't peeling off the walls) then say that. There's a big difference between a house where someone can do the work over the course of a few years as they feel like it or have the money, and one that needs major work like rewiring before it can really be lived in.

motherofstudents

I would leave it as it is too. As long as it is clean and nothing major needs doing I think it will sell easier under the stamp duty threshold as a house in need of cosmetic updating. As a buyer I would prefer to put my own stamp on a house and choose the style of kitchen and bathroom.

Ivana_Tinkle

Did either of the estate agents express any opinion about whether you should renovate? I'd ask them for advice. Obviously there's a chance they'll just tell you to put it on the market as it is so they can get their commission faster, but they might be able to give you an idea of what sells easily in your local market.

The problem with asking here is we're all likely to be the type of people who'd rather buy it cheap and do it up ourselves, which might not be the case for the typical buyer in your price range in your area. I know that in my area, the absolutely perfect but expensive houses sell very quickly, while cheaper fixer-uppers seem almost impossible to shift (unless they're super-cheap and semi-derelict).

Kaeuqs

Where did your valuation of £550k come from (after renovation)?
It strikes me that if a house is marketed at £550k when the other houses in the street are marketed at £480k-£550k:

1) The house would have to be significantly bigger/better - since you're asking for a 10% premium. I think this would need to be another bedroom or other USP. Would your renovation include addition of a bedroom? Is the garden of the houses next door suffiicient for a family - if so, I'm not convinced that a larger garden is a selling feature - as a lot of people see it as more work - unless it's sufficiently large to be considered as a potential building plot.

2) Make sure that your street/location can/will support the extra 10% you are considering asking for after the renovation. What are the alternatives for someone with £550k budget? There is an old idion of "buy the smallest house in the best street".

3) That you'd be expecting to achieve a sale of greater than £500k, and that as a buyer I would have to get used to the fact that I would have to pay the greater stamp duty. Stamp duty thresholds are a real disincentive, however, I think marketing at 10% above the threshold is sufficient to negate it's effect.

WD40

Some very thought-provoking posts – thanks!

I would put "in need of updating" on the details so viewers aren't taken by surprise, but if it's liveable at the moment (e.g. has central heating, has a working kitchen, wallpaper isn't peeling off the walls) then say that.

It’s been painted inside and out and everything works perfectly, it’s just that the carpet, kitchen, bathroom and glazing are the same as when it was built in 1993.

The first agent consulted wanted to market at £499, with a view to sell @ £480 – stating ‘in need of updating’ in listing. Suffice to say, my relative went with the second agent, who – aside from appearing more popular in the neighbourhood – valued the place at £499, listing @ £525. Same agent is selling house next door. They appear to have had very few viewings (they beat us to market by around 10 weeks) and have just dropped from £499 to £480 (much smaller house, half the garden).

As a buyer I would prefer to put my own stamp on a house and choose the style of kitchen and bathroom

So would I. Particularly if you consider the jump in Stamp Duty could be spent ensuring you had exactly the fittings you wanted… I really think it’s a good house, with lots of potential, it’s just that the £500k sector appears to be one of the worst affected at the moment (i.e. ‘mid price homes’).

Did either of the estate agents express any opinion about whether you should renovate? I'd ask them for advice.

The current agent has been asked numerous times about this, to each of the 3 staff we’ve dealt with. On each occasion they appear to be ducking the question. One said ‘it’s a desirable area, if someone wants to live on the estate, they’ll look past the decor and fit their own’

Kaeuqs: regarding £550k, you make some salient points. It is the largest house on the street, with by far the largest garden. Other houses in the area have single-floor extensions (i.e. precedent for planning is there) and one could turn it into a very sizeable place if the kitchen were extended into the garage. The developer’s house (which has just fallen through, sale-wise…) a few doors away supposedly sold at £480. It’s much smaller, with half the garden. However, I see your point.

One point to make is that, from a visibility / security point of view, my relative’s house is the only one on the close which can be seen from the rest of the estate. It has a streetlight outside, with fencing all around. In this regard it has major advantage over the other houses, as all the others are tucked away (not desirable if you're away for a couple of weeks, if you know what I mean...).

Thanks again.

edit - one thing to reiterate is that she *was* offered £490K within weeks of going to market last yr... We're now kicking ourselves for not taking it (agent valued at 499, it was early days, so we thought we'd get it...). I don't need this being rubbed in, please!

2nd edit - there's also an unfortunate precedent, in that the house next door is still for sale (we believe it's had far fewer viewings) and the developer's one a few houses down has fallen through and is now off the market (no doubt, because 2 others on the street are...).... This doesn't exactly suggest the market for this type of house is healthy at the moment...

abaxas

As above, no house is going to sell for £550k. If the improvements dont increase the price to a level where it can be solve over the stamp duty threshold, then do it. If not, sell as is.