Confused FTB - lots of questions!

dumpallhere

After 16 months of home hunting (!!), we have finally managed to find one that my OH seemingly likes and may agree that we put in an offer to buy. The property has been on the market only for a few days, being sold through only 1 EA (as yet) and we know that there is one more interested party as of now.

The house is about 2 years old and one of the dozen homes built (small development).

Having done some research, have found out that this (new build) property was bought (as per land registry data) by the vendor at about 10% more than sale price of other (new build) plots at the time (2 years ago). The vendor has listed the sale price as 3.25% above his buy price ... but looking at it from the other perspective (2 year old sale prices of other plots) it is ~13.5% markup!

Which seemed a bit too much, to me at least, given the market conditions .. so I thought of putting my brains to work overtime to try and figure out what is/was so special about this property that someone was tempted to pay a ~10% premium to buy it.

Facts / Difference(s), when I do an apple to apple comparison:
1. This is an end-terrace, whereas the others are terraces.
2. The total private amenity space is 33-38 sq. m. higher, which essentially means that the garden is 33-38 sq. m. bigger than the others.

Are these differences big enough to justify a 10% premium on sale price of a new build?? If yes, then I can understand the current sale price being asked.

But if not, then the only other reasons that I could come up with are:
1. The plot was a show home, which was sold fully loaded - carpets, furnishings, fixtures, and possibly electrical / electronic items included.
2. The stamp duty was paid for by the developer.
3. Cashback?

I have tried, albeit only online, to arrive at an educated guess about the current value of the plot but in vain:
1. No new developments in a 1 mile radius in last 5 years.
2. It seems to be a "steady neighborhood" - very few sales in last 2-3 years.
3. Since the neighborhood has properties that either detached or semidetached and were built decades ago, a comparison may not be appropriate as a reference.
4. Zoopla suggests that the value of these plots has appreciated between 1.3% to 10% (the best bit and one that I am unable to understand is that, according to Zoopla, between A and B - which are mirror images of each other - one has appreciated 1.3% and the other 10%!!!! How so???).
5. Nethouse prices suggests that there has been "no value change" in the last 2 years.
6. Nationwde HPI Calculator suggests a value appreciation of 4.03% if I select "Greater London" and a value depreciation of -0.72% when I select "Outer Metropolitan". According to the tool, the postcode in question lies in "Outer Metropolitan".
7. I was tempted to pay for a AVM report, but decided against it for now.


While we like the house, and are tired of the 16 months of home-hunting induced stress and long commuting to work, we don't want to end up paying a lot more than what is worth.

Riggster

It's only worth what you're prepared to pay for it.

Sounds like you love it.

Can you afford the asking price? If its only been on the market a short time, discounts on the asking price may be limited.

Put in an offer 10-15% below the asking price.

You might get a plain NO or a figure to start negotiating at.

What's to lose?

kingstreet

Be careful.

Some lenders treat property two years old as still being "newbuild" and they will impose the lower loan to value ceiling that implies.

Dan-Dan

On just one of your points , looking around our area over time , 10% as a premium for a end of terrace over a terraced , does seem failry common , some cases nearer 20%

dumpallhere

Riggster wrote: »

Sounds like you love it.

With the OH having rejected hundreds of pretty decent properties in the last 16 months and seems okay to move into this one, yes you can say I love it! :j

Riggster wrote: »

Can you afford the asking price?

A bit over what we have budgeted but can do if it comes to that!

It is just that I believe that the vendor is asking 18%-20% above the "true / lender" value, and closing that gap may mean that I might have to borrow at a higher LTV.

dumpallhere

kingstreet wrote: »

Be careful.

Some lenders treat property two years old as still being "newbuild" and they will impose the lower loan to value ceiling that implies.

70% LTV is what we had worked on all along, hoping that we won't end up paying 5%-8% the value of the property.

In this case, if we end up paying 18%-20% markup then as mentioned above, will need to search my pockets or go for a higher LTV.

dumpallhere

Dan-Dan wrote: »

On just one of your points , looking around our area over time , 10% as a premium for a end of terrace over a terraced , does seem failry common , some cases nearer 20%

Thanks for that feedback.
In this case, a 10% markup is >£30K.
This is way over the top that I have observed in the last 16 months of my search .... for a new build. Hence the dilemma and confusion!!

dumpallhere

Is it worth getting an AVM report done? ... for a (almost) new build?

kingstreet

dumpallhere wrote: »

Is it worth getting an AVM report done? ... for a (almost) new build?

Is that a desktop valuation?

If you are applying for a mortgage, you'll probably find the lender wants an inspection. Either way, you'll pay the full price for the lender's mortgage report & valuation, even if it settles for a desktop, or drive-by.

hamster2013

1. how do you know that another party is interested: did the EA tell you that? if so, then just ignore, as 9/10 times its their tactic to get you to speed up - i have experienced it when I put an offer , the EA told me another party showed up interested and put a higher offer - so we went up and up, and finally he said the other party put same offer but vendor prefers me as my finances are better - i pulled out after recalculating (he had managed to drag me up 10% above my budget) - and 4 months later, the property is still on the market.... where did the other same offer go ? LOL

2. End of terrace, as others have indicated, will always be more expensive than terraced - keeping in mind the larger garden, think of the better potential you have in terms of permitted development - if you can extend back by 3m, that will be more comfortable for you than for your neighbor.

3. if you have been renting for 16months, do the maths as to how much you would have repaid your mortgage by now.
project yourself 16months later, and you will see how that £30k will seem lesser.

4. if there are not many sales on zooplai in the area, its harder to see what the properties were put up for on the market v/s what they sold for. but 10% below asking price is a standard any EA would be expecting - he will pressure you immediately that its a no go and that 'the other party' gave more - ask him if he would still pass it on to the vendor.

5. have you had a second viewing ? This is a tactic i have used in the past to bypass the EA's evil tactics - go to the second viewing with your other half, and one of you has the task to get the EA out of the room while you view the property - and you mention to the vendor your interest and how much he is willing to negotiate - not as a way to cut the EA, as he is legally under contract with him, but to get a feel.
It will also give you a sense of how fast they want to sell and if they have found something to move into.

dumpallhere

hamster2013,

1. The EA was already giving a tour to someone else when we reached 20 min. early for the appointment at the address.

2. Okay, have found that the end-terrace at the other side of the terraces, which also happens to be 2nd in line in terms of total private amenity space (the property we have seen has the max. TPAS amongst the whole lot), sold for a premium of ........ just ~2% as a new build!!!

There's a public pedestrian / cycle path along the length of the property that we are interested in, whereas the end-terrace on the opposite end has a 5 ft gap (overgrown shrubs) between its side wall and that of the neighboring property.

Honestly, I am leaning towards my own assumption that the house we have seen was a "show-home" and sold with incentives (as outlined in my opening post), hence the inflated "sold at" price!!

3. That is the very reason I am keen to get into this home because I know that it may be 16 more months before my OH okays another property!! :rotfl: That said, I am keen to save as much as I can .. just as any other buyer.

4. My thoughts as well.

5. Thanks for the tip.