Am i stupid to offer more than the valuation?

Smith_007

The vendors didn't want to lower the asking price

Delusional vendor.

highguyuk wrote: »

They've come back to you, they clearly want to sell.

Seconded.


What type of house is it?
First time buyer house: It will never sell above valuation.
Retirement / forever type house: Lots of loaded baby boomers with more money than sense might be willing to pay over the odds (£200k beach huts anyone?).

DRP

Smith_007 wrote: »

Delusional vendor.



Seconded.


What type of house is it?
First time buyer house: It will never sell above valuation.
Retirement type house: Lots of loaded baby boomers with more money than sense might be willing to pay over the odds (£200k beach huts anyone?).

I await with baited breath the valuation for our place. Our FTB went into sealed bids with an offer 10k over asking which puts the house at the maximum ever sold in the street (by about 5k).

To put my paranoid hat on, I wonder if this was a tactical move by the buyer, guessing that a valuation would come back lower & give them room for negotiation

In any case they have a large deposit, so we will be arguing the toss if they come back with a lower valuation...

dancingfairy

Surely this will affect you when you come to sell? o.k so it doesn't matter so much if you are prepared to pay a bit more than what the house is thought to be worth, but when you come to sell others pay only be prepared to pay what they think it is worth. Say it is worth 90k now but you're prepared to pay 100k if you needed to sell it then you'd be looking at 90k so a loss of that 10k. Basically you're looking at negative equity/loosing money.
Consider how much it'll be worth in 5 years time based on what the lenders think it is worth now projected 5 years into the future. Will you have overpayed enough on it? is it worth loosing 10k (or whatever) or 5 years to have the house?
A difficult decision.
df
Edit: 5 years is quite a short time frame in my mind. If it was a longer time frame then the additional costs would feel a lot less and the risk of negative equity due to the difference in purchase price would be a lot less.

laidbacklou

Hi dancingfairy. This is exactly why I have been finding it such a difficult decision! I think buying a house is always a gamble as even if you pay exactly the valuation now, the price could still drop by the time you want to sell. Likewise it could increase. I feel ok about my offer now as it is only a small percentage over valuation and I think if it gets us the house it will be worth it. I will also be glad when this is all over. Been feeling sick with nerves for the past month!

hazyjo

laidbacklou wrote: »

I think buying a house is always a gamble as even if you pay exactly the valuation now, the price could still drop by the time you want to sell. Likewise it could increase.

Yes, but so would the rest of the market. If you overpay by £10k, that is just for that house. If the market falls another say 20%, you will lose that as well as the £10k.

Plus, if prices increase by say 20%, what you will want to move to will could well be even more out of reach as you'll have overpaid on yours and won't be making as much profit as you would if you pay the valuation.

Jx

Full_of_angst

laidbacklou wrote: »

Thanks for the example Tim, I worked it out the same way but with my numbers and it comes out as around the same LTV as we had before so it won't change our mortgage rate luckily.

Going to attempt negotiations tomorrow. :eek:

Thanks everyone.

Hi, I'm wondering how you are getting on with your negotiations?

In a similar position here so will be watching your thread for your updates.

Good luck.

ideal_knowledge001

laidbacklou wrote: »

I keep getting conflicting information about the surveyor's opinion - is he actually objective or is he giving a low valuation as he is working for the bank?

I just don't know what to do! Please help!

I know this is always a difficult situation especially if the house goes to someone else.

There are many factors to consider

1. As everyone stated see your LTV, that is crucial to see how much mortgage you can borrow at what rates of interest. This will help calculate affordability.

2. You will have to judge if the seller is playing mind games, if it's valuation is a certain price then really they should be selling around that.

3. If the seller has lowered 9% and come back to you then I strongly believe you should negotiate the price a bit more. Not many sellers come back in the last month or so as selling houses are picking up.

4. To stay 5 years in my opinion is definitely short term especially if you will have to sell your house in 5 years time, if you over pay and try to sell in 5 years time there are always chances you will lose out on money, you may lose out anyways but because of paying more you may lose out more.

5. An important factor to consider is the actual building itself, good condition, no major issue with it, location, neighbours. I know people that have paid extra for a property because they really liked it and was in an ideal location but then again they all planned to live there for many years or either short years and then rent it out.

I hope I haven't confused you more lol.:D

ideal_knowledge001

laidbacklou wrote: »

i'm also thinking it will actually lower our LTV as we won't need to borrow as much, or is that totally wrong?

LTV is calculated as below:

Mortgage amount/property valuation value = %


For example

Mortgage amount = £150k

Property Value = £200k

150k/200k = 75%

This then means you gave a deposit of 25%.

The lower the LTV means the more deposits you gave which then means the better mortgage rates you can get.

hazyjo

ideal_knowledge001 wrote: »

There should be a like button for this common sense stuff

Eh? What's common sense to one person isn't to another.

ideal_knowledge001

hazyjo wrote: »

Eh? What's common sense to one person isn't to another.

Well it does have the word "common" in it but yeah what you said is True, sorry if I offended anyone.