Possibility of overpriced market valuation

wateva

Hi All,

I am interested in a house that has a guide price of £220k for a three bedroom house. Thing is when I did a comparable house price check for similar properties sold on the same street, I found the sold prices were far less which seems to suggest the price of the property in question maybe artificially inflated by approximately 10-15%.
Taking this information into account, how would you advise I tackle the matter when making an offer? I know my offer may come across ridiculous but I don't want to pay over the odds for a house which may be overvalued. At the same time, I don't want to lose out on a good house. The house has been on the market since April which isn't long but judging by the way houses are being snapped up in the area, I am surprised this house hasn't sold yet.
Any advise received is much appreciated

anselld

Bear in mind that there is a lag of 2-3 months in publication of sold prices so you may expect to pay slightly more.

There is no reason why an offer 10-15% below asking should be seen as ridiculous. If that is what you think is a fair offer and the maximum it is worth to you then make the offer.

ethank

Yeah be very careful using the sold price data as a guide. As although there is a 2-3 month time lag in publishing the data, that is from the day of completion.... So if it takes three 8-10 weeks on average to do conveyancing and complete - add that on and you are looking at prices from 5 months ago!

HouseBuyer77

If properties normally disappear very quickly and it's been on since April there will be a reason. This may be they had a sale sorted which fell through or it may be it is overpriced but they have unrealistic expectations so aren't selling.

HouseBuyer77

Oh and how does the asking price compare to the asking price of other similar properties? As said above the land registry data has a far amount of lag on it so that can give you a more up to date view (though obviously more distorted as asking price is not selling price).

wateva

Well to give you an insight three bedroom houses are being sold in the region of £180k. Some sold properties had pictures available to view and they appear to be in good condition as well.

Annie1960

Before you offer, ask the EA why it hasn't sold yet and have there been any offers.

If there have been no offers, then chances are it is over-priced in such a fast-moving area.

jimpix12

Even in the "surging" areas of the South East, and if you pick and choose the data, the most that properties have risen in 5-6 months is, what, 0.5% in real terms? 1%? In other words it's still nowhere near 10%.

It doesn't say the area you are looking at, but if you overpay simply because the vendor wants that price and you don't feel it's worth it, you are an eejit.

ellie27

The sellers should know how much the other similar houses sold for.

If you think £180k is what other ones, same size, same condition etc sold for then offer £180k.

No doubt it will be rejected, but it is a starting point.

Make sure you know your max budget. How much do you want the house? Are there other houses on the market that you would happily buy for the £200k max if this one is not possible?

Rosetinted

wateva wrote: »

Taking this information into account, how would you advise I tackle the matter when making an offer?

When making an offer that's under the asking price, I provide reasons why I feel the price I'm offering is fair (i.e. a list of what's wrong with the house), so that's what I'd advise doing in your case.

As someone already said, it's also useful to ask the agent why they feel the property hasn't yet sold, given that other properties of that type in the area are moving quickly. I did this when viewing a house a few weeks ago and the agent told me that feedback from viewers was that the house was too shabby for the price and they wanted the finished product for that amount (they were right!).

When I offered I said something along the lines of 'I've researched prices in the area thoroughly over the last 6 months and compared to other properties at that price, this house is not in such good condition. It needs renovation work, which I estimate will cost £15k. I'm therefore offering £[asking price minus 15k]'.

In your case it'd be a good idea to check what houses that are selling for £220k offer that this one doesn't and then put your case to the seller via their estate agent of all the things you'd expect for 220 that this house doesn't have. Be polite and factual about this, though ('needs new decor', rather than 'it looks like the 70s threw up in there'). No seller wants their beloved home verbally savaged by a potential buyer.

You never know if it's the seller or the EA who has an over-inflated opinion of their property's value. The house I offered on started at 20k over market value, was dropped to 15k over market value and I offered market value for it. I never got a response to my offer and lo and behold, the house is still on the market. It's been on for two months in an area where reasonably priced houses shift within 24 hours. Some sellers refuse to accept reality!

househuntingmad

Go ahead and make your offer based on what you believe it is worth, but be prepared that a swift no may be the reaction.

I researched carefully as above and made an offer on a property six months ago that was clearly overpriced and offered what I thought was a more accurate value based on what else was selling. Property is still for sale now. Ultimately it's up to a seller to decide what they accept, whether it's in the realms of reality or not!