Should I overpay or withdraw from sale?

kate5555

Hi everyone,

Another FTB looking for advice on a purchase please.

I've had an offer of £130,000 accepted on a house I really like(negotiated from £135k asking price). I noticed that other properties on the street had sold for a lot less (£85-90k for a 2br, whereas mine is 3br). However the house ticked all the boxes I was looking for, and is nicely done up inside and ready to move into straight away.

I have now had the mortgage valuation of £120,000 and the Homebuyer report (both carried out by lenders surveyors). The reason given for the lower market value is due to the available comparable evidence (I assume this means sold prices).The report has identified 5 elements as condition rating 3 and 7 elements as condition rating 2.

I've summarised the rating 3s as follows:

• F7 Woodwork - Some ill fitting internal doors. Internal doors have glazed panels which do not appear to contain safety glass - Health and safety issue and should be replaced with safety glass.
• G1 Electricity - No evidence of recent electrical circuitry checks (the seller advised the house has been rewired fairly recently but not seen evidence of this)
• G4 Heating - Boiler certification not available (because the seller has sent it to the solicitor)
• G6 Drainage - The inspection chamber outside the property contains water and effluent within, suggesting this has backed up and there is a possible blockage. Further investigation recommended before purchase.
• H2 Other - There is a basic brick built store with a flat roof - unable to confirm if roof has asbestos content. The electrics in this area are amateurish and should be checked.

As I see it there are two issues and would welcome any advice:

1) Valuation lower than offer - Is this normal? I've read mixed things - some say lenders 'down value' because they don't want to lend, however I can kind of understand it when comparing with sold prices on the same street. I don't expect to stay there for more than 5-10 years (maybe even less) which I think makes resale value more of a concern.

2) Issues identified in Homebuyer report - I don't know whether I should worry about these. They don't seem like huge issues to me but I have no experience owning a house so am clueless. I've spoken to my solicitor but they were not particularly helpful and simply advised I get reports done. The sellers EA told me most of the defects were common to most houses and there was nothing major identified.

I've said I won't go above £120k and now waiting for the seller to respond. I doubt they will accept that though, so I need to consider if I would be willing to pay more.

What would you do in my situation? All advice gratefully received

Thanks in advance
Kate

alchemist.1

Depends on how much you like the property. Are there any equivalents at 120k in the area?

kate5555

No I haven't seen anything comparable at 120k in the area. I really want the house and I was happy to pay £130k, it's just getting the valuation that has scared me - I don't want to pay too much and then lose money when it comes to reselling. I know that there is always a risk of losing money when buying and selling property but I don't want to start off at a £10k loss (if the valuation is to be believed).

alchemist.1

My personal opinion would be to pay the additional amount (if i was going to stay in the property long term and loved the property).

If its case of wanting to move in 5-7 years time, then I would give it a miss.

kate5555

Thanks - I suppose I was thinking the same as you, but hoping that someone would tell me otherwise!

andybenw

The survey items don't look too bad. Stuff about electrics/boiler is standard even on high end.

As to price it's not just a question of you going above the 120. The seller may not be prepared to move.

So be prepared to walk away if you can't get near the 120. A pair of weeks thinking time might have the seller reconsidering.


Edit. My current place. Offered 148. Downgraded to 140 after survey. Eventually settled at 141.5

kate5555

andybenw wrote: »

As to price it's not just a question of you going above the 120. The seller may not be prepared to move.

Good point and one I hadn't really considered to be honest. If the seller won't move from 130 then I don't have any choice but to withdraw, as I don't have enough deposit to make up the 10k difference.


I will try to prepare myself to walk away in case it comes to that, unfortunately I have been an overenthusiastic FTB and in my head I have already moved in, naively thinking everything would go smoothly!


Thanks for your opinion on the survey items - good to know its fairly standard.

Mossfarr

Sounds like the house is overpriced to me. I would be asking why they think their property is worth so much more than the other houses in the area. If it was in absolutely pristine condition- new central heating, complete rewire, extended, conservatory, new double glazing etc etc then it might be worth it, but from your surveyors report it doesn't sound like that is the case.
It sound to me like the vendors haven't accepted that property prices have actually reduced since the crash. They may be in negative equity and need to get such a high price to break even themselves.
I definitely would not offer more than the £120k valuation, you may need that extra £10k to bring the house up to scratch.

G_M

The value of a property depends largely on compaison with others locally, but also on your own preference. If it's for a long-term home and you love it, it may be worth more to you than other properties locally are worth to other people.

There's no magic definitive 'market value'.

Of the survey items:

• F7 Woodwork - Some ill fitting internal doors. no big deal. Can you live with that? If not a bit of DIY or an odd-job man can fix easily/cheaply Internal doors have glazed panels which do not appear to contain safety glass - Health and safety issue and should be replaced with safety glass.Do you have kids? Millions of home had & still have these doors - it's just that modern homes are now fitted woth safety glass as standard
  
• G1 Electricity - No evidence of recent electrical circuitry checks (the seller advised the house has been rewired fairly recently but not seen evidence of this) If in doubt, get an electrical report done. Or ask the seller for evidence of the re-wire.
• G4 Heating - Boiler certification not available (because the seller has sent it to the solicitor) Hey good news! Most sellers do not have a certificate. Why should they? Again, if you're worried about the boiler get it inspected.
  Does it work? Was heating working? Was there hot water?
  
• G6 Drainage - The inspection chamber outside the property contains water and effluent within, suggesting this has backed up and there is a possible blockage. Further investigation recommended before purchase. Probobly the only genuine issue. Could be nothing serious, and a quick push with a drain rod would clear it. Could be a collapsed drain or tree roots growing through the drain.... A CCTV inspection would cost £100-150?
  
• H2 Other - There is a basic brick built store with a flat roof - unable to confirm if roof has asbestos content. The electrics in this area are amateurish and should be checked.Does the roof leak? If no evidence of damp inside, then leave the roof alone and there's no problem. The electrics may have been added in at some time by a cowboy, or DIY, but you can always have them fixed /improved later if necessary.
  

jacko74

£130k for a 3 bed on street where 2 beds sell for £85-90k is just ridiculous, it's no wonder the insane property bubble is keeping on inflating when there's gullible mugs around willing to pay these prices.

Marvel1

£135K original asking price, valued at £120K, no way I would pay over that much.