Estate Agents Estimate Vs Surveyor Estimates - Advice Req'd.

epichouse

Hi all.

I am in a bit of a moral and financial situation here. It will be my first house purchase. A while ago I commented about a house I am interested in buying that belonged to a good friend of the family, who very sadly passed away earlier this year.

We had discussed it very vaguely over the years that they would like me to have it if they ever had to leave through ill health etc, and that they would do me a good deal on the house. The benefactors of the will (two parties) are very kindly amicable to those wishes. They are very good and honest people.

The house was valued (by them) via two estate agencies in the area. For arguments sake, let's call it £150,000 to £155,000 on the (would be) estate agent's window. A house down the road sold for much less, under £118,000 but it wasn't quite comparable. A house up the same road is estimated to be £140,000 on Zoopla, if that's anything to go off. Some further down are over £170,000 with bigger gardens and driveways, but others further down from those don't bring anywhere neat that, so it is a mixed bag within a certain spectrum.

To save estate agents fees and the rigmarole, we decided we'd mutually make a deal, make an offer, bearing all the above situation in mind.

Due to me not being in a chain, being able to raise the funds (one way or another) immediately without a mortgage, the ability to move on it straight way, plus there being some modernising work to do at the property, we offered, say, £135,000 for a quick sale before winter. This was accepted, although nothing has been signed yet.

We thought we'd done okay, they thought they'd done us a good deal, and everybody was happy.

Thanks to advice on here, we decided to get a chartered surveyor to check the property structure and stature etc before buying. (After all, I am spending my life savings on it and holding a bit extra for some modifications).

The chartered surveyor indicated (we have not had the actual report yet) that the house, in his view, would be more like £125,000 and it would be more £150,000-£155,000 if it was all modernised and made swisher inside and out.

This means that the estate agents are looking to be £25,000 to £30,000 out of sync with the surveyor we employed, and that our offer of £135,000 now becomes no longer a 'good deal' but approx £10,000 over-priced right from the outset!

This £25,000 to £30,000 drop from the estate agents estimate is going to be a big shock to the families selling the house, after being told by the estate agents that it should fetch what they said it would. Yet, I cannot really afford to be paying £10,000 more than its true worth just because it would be impolite to do anything else.

I wouldn't really want the house to go on the market, then I end up missing it by a couple of thousand, or, indeed, that it ends up being put under offer with an estate agents for more than the £135,000 that I already offered and end up in some kind of bidding war!

I do not have much (any!) experience with houses, estate agents, or surveyors. I had recently read that estate agents are not anything to go off, and that the chartered surveyors are the only ones who can truly value a property (ie, for court cases and so on), but then again, why would estate agents inflate the expectations if it wasn't going to sell at something near to their suggested price? They were not going to be taking a percentage, it was a fixed fee.

I don't know what the report is going to say yet, or what the owners of the property will do about it when I break it to them.

I am hoping that a compromise can be met between us all, and that I can recoup some of the difference by calling in a few favours on the renovations and doing a bit more "DIY" than I was planning, so that if I ever have to sell the house I am not left too much out of pocket (as the prices around here will eventually fall slightly, no matter what the general market is doing).

So what is to be done in such a situation? I would just like to pay a "fair price" for the house, be able to do it up (to modernise it to my liking) and not lose too much money if things didn't work out and I had to move in a few years time.

I am not really that bothered about a "good deal" at the end of the day. I just don't want to make a mistake by either missing it for the sake of a few thousand, or paying over the odds.

So who is in the right here? I am hoping that a middle-ground can be met, but what if this fails?

I feel terrible having to further barter down the price in such sad circumstances. They must feel they have already taken some on the chin with the initial offer, now if I want the house I will be having to take some on the chin and they taking even more on the chin. What a situation!

G_M

EAs frequently 'over-value'. They are used to trying to pursuade a seller to employ them to sell their house,so they indicate that they couldget a high price.

Of course, once the seller has signed a contract, the house may not sell and the EA will suggest reducing the price.

An independent surveyor, however, is objective. He gains no advantage from either over-valuing or under-valuing.

flashg67

If you take an 'average' expectation of a 10% reduction on the EA price, that would give you a likely selling price nearer to the price you have agreed, so if extensive work is needed, then perhaps some where in between that & the the surveyors estimate does seem nearer the mark.
But, if you can get it for £135k but don't need to spend £20 on repairs to realise £150k, you'll still see an increase in value anyway, not forgetting the usual profit you'll make over the years through house price inflation. The £10k you 'overpaid' won't seem much in the scheme of things after a few years.
You risk ruining the friendship by renegotiating now, especially if they think you're looking to make money on the house - whenever that may be.

epichouse

Thanks. There's quite a few dynamics at play here, which can get pretty complicated.

Due to the nature of the area, I cannot see house prices rising here in the next decade. In fact, I suspect they will either stay relatively static or even decline slightly, even if the nationwide marketplace rises. This has been the trend elsewhere in this town, which is on the whole declining more than it is improving. It is one of the poorest places in England, industry is long since decimated, litter, failing schools, etc are abound. This little road is just in the more affluent part of it. I can't really afford to leave it or the surrounding area, and besides, my family and work is here.

I am not seeking to make any undue money off them or off the house when I sell it - I just don't want to lose too much if I have to move. It will be my first house, first time living on my own, in a house which will have very strong memories and sensations of the previous owner for quite some time.

I don't know how I am going to feel being there, whether it is all going to work out. It is a big jump for me both personally and financially. Hopefully it will work out fine, but I am just keeping in mind a worst case scenario or a change in situation.

I do hope that a middle ground can be found, but I don't think I can not mention the disparity between the estimates. It is potentially quite tricky. I guess time will tell!

Yes, think you could be right..... if a compromise cannot be reached, I think we'd have to get more accurate with the costs of the work I'd be looking to have done. We are only estimating things at the moment, going from general figures we see being knocked around.

If I can call on some favours, be thrifty in the specifications, do more of it myself (learn how to tile etc!) and achieve it all for less than we think, that would then be fine with me.

Maybe I should get onto this before going back to the sellers? I'm not going to have much time though, maybe a week, and I work most days.