Have i offered too much?

dantheram1985

Hi all,

i'm in the process of convincing myself i've offered too much for a prospective house purchase.

I offered the the asking price of £325k in response to the uniqueness and location of the property. It's a 3 bed semi in a rural location that sold for £200k in 2006 with the house next door exchanging for £229k in 2014 (very similar property with larger garden).

the price per sq metre is £3182 which seems high to me and i'm concerned that the mortgage valuation will come in under my offer price thus affecting the LVT.

Should i arrange a survey, which includes a valuation, and use this renegotiate the price if necessary?

dunroving

dantheram1985 wrote: »

Hi all,

i'm in the process of convincing myself i've offered too much for a prospective house purchase.

I offered the the asking price of £325k in response to the uniqueness and location of the property. It's a 3 bed semi in a rural location that sold for £200k in 2006 with the house next door exchanging for £229k in 2014 (very similar property with larger garden).

the price per sq metre is £3182 which seems high to me and i'm concerned that the mortgage valuation will come in under my offer price thus affecting the LVT.

Should i arrange a survey, which includes a valuation, and use this renegotiate the price if necessary?

Why did you offer £325k, then?

If the valuation comes in low, then you at least have a rationale for either dropping out or trying to decrease the offer price. This (latter) will make you look rather silly, though - and could pee off the seller (rightly so). It's your responsibility to DYOR and offer what you think the house is worth to you, and be sure you can afford it.

need_an_answer

Once you initially get over the valuation for mortgage purposes surely the price you paid becomes subjective.

Don't think of it that you have overpaid per se but more that you are buying a property to live in and enjoy.
Hopefully when you come to sell you will have a capital lumpsum and all the thoughts of did you overpay will be long gone

Too many purchasers nowadays want to see the value of their house increase almost on a weekly basis....and at the risk of sounding doomy,property is a longterm investment.

dantheram1985

need_an_answer wrote: »

Once you initially get over the valuation for mortgage purposes surely the price you paid becomes subjective.

Don't think of it that you have overpaid per se but more that you are buying a property to live in and enjoy.
Hopefully when you come to sell you will have a capital lumpsum and all the thoughts of did you overpay will be long gone

Too many purchasers nowadays want to see the value of their house increase almost on a weekly basis....and at the risk of sounding doomy,property is a longterm investment.

i do agree with this perspective - my fear is the mortgage valuation being closer to £300k or something. Normally there are plenty of similar houses upon which to judge a fair price but this one is a little different - next door to the other side is a £1.4m mansion!

ReadingTim

dantheram1985 wrote: »

Should i arrange a survey, which includes a valuation, and use this renegotiate the price if necessary?

2 risks associated with this:

1 - the survey & valuation agrees with the price you've offered. Oops.

2 - the vendor chooses not to believe the survey/accept the valuation, and decides to find another buyer instead. Oops.

Dunno what you think it's worth vs what you've currently offered, but another way to think about it is whether you'd be happy to lose out on the property over the sum of x thousand pounds?

need_an_answer

The thing is presumably the EA and the vendor put some sort of value on the house when they marketed it,if it hasn't been on the market for months then there is a fair chance that the valuation must have some realistic qualities to it....afterall you seemed to agree with your offer.

Having a mansion next door hopefully demonstrates that its in a nice area or at least has something to redeem it in order to gain a potential buyer in you.

How much are you thinking you may have over offered?
Are you in a position to cover that shortfall vs the mortgage if the valuation comes in lower?

I guess you may just have to sit tight and see if your mortgage valuation agrees

Sorry but I don't like these online valuation websites that take little notice of something other than bulk standard.
markets do fluctuate and depending where the house is its perfectly possible that there has been an increase even in 4 years when compared to "something similar"

hazyjo

A surveyor will be more likely to value lower if you're a FTB or if you have a small deposit when offering asking price.


How long has it been on the market? Do you know if there's been much interest? If it's sat there for months/years with no price drop, again they are more likely to value at less than you've offered.


What's the local market like?


If you're getting a mortgage, they will undertake a valuation. The lender often gives you the option of bumping this up to a homebuyer's report or full structural survey (if they offer FSSs, some don't) (usually cheaper than employing a separate surveyor).


Very hard to now drop the offer without (a) peeing off the vendor and (b) have them think you'll do it again during the process or just before exchange.

dantheram1985

need_an_answer wrote: »

The thing is presumably the EA and the vendor put some sort of value on the house when they marketed it,if it hasn't been on the market for months then there is a fair chance that the valuation must have some realistic qualities to it....afterall you seemed to agree with your offer.

Having a mansion next door hopefully demonstrates that its in a nice area or at least has something to redeem it in order to gain a potential buyer in you.

How much are you thinking you may have over offered?
Are you in a position to cover that shortfall vs the mortgage if the valuation comes in lower?

I guess you may just have to sit tight and see if your mortgage valuation agrees

Sorry but I don't like these online valuation websites that take little notice of something other than bulk standard.
markets do fluctuate and depending where the house is its perfectly possible that there has been an increase even in 4 years when compared to "something similar"

Re: over offered - roughly 10k-15k over i'd say - if you roughly compound the house next door up at 5% per annum you arrive at £280k (remember this house is also bigger). i think it's right at the top end of what is realistic which means i should've have at least gone in at 300k and worked up.

Just spoken to a surveyor who is of the same opinion so i'm favouring the retraction - however awkward it may be, at leaset no one has lost money yet!

i feel now any reduction in offer will mean i'm out of the running completely due to the bad feeling it will inevitably cause

Aylesbury_Duck

I echo the sentiments above. The vendor clearly believes it's worth that price and so did you to offer it. Are you buying a home or an investment? If the former, you will need good justification to reduce your offer and not annoy the vendor so that they reject it and any others you make. If the latter, withdraw your offer and submit another once you have done some proper research and in the knowledge that if the vendor gets annoyed, you can walk away without any problems or emotional attachment to it as a home.

hazyjo

If you had agreed a £325k asking price offer then came back to me with £300k, I would tell you where to go and remarket immediately (unless maybe it had been on the market for months/years).

hazyjo

dantheram1985 wrote: »

Re: over offered - roughly 10k-15k over i'd say - if you roughly compound the house next door up at 5% per annum you arrive at £280k (remember this house is also bigger). i think it's right at the top end of what is realistic which means i should've have at least gone in at 300k and worked up.

Just spoken to a surveyor who is of the same opinion so i'm favouring the retraction - however awkward it may be, at leaset no one has lost money yet!

i feel now any reduction in offer will mean i'm out of the running completely due to the bad feeling it will inevitably cause

I bought in 2013. My house went up roughly £100k pa for the first 2-3 years as the market near me boomed. It then remained static for the next 18 months or so. Where are you getting the 5% pa increase from? Doesn't make a lot of sense to me. I really can't see how you can guess at a price for the one you want from something different next door that sold 4 years ago.