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Are we fighting a losing battle for a severely overpriced property?
lax150
Posts: 2 Newbie
Good evening all,
We are first time buyers and wanted to see if we could get some impartial advice about a property we have made an offer on.
The house was purchased by the current owners in May 2018 (6months ago) for £295,000. Having made some improvements (listed below), the house is back on the market for £445,00.00!!! Firstly, for those experienced in buying/selling properties, does this sound realistic to have increased in value by £150,000.00? I know Zoopla and MousePrice valuations can't be taken as 'Gospel', but they are much lower than the asking price - sitting around £300k-£307k depending which ones you look at. Given that some works have been completed we don't disagree that the value will have increased, but can't see how by that much. The Nationwide House Price Index indicates that property values in this area have increased since May by about 0.7%, whereas the asking price is 50% more than what they paid for it a few months ago.
We have offered £358,975.00 as our first offer after a VERY comprehensive breakdown of comparisons of historic sold prices, predicted values based on sold prices, predicted values based on historic valuations, price per square metre etc etc etc, and comparisons of these with other properties on the market and ones that have sold in a 1/4 mile radius, as well as factoring in the works they have done and what value they have added to the property, which with advice from The Advisory's value added calculator we think around is around £59,000.00.
We put an offer in 4 days ago (Mon) and heard nothing apart from a snotty response from the EA that same day along the lines of 'I'm the professional and I think the valuation is right.... I'll put the offer to the vendors but it's extremely low and wont cover what they paid for it or the cost of the works' - then didnt hear anything until yesterday (Thurs) when i had to chase to see if they had heard back from the vendor; apparently they are abroad and difficult to get hold of. Fair enough I guess.
I wanted to ask initially - do you think that given i've supplied so much data which supports our reasons for a low offer, that the offer is too 'cheeky'? Would you think that the asking price is unrealistic given that the market has only increased by that small percent?
I also wanted to question the EA's response saying that the offer wouldn't cover the costs of the works by the vendor; I was under the impression that certain works add value, while others added saleability, and that it would be naive for a vendor to do works to a property and expect a full return on investment for all of it?
And finally, does the following sound ok to respond with if the vendor says no to our first offer (which we are 99.9% sure they will!) without coming across as too aggressive:
]Hi XXXXXXXX,
Thanks for getting back to us and confirming this.
We understand the offer is 19% lower than the asking price and what the vendor is obviously expecting, but after seeking professional advice we think that a 50% increase in value over 6 months is also overly ambitious for the area, despite the works that have been completed. Improvements can only add a certain amount of value; whether a new bathroom was installed for £3,000.00 or for £25,000.00, there will be a limit to the value that has been added (normally 3-5% for a shower room). The amount of money spent on improvements does not directly equate to the value that has been added to a property, and cannot expect a full return on investment.
We viewed a house very close by which was much larger (32% larger with an additional 54m/sq of internal space) which we unfortunately were not quick enough to make an offer on; a 4 bedroom period semi townhouse over four floors with much bigger rooms, a much larger kitchen/diner, similar level of decoration, a basement with full useable head height and a large rear garden which has recently sold for circa. £385,000.00 on an asking price of OIEO £400,000.00. When comparing to this house, No.27’s rooms are much smaller and narrower, no original fireplaces, much less floor space, hardly any rear outside space, no real front garden other than a path/step, busier road, very small kitchen, and basement rooms that can’t be fully utilised due to restricted head height. What this suggests is, within a very small local area, the vendor of No.27 believes their property is worth £2,617.00 per m/sq, while the larger property only managed to command £1,727.00 per m/sq – a difference of £890.00 per m/sq.
Another property in this same terrace as the property we have offered on has 4 bedrooms, a much larger kitchen, much higher head height in the basement which has been divided in to more useful space, higher ceiling heights throughout, a larger rear garden, a garage and is in a similar state of decoration and has a much lower estimated current value which is significantly closer to our offer on No.27 than the asking price, despite it having more valuable key features and space.
No.29 next door, while a different type of property, is currently on the market for within 4% of its MousePrice estimated value which suggests that these valuations are somewhat accurate - although, we realise, never perfect (compared to No.27 having a difference of 41% from its MousePrice estimate!)
Looking at what’s on the market at the moment in the local area, or has been very recently, this is the most expensive 4 bedroom terrace or semi-detached house, while also being the smallest and/or offering no real back garden. The map below shows:
• 4 beds
• Terraced or semi
• Up to £450,000.00
• Still on the market
(MAP OF PROPERTIES)
These properties here are marketed at £375,000.00 - £425,000.00 (except No.27 at £445,000.00), and all include larger rooms and much more outdoor space, and are obviously in the same locality as No.27. There are also two further properties with these criteria that have sold recently in this area that were on the market for an average of 6 months, and had an average asking price of £412,000; again, these properties are much larger and have full rear gardens and larger kitchen/diners, and as mentioned above, we know that one of these ended up selling for circa. £385,000.00.
Although the vendor has obviously decided to do ‘invisible improvements’ to the property such as re-wiring and installing a different type of drainage for toilets and so on, we have been advised that they are unlikely to bring the vendor more money by increased value. These types of improvements are generally considered maintenance and would not normally command a return on investment, especially the full cost of the works, but improve the desirability or saleability. Many buyers, us included, can obviously appreciate a property that features a new heating system and can see how this makes the property more attractive, but again, they generally won't pay extra for it, and wouldn’t expect to have to cover the full costs of this or accept that the value of the property had increased by the amount that had been spent on this improvement. Replacing a roof past its life expectancy is also generally considered a maintenance issue and not an investment in the property’s value, and cannot expect a full return on investment.
The below information from TheAdvisory supports the information that we had received on the value home improvements add to a property, and what improved saleability and should not expect a return on investment:
(LIST OF IMPROVEMENTS AND THE VALUE THEY ADD - THEADVISORY)
We would then look to make another offer based on their feedback.
Should we also be concerned that tomorrow will be day 5 and we still haven't had any response to the offer that was made?
Any feedback on any of the above would be greatly appreciated; and sorry for the length of the post!
We are first time buyers and wanted to see if we could get some impartial advice about a property we have made an offer on.
The house was purchased by the current owners in May 2018 (6months ago) for £295,000. Having made some improvements (listed below), the house is back on the market for £445,00.00!!! Firstly, for those experienced in buying/selling properties, does this sound realistic to have increased in value by £150,000.00? I know Zoopla and MousePrice valuations can't be taken as 'Gospel', but they are much lower than the asking price - sitting around £300k-£307k depending which ones you look at. Given that some works have been completed we don't disagree that the value will have increased, but can't see how by that much. The Nationwide House Price Index indicates that property values in this area have increased since May by about 0.7%, whereas the asking price is 50% more than what they paid for it a few months ago.
We have offered £358,975.00 as our first offer after a VERY comprehensive breakdown of comparisons of historic sold prices, predicted values based on sold prices, predicted values based on historic valuations, price per square metre etc etc etc, and comparisons of these with other properties on the market and ones that have sold in a 1/4 mile radius, as well as factoring in the works they have done and what value they have added to the property, which with advice from The Advisory's value added calculator we think around is around £59,000.00.
We put an offer in 4 days ago (Mon) and heard nothing apart from a snotty response from the EA that same day along the lines of 'I'm the professional and I think the valuation is right.... I'll put the offer to the vendors but it's extremely low and wont cover what they paid for it or the cost of the works' - then didnt hear anything until yesterday (Thurs) when i had to chase to see if they had heard back from the vendor; apparently they are abroad and difficult to get hold of. Fair enough I guess.
I wanted to ask initially - do you think that given i've supplied so much data which supports our reasons for a low offer, that the offer is too 'cheeky'? Would you think that the asking price is unrealistic given that the market has only increased by that small percent?
I also wanted to question the EA's response saying that the offer wouldn't cover the costs of the works by the vendor; I was under the impression that certain works add value, while others added saleability, and that it would be naive for a vendor to do works to a property and expect a full return on investment for all of it?
And finally, does the following sound ok to respond with if the vendor says no to our first offer (which we are 99.9% sure they will!) without coming across as too aggressive:
]Hi XXXXXXXX,
Thanks for getting back to us and confirming this.
We understand the offer is 19% lower than the asking price and what the vendor is obviously expecting, but after seeking professional advice we think that a 50% increase in value over 6 months is also overly ambitious for the area, despite the works that have been completed. Improvements can only add a certain amount of value; whether a new bathroom was installed for £3,000.00 or for £25,000.00, there will be a limit to the value that has been added (normally 3-5% for a shower room). The amount of money spent on improvements does not directly equate to the value that has been added to a property, and cannot expect a full return on investment.
We viewed a house very close by which was much larger (32% larger with an additional 54m/sq of internal space) which we unfortunately were not quick enough to make an offer on; a 4 bedroom period semi townhouse over four floors with much bigger rooms, a much larger kitchen/diner, similar level of decoration, a basement with full useable head height and a large rear garden which has recently sold for circa. £385,000.00 on an asking price of OIEO £400,000.00. When comparing to this house, No.27’s rooms are much smaller and narrower, no original fireplaces, much less floor space, hardly any rear outside space, no real front garden other than a path/step, busier road, very small kitchen, and basement rooms that can’t be fully utilised due to restricted head height. What this suggests is, within a very small local area, the vendor of No.27 believes their property is worth £2,617.00 per m/sq, while the larger property only managed to command £1,727.00 per m/sq – a difference of £890.00 per m/sq.
Another property in this same terrace as the property we have offered on has 4 bedrooms, a much larger kitchen, much higher head height in the basement which has been divided in to more useful space, higher ceiling heights throughout, a larger rear garden, a garage and is in a similar state of decoration and has a much lower estimated current value which is significantly closer to our offer on No.27 than the asking price, despite it having more valuable key features and space.
No.29 next door, while a different type of property, is currently on the market for within 4% of its MousePrice estimated value which suggests that these valuations are somewhat accurate - although, we realise, never perfect (compared to No.27 having a difference of 41% from its MousePrice estimate!)
Looking at what’s on the market at the moment in the local area, or has been very recently, this is the most expensive 4 bedroom terrace or semi-detached house, while also being the smallest and/or offering no real back garden. The map below shows:
• 4 beds
• Terraced or semi
• Up to £450,000.00
• Still on the market
(MAP OF PROPERTIES)
These properties here are marketed at £375,000.00 - £425,000.00 (except No.27 at £445,000.00), and all include larger rooms and much more outdoor space, and are obviously in the same locality as No.27. There are also two further properties with these criteria that have sold recently in this area that were on the market for an average of 6 months, and had an average asking price of £412,000; again, these properties are much larger and have full rear gardens and larger kitchen/diners, and as mentioned above, we know that one of these ended up selling for circa. £385,000.00.
Although the vendor has obviously decided to do ‘invisible improvements’ to the property such as re-wiring and installing a different type of drainage for toilets and so on, we have been advised that they are unlikely to bring the vendor more money by increased value. These types of improvements are generally considered maintenance and would not normally command a return on investment, especially the full cost of the works, but improve the desirability or saleability. Many buyers, us included, can obviously appreciate a property that features a new heating system and can see how this makes the property more attractive, but again, they generally won't pay extra for it, and wouldn’t expect to have to cover the full costs of this or accept that the value of the property had increased by the amount that had been spent on this improvement. Replacing a roof past its life expectancy is also generally considered a maintenance issue and not an investment in the property’s value, and cannot expect a full return on investment.
The below information from TheAdvisory supports the information that we had received on the value home improvements add to a property, and what improved saleability and should not expect a return on investment:
(LIST OF IMPROVEMENTS AND THE VALUE THEY ADD - THEADVISORY)
We would then look to make another offer based on their feedback.
Should we also be concerned that tomorrow will be day 5 and we still haven't had any response to the offer that was made?
Any feedback on any of the above would be greatly appreciated; and sorry for the length of the post!
0
Comments
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I would walk
Either the price is accurate
Or the sellers are deluded
Or they need the money to fund another project
Or there is something dodgy going onFind out who you are and do that on purpose (thanks to Owain Wyn Jones quoting Dolly Parton)0 -
If I were the EA I'd read that and turn to my colleagues and say "Got a right nutter here...."
Whether you're wrong/right, they really aren't interested in your 3 volume reasoning.
All their ears open up for are the figures you are prepared to offer.
Whether it's overpriced, ridiculously overpriced, insanely overpriced... or whether you've managed to track down every individual trades person that worked on that actual house and got their exact costings that they charged.... is all irrelevant.
There is a house for sale at £X.
How much are you offering?
That's it. That is all anybody's interested in. SRSLY. They don't want to hear anything but an offer, or silence.0 -
Walk away, don't be silly (meant nicely), housing market is dropping and the sellers are on a different planet. What on earth are you sending a letter for?0
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We were advised by a buying agent to put the offer in writing and explain the reasons why, supplying any data that supported this!lookstraightahead wrote: »Walk away, don't be silly (meant nicely), housing market is dropping and the sellers are on a different planet. What on earth are you sending a letter for?0 -
Make your best offer to the EA based on what you think it's worth and leave it on the table.
Writing a dissertation that will promptly be filed in the bin by the EA will not make a jot of difference.
If the property really is that over valued the vendors will have to drop the price when they get no offers at that price, or even no offers at all.
And 5 days is nothing - all you'd be doing by sending that letter is showing the EA that you are desperate and clueless as FTB's. That sound very harsh, but it means you've instantly given the EA the upper hand and they'll play you. Remember the EA works for the vendor, not you.
The best thing i did when i was buying my first home was to tell the EA that all communication had to go via my solicitor when they were trying to pressure me to complete quicker or not get extra surveys done/ask for a reduction on the price when the survey found serious work that needed doing. My solicitor was happy with this and kept them in check.
Make your best and final offer based on what you think it's worth and then walk away and leave them to dwell on it. Then start looking for other properties.0 -
A "buying agent? They are selling for £x, you want to buy for £y. y is significantly less than x. I got completely bored reading your "reasoning", who on earth knows how the buyer will respond, other than using your paper for lighting the fire. You not only want to buy their house for almost £100K less than they want but you also want to prove how much cleverer you are than them. Nuts.0
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How long has the property been on the market ?
If you can see the photos of the property when it was sold 6 months ago you might be able to see what changes if any the new owner has made.
A property is worth whatever someone is willing to pay !
As well as the purchase price the owner will have paid over £10,000 stamp duty and maybe more. Legal costs and mortgage costs, surveys and improvements.
Unless they have added square footage ( IE an extension or loft conversion ) I doubt they have added £150,000 to the value in 6 months.
However I have seen a house ripped to pieces and 3 new bathrooms and 5 new bedrooms plus huge extension all completed in less than 6 months which doubled the value.0 -
Another vote for at best it's a pointless exercise sending them a letter telling them why you aren't prepared to pay the price they are trying to charge for the property.
I would think more appropriate would be just a couple of sentences of "Having checked nearby similar properties for sale - then I regret we are unable to offer more than £x,000 for your property" and state a slightly higher amount.
Sink or swim they either "take it or leave it" re that slightly higher offer. But they won't read that long letter - they aren't academics thinking logically and therefore just might read it and think "Oh yes....they've put good sound reasons here - which I will evaluate objectively and re-think the price". They just aren't....0 -
We are first time buyers!
And boy does it show.
As said all you needed to do was make an offer, not write War and Peace.
And FWIW the price it was bought for previously is irrelevant. Suppose it was sold to them by a relative, or a distressed buyer, it had been trashed by a tenant, whatever.
And would you be paying the AP if it had been bought for £450k?
Its worth what its worth now. What was spent on it, what it cost to fix, is irrelevant.
I'm not saying istw orth what they are asking i dont know but you dont need to bamboozle them with logic or bs (some of what you wrote is bs, of course rewiring a house that has bad wiring increases its value, for example).
But this is unimportant. If its worth £450k your offer is irrelevant, if its worth £350k they'll be back to you in 6 months, maybe after they had no visits let alone offers.
Should we also be concerned that tomorrow will be day 5 and we still haven't had any response to the offer that was made?
Thats because they are still laughing so hard they cant type properly.0 -
I am intrigued. Just what have the vendors done that merits an increase of 150 grand? Rewiring isn't enough!
And as others have said, forget the screed and just tell them to jog on.0
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