Are we fighting a losing battle for a severely overpriced property?

Alan2020

Ha ha, really funny.
At least post a link so people can give you an informed opinion.

Our neighbours bought a house for £750k, then spent £200k doing it up. Is it worth £950k, no absolutely not.
I think it is worth £1.1m. Because not many people have the time or cash to do the work after getting a mortgage.

Carrot007

Yes it's probably overpriced.


Yes it will probably sell for a lot less.


But not to you because you may be the first to point it out.


Overpay or move on are pretty much your options.

KiKi

Do you think they are going to read that and say "oh gosh, we've obviously made an error in valuing this property, of course we'll advise the vendor straight away, and suggest they accept your offer"? Of course not! You're telling someone they're wrong; they're not going to listen - and certainly not to that much information.

They have put it on the market for 445. You're not offering close to that. Vendor says no.

The fact is, you're probably right, and the vendor sounds bananas. But writing a letter like that...! It's not a court case! You're not proving anything for the prosecution and they're not proving anything for the defence. If you're not prepared to pay what they want and they're not prepared to accept what you're asking then that's it.

Walk away and find a less nutty vendor. And don't write letters! Just put an offer in and leave it at that!

BoGoF

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societys_child

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Quoted for posterity.

lax150 wrote: »

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!

Davesnave

Carrot007 wrote: »

Yes it's probably overpriced.

Yes it will probably sell for a lot less.

But not to you because you may be the first to point it out.

^ This.


Had the experience. £100k gap.

It was 3 years later when the house sold for exactly what we'd offered.
Glad we just walked.

Even more pleased we didn't write an essay!

EachPenny

lax150 wrote: »

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.

This is all very interesting, but not how things work in reality. In reality someone owns a property, they come up with a figure they want someone to pay them, often with the advice of an estate agent. There is no legal requirement for that figure to have any relationship to what they might have paid for it yesterday, nor what other similar properties nearby are valued at.

People interested in buying the property look at the price and think whether they are willing to pay that amount. If they think it is worth slightly less they might make an offer a bit below the vendors price. But if the price is too much the appropriate thing to do is to walk away and look for another property to buy.

The only thing a passionate treatise on why you are right and they are wrong will do is to convince them you would be a 'difficult' buyer even if you now offered full asking price, and secondly to annoy them... most likely due to the dry cleaning bill having spat their tea out over themselves.

lax150 wrote: »

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.

I'm not sure why you would offer that particular bit of information to anyone, as it does not help your case at all.

The only people who need to reflect on that information are yourselves. Why did you not get an offer in quickly enough? Were you overthinking the value?

Or perhaps if houses are selling more quickly than you anticipated then perhaps your perception of value is not as accurate as you think? Value is driven as much by demand as it is statistical analysis of the local housing market.

Please don't send that letter, you'll regret it.

-taff

Offer what you think it's worth, walk away if they don't accept and you're not planning to offer more.
If you plan to do something similar in the future, the write a letter bit, ask yourself how you would likely respond to receiving something like that.

Cakeguts

You cannot force someone to lower their asking price to what you want to pay or what you think a house is worth.


Offer what the house is worth to you and if they don't accept it buy a different house.

Jonah01

BoGoF wrote: »

OP's current status is viewing a thread titled "how to delete a post from this forum"

BoGoF,

Don't try to belittle the OP.

The fact that you searched to see what they were viewing speaks volumes.

Just help don't make fun