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

Crashy_Time

jimbog wrote: »

From your link:
he was not predicting house prices would fall by a third

"But he warned house prices were likely to fall in the first half of the 2019 as people put off buying amid the Brexit uncertainty, while the number of sellers, "driven by death, debt and divorce" would remain about the same."


Should read "Would-be sellers" as transactions are way down and falling?

kazwookie

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!

Blimey forget war and peace, I only read half of that and was bored

Crashy_Time

OP, just walk away from this, the seller is obviously heavily delusional, and may actually have mental/emotional problems.

lookstraightahead

I wouldn't send that letter, the seller is on a different planet and won't listen anyway. More fool them. Why on earth bither when they are clearly trying to rip you off - have some pride

lookstraightahead

quantumlobster wrote: »

TBH if my buyer presented that letter to my EA, I'd be instructing my EA to politely refuse to entertain any and all offers from them, irrespective of value.

Although this seller clearly likes story time, with a vivid imagination.

Crashy_Time

Don`t bother with the letter, it is too long, the agent and the seller will understand the basic message that they are not getting this price with one short phone call anyway. Run away from this house, fast.

[Deleted User]

Walk away for now but keep your eye out for any reductions over the next few months. If it is as overpriced as it seems then they will have to drop their price eventually when they realise nobody is willing to pay that.

robatwork

OP has been back but hasn't updated, no doubt a bit chagrined at the multiple postings saying how foolish this was. No point flogging a dead horse now, I'm sure he's got the point.

Plus

I suspect the OP is long gone, but as a FTB this is how I would play this:

"We would like to offer £X for 99 Acacia Avenue as a purchaser with no chain. We understand that this is below asking price but believe this is a fair value in comparison with similar properties in the locality"

The vendor now has options of Accept, Reject or Negotiate. Let them take as long as they like. I suspect their answer is going to be Reject, in which case I would reply:

"We understand our offer of £X is not acceptable to the vendor. However we would like to leave the offer on the table and invite them to contact us in due course should they reconsider"

The trick is to have your initial offer higher than the second offer they receive. Then forget about this place and view others. Maybe one day you'll get a phone call.

The other card that could be played is the 'we're poor FTBs and we can only afford X', but I don't think that's going to fly here - might knock off £5K to seal a deal, not £150K.

Crashy_Time

lookstraightahead wrote: »

Although this seller clearly likes story time, with a vivid imagination.

Many do, but EA`s encouraged it as well.