Houses overvalued?

laserline2

Hi all, I am looking to put an offer in on a project house which we have seen in a local village.

Can anyone shed some light on why estate agents seem to think that renovation houses are worth a fortune? Doing the maths on this property (And most we have seen if i am honest) they want silly money for a house that needs a fortune spending on it.

For example:

House is currently on at 500k
Renovation costs (including small rear extension) - 130k This has been looked at by a surveyor to confirm my numbers
House finished - Roughly 575k

Yet when I even mentioned numbers of around 440k being more realistic you would have thought I had insulted their sainted mother?

Anyone else seeing the same?

BoGoF

Perhaps it is you assuming that £130k spent adds £130k value? It doesn't.

Is it advertised as a renovation project or perfectly habitable as is? How does the asking price compare to recent sales in the area?

laserline2

I do completely understand where you are coming from but at the same time no-one will want to carry out work which they wont get their money back from? I am looking to basically break even as a project rather than turn it to make a profit?

As it sits it is semi habitable, I would estimate it would needs around 25-30k to make it completely habitable (electrics need sorting asap etc)

[Deleted User]

laserline2 wrote: »

I do completely understand where you are coming from but at the same time no-one will want to carry out work which they wont get their money back from?

They do it all the time. People may think their 15k kitchen adds 15k to the price, but it doesn't.

People renovate - or should renovate - for their own benefit.

tom9980

laserline2 wrote: »

I do completely understand where you are coming from but at the same time no-one will want to carry out work which they wont get their money back from? I am looking to basically break even as a project rather than turn it to make a profit?

As it sits it is semi habitable, I would estimate it would needs around 25-30k to make it completely habitable (electrics need sorting asap etc)

This type of property is bought by someone who can do lots of the work themselves and turn it into a HOME they do not see it as an investment at all they simply do not care about making money on it. You are looking at it as a pure investment which is your mistake.

babyblade41

Not sure what the reason is fr this particular purchase.

If you aren't too worried about turning a profit then it's a house to live in and so the end value shouldn't concern you too much long term

It depends where you are, but as an example I'm in SE Oxfordshire rural village ..Prices are ridiculous here but for 435K I managed to find a 3 bed detached on the top of a hill overlooking the countryside , so think prime location and on a very big plot

I will have spent approx 60k on small extension to lengthen the kitchen , new bathroom, remove old downstairs disabled shower room and replace with loo and update throughout cosmetically.

Apart from specialist trades we will do a lot of the hard work and sell on in about 5 years .

When you are looking at renovating you need to figure out your long term plans . If it's your home for the forceable future you have time and a never ending budget but if it's not then you could probably shave quite a bit off the budget if you plan properly

Even on a small refurbishment house you can go wacko with the budget but recoup hardly any money at all.

Look at prices around this property in good order and try and gauge what the property would realistically sell for without bells and whistles

Without seeing the house it's difficult to know what is and what isn't an acceptable offer .

For all anyone knows this could be about the right price for the area and your offer is taking the Micky , but it maybe the vendor thinks it's worth far more

You could go along offering very cheeky offers until you find someone who will bite your hand off

Another thing depends whether you are selling to buy, cash buyer nothing to sell, nothing to sell with a mortgage

geeovana

I largely agree with you. We have been looking recentley and I got the impression sellers feel you should do the work for free i.e. if a house is work 250K after 50K renovation costs, they feel you should buy it for 200K. We walked away from many as it involves a lot of time to renovate a house, even just the 3-bed semi's we were looking at.


You also have to bear in mind that the older generation who havent done any work on the house since the 70's think that younger generations will go in, give a quick hoover and put there feet up. What you may see as requiring renovation, others may feel is in great condition.

need_an_answer

laserline2 wrote: »

I do completely understand where you are coming from but at the same time no-one will want to carry out work which they wont get their money back from? I am looking to basically break even as a project rather than turn it to make a profit?

As it sits it is semi habitable, I would estimate it would needs around 25-30k to make it completely habitable (electrics need sorting asap etc)

Wont get their money back from, can be quantified in two ways...when you come to sell or someone could simply want to make it their dream home and live in it,enjoy it and not be too fussed over its value.


I fall into the second category having bought my dream home as a wreck many years ago...it was a very long term thing and yes I've probably aired more to what renovations we want in the property for our own consumption rather than what will actually add value or even be desirable to the next person who buys it...but the price has risen substantially from the figure we paid for it in the time weve owned it not just because of any renovations but because over time the general trend in property prices is that they increase(whatever our resident property member crashy says )


So your electrics need sorting and you need a figure to make it habitable,I agree totally with that but the rest of your budget is for your own gratification and shouldn't be at the expense of the seller to be knocked down in price simply because you want to spend the extra on an extension etc.

It does beg the question if houses that match tour expectation are hovering around the £575 mark then go and buy one of those instead.

It all boils down to whether you see this as a place to live for many years and enjoy or something you wish to move on from once you have renovated.

A house is worth what you will pay for it,if its too expensive walk away,but if you are prepared to sometimes take a long term view then you might find that you'll end up with something special.

I know several people who have bought forever homes and possibly overpaid at the time but they all have never regretted it because there was "something" about the house that made it worth it.

Finchy2018

you know, though, just because you want an extension, it doesn't mean it NEEDS one.

Cakeguts

You are thinking that if you pay for a new kitchen and bathroom etc you will get your money back. You won't simply for the reason that when you come to sell you will be selling not a new kitchen and bathroom but a second hand kitchen and bathroom because if you have lived in the house and used them they are no longer new. As are all the decorations and internal fitting you may have done.

PasturesNew

In the main, they're not selling a house, they're selling a dream.

Buyers will see it, go off into dreamland and imagine how it'd be "perfect", or a "forever home", or, some developers might think they see a profit by doing/repeating something they've seen or done before to turn money over.

Project houses sell to niche markets.... it annoys me when I see one that just needs a splash of paint, £20k of fiddling and a bit of new flooring because I can also see in that house that if one spent £60-75k it could double the size of the house and be re-sold as a super-trendy large modern house... and I know I'd be outbid.

While I'm quite happy buying a little bit of a do-er upper, then live in 1990s style.... developers see grand extensions, bifold doors, granite tops and range cookers - and have the money to slap down that's greater than my little "house to live in" pot.