Houses overvalued?

Grampus8

laserline2 wrote: »

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?

are you mad? You've set off Crashy's bat signal!

westernpromise

Project houses are worth much the same pre-and post-project because even if you buy somewhere in better condition, you may still have to do most of the same work to correct the vendor's taste.

By the time you've redecorated a house, updated the kitchen, bathrooms, and lighting, etc, you've spent almost as much as someone who has renovated a total wreck. You haven't had to replaster walls or ceilings or replace floors, but on the other hand, neither have you had the opportunity to bury all your home cinema and TV wiring.

Also, extensions are off-putting to many. It's usually obvious what's been done, and cheap extensions - where the house looks like it's been freeze-framed just as it's exploding - would dissuade me from buying at all. It does not follow that an extension adds value because in adding space inside you've lost it outside, so there's a loss as well as a gain. An attic conversion likewise does not turn a 3-bed house into a 4-bed house, because it still has the ground floor footprint of a 3-bed house, it has the same room sizes as before, and you have lost the attic storage space for your luggage and garden furniture and whatnot.

laserline2

Thank you all for your reply's above. Whilst i may disagree on certain points I wanted to give a bit more context in case this helps:

House in question is a probate sale based in the SE (Near the Oxfordshire border), The previous owner had lived there for around 50 years and in that time the place has had very little updating.

Whilst true that it is not falling down, to be appealing to anyone needs a "refurbish" (Plaster & Paint, wiring, boiler, roof, windows etc)

I do take on board the point that whilst I would prefer an extension (Single Storey, To make a larger kitchen/ diner & Utility room) It is not strictly necessary to every buyer. However with agreement of the estate agent, without this the house would be worth around 525k max.

I probably am looking at this more as an investment as stated, Purely from an uncertainty point of view as houses in the larger area seem to be struggling to sell at this price. Whilst I am not trying to make a profit on this house I am also not trying to loose my shirt.

Sorry if this comes across as defensive, we have not had a great time of estate agents in the area and is making this house hunt much less enjoyable than last time :rotfl:

need_an_answer

How long has the house been on the market?

Thats usually an indicator if its competitively priced...where I live renovations go quickly!

Brodiebobs

We bought a probate house that had been lived in for 60+ years with little to no work, there was lots of interest from developers but it put off a lot of 'normal' people because of the level of work needed. Albeit we're in a much cheaper part of the country.

We felt the valuation was high, and they were appealing to the developers lot, as there were musings about the plot being big enough to build another property on, but we put a cheeky offer in, as well as telling them it was to be a family home not sold on, and i think that swayed it. After some negotiation a figure was agreed we were both happy with.

We have done most of the work ourselves apart from main trades and 6 years on its still not finished, its been blood, sweat and lots of tears but we wouldn't have been able to afford the size of house 'done'. Then or now, and fortunately for us the area becoming very popular and the works we've done means the value has almost doubled in that time.

Guess the moral of the tale is without unlimited funds its not as easy as the TV programs make out, and I wouldn't want to do it again!

Crashy_Time

There was a concentrated effort for years in the media (sponsored by the banks) to get people to believe that debt on property was a sure fire way to riches, BTL was the way to get people hooked into more than one mortgage, "Project" houses were just another way to encourage people to borrow money to follow the "dream". The amount of money that has been borrowed against property is truly scary and very destabilising for the economy if things go wrong, so the more people who wake up to the debt scam that is New-builds and "Renovate for profit" etc. the better.

Brodiebobs

Crashy_Time wrote: »

There was a concentrated effort for years in the media (sponsored by the banks) to get people to believe that debt on property was a sure fire way to riches, BTL was the way to get people hooked into more than one mortgage, "Project" houses were just another way to encourage people to borrow money to follow the "dream". The amount of money that has been borrowed against property is truly scary and very destabilising for the economy if things go wrong, so the more people who wake up to the debt scam that is New-builds and "Renovate for profit" etc. the better.

I can understand the point your making but not everyone does it for this reason, as above we go a 'do-er up-er' as we wouldn't afford anything else where we wanted to live. We haven't borrowed to renovate and overpay to minimise our mortgage debt.

In return we have an asset that is worth more than we paid for it, but that's not what concerns us, its a home in the area we want to live which is large enough for our needs.

babyblade41

I am from Oxfordshire so it depends where about this house is. I am SE rural Oxfordshire so very expensive.. but you head out towards Banbury and prices drop

If it's for an investment at this value I think you are looking at the wrong type of investment.
Oxford is always desperate for rental properties so not sure how this would/could be a good financial investment in the short term

MobileSaver

Crashy_Time wrote: »

to get people to believe that debt on property was a sure fire way to riches, BTL was the way to get people hooked into more than one mortgage,

Whether a "concentrated effort" is true or not, for the vast majority of people getting "debt on property" has brought them riches...

How has it worked out for the HPC zealots who sold to rent ten or twenty years ago?

Gwendo40

I find probate vendors to generally be the most stubborn, greedy and deluded vendors out there, I also find that houses requiring renovation and refurbishment are VERY poor value for money in the current market with asking prices little different to comparable houses that require little or no work.

Probate vendor + refurb project = waste of time even viewing.