Houses overvalued?

spadoosh

laserline2 wrote: »

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:

Im pretty certain without seeing the property i could get it to a reasonable standard for £25k.

The vast majority of your £130k is an extension. So take that out straight away. The next majority of those costs are labour, well i can DIY pretty well. So lets half it for the extension (its probably more) to £65k and half it again for the labour (again probably more). So £32.5k at most. Its not so overpriced now.

You can only ever add the material cost to value at most. And even then its hit or miss, eg if i put bright orange paint in my living room i very much doubt someone would be willing to pay £20 more (cost of paint) for it because theyll almost certainly be spending another £20 to change it.

Crashy_Time

Brodiebobs wrote: »

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.

You might not have done, but if many millions of others had not been infected with the "property bug" your asset might not have increased so much, and if sentiment turns the opposite way on property it might be a hard asset to sell in future, especially at a profit?

Crashy_Time

MobileSaver wrote: »

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?

Those "riches" depend on new borrowers taking on ever increasing debt on property(why do you think we need HTB and near zero rates BTW?) and if they want to trade up rising prices still hurt them, it is an illusion based on selling debt on a very illiquid asset that is very over-valued now and due a crash. Riches are something that you can access immediately and don`t rely on finding a buyer or another place to live.

Semple

tom9980 wrote: »

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.

That maybe so, as FTB'ers we had a look at a few "renovation projects", as we were happy to have a go at DIY and spend the time making it into a nice home - it wasn't to be an 'investment' per se, but obviously you'd expect that when you come to sell on you wouldn't be selling it for less money than you had put in.

In most cases the sums never added up. By the time you'd done the core aspects which you'd have to pay trades for (house rewire, new boiler, new doors/windows), and then added the cosmetic changes - plastering/painting/flooring along with a new kitchen and bathroom. With all that added on top of the purchase price, we typically found that it exceeded the prices of other houses in the area that didn't need all the work doing.

I'm sure i'm not going to be the only one who doesn't value my "free time" as worthless. I'm not saying that every hour of my free time that i invest should increase the value of the house. But at the same time, no one is going to buy a property for 200k and spend 50k on renovations that they have to invest hundreds of hours of their own time, when next doors house can be purchased for 250k and doesn't need a thing doing to it.

TBagpuss

Semple wrote: »

That maybe so, as FTB'ers we had a look at a few "renovation projects", as we were happy to have a go at DIY and spend the time making it into a nice home - it wasn't to be an 'investment' per se, but obviously you'd expect that when you come to sell on you wouldn't be selling it for less money than you had put in.

In most cases the sums never added up. By the time you'd done the core aspects which you'd have to pay trades for (house rewire, new boiler, new doors/windows), and then added the cosmetic changes - plastering/painting/flooring along with a new kitchen and bathroom. With all that added on top of the purchase price, we typically found that it exceeded the prices of other houses in the area that didn't need all the work doing.

I'm sure i'm not going to be the only one who doesn't value my "free time" as worthless. I'm not saying that every hour of my free time that i invest should increase the value of the house. But at the same time, no one is going to buy a property for 200k and spend 50k on renovations that they have to invest hundreds of hours of their own time, when next doors house can be purchased for 250k and doesn't need a thing doing to it.

I think that is true up to a pihjtm, although it also depends a little bit on how you see 'doesn't ned a thing doing it' - which would need you to have simialr tastes to the people you were buying from.

Spending the money to get a house the way you want it, even if you don't make back that money when you come to sell, has a value in terms of your enjoyment of it as a home, and your quality of life.

Of course, it is all dependendt on how much work and cost you aretalking about, and how important your surrpundings are to you, and how long you plan to stay. Spending £50K to get things exactly the way you want makes more sense if you expect to stay for 10-15 years than if you expect to move after 3-5, for instance.

MobileSaver

Crashy_Time wrote: »

it is an illusion based on selling debt on a very illiquid asset that is very over-valued now and due a crash. Riches are something that you can access immediately

Since you sold to rent I have sold two properties and I can assure you that the £200k+ profit from those was no illusion and is sitting in cash in my various bank accounts as I type, immediately accessible should I so wish.

For over five years now you have been telling everyone what a bad idea it is to buy property so perhaps you can tell everyone how your renting riches have increased over that period?

Crashy_Time

MobileSaver wrote: »

Since you sold to rent I have sold two properties and I can assure you that the £200k+ profit from those was no illusion and is sitting in cash in my various bank accounts as I type, immediately accessible should I so wish.

For over five years now you have been telling everyone what a bad idea it is to buy property so perhaps you can tell everyone how your renting riches have increased over that period?

Do you know the % of people in the UK that have 200k in a bank account out of interest?

markin

1 Problem is a good extension built in the 70s/80s/90s will now be 5X more to build, so you are less likely to break even with the one built 20+ years ago, To try and match that you have to self build it, or wait 10 years for for your house to go up in value.

Crashy_Time

Gwendo40 wrote: »

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.

Good advice.