Offering more than 10% lower after research

bradyhv

Hi all,
My partner and I are first time buyers and we have a properly that we are interested in in the area we want. The property is in the north west and is a 3 bedroom detached. The house is lovely but my initial thought was that the house seemed overpriced straight off the bat, so after some research I found that the property had previously sold in July 2015 for 200k, and it was listed on Rightmove so I could see all the previous pictures and floor plan from 2015. The property is now listed with a price of 270k, and the pictures show that the current owners have done virtually nothing to it since they purchased it (kitchen, bathroom, flooring all identical to when it was last sold). I have looked up the property on Zoopla which estimates the house has increased in value by 38/39k in the last 5 years, and I also put the details into Property Price Advice which estimated the house was worth around 234k. Not just has sold within a 1 mile radius in the last few months but the most comparable I could find was 2 sales at the end of January, one was a much bigger 3 bedroom house and that sold for 245k, and a similar sized 3 bedroom (only significant different was no downstairs WC and was semi detached to a bungalow) and that sold for 212k. An additional thing to note is that the property was originally listed as a 3 bedroom with the floor plan stating the garage was fully converted into a “study” despite there clearly being a garage door in the pictures. Shortly after, the agent changed the listing to say a 4 bedroom house and changed the floor plan to say “study/bedroom 4”. They then changed the floor plan again to show 1/3 as a garage and the other 2/3 as “study/bedroom 4” and this room was described as a bedroom that was formally a garage that “could easily be changed back” but provided no pictures on the listing. And as suspected, it wasn’t really even a study let along a bedroom. We don’t need a 4th bedroom or a study but just thought this was all very strange?

Taking my research into account and the size of the property I truly do not believe it’s worth any more that 240k, but is offering 30k less than asking pricing just a giant waste of time? I feel as first time buyers with a big deposit, we may be appealing to sell too as there will be very little hold up but I don’t want to alienate the vendor or the estate agent if offering 30k less would just be taken as a joke if they are determined it’s worth 270. Any advices or explanations of how similar situations have panned out would be hugely appreciated! 

Thank you 

danlightbulb

I do the same checks as you do and Im seeing the same effect in my area here. Very inflated asking priced compared to comparable sold prices adjusted for house price inflation, or as you say even the previous selling price of the very house that is for sale.

Ive asked the question and people who don't know the area just say 'local property bubble'. Well i'm not willing to participate in this game.

If I really liked it, I'd set out my reasoning in a short email to the agent, citing the evidence, along with my offer of what I think its worth. That is all you can do. Or pay an inflated price of course, its up to you.

Well done for being thorough - many people don't bother and are getting ripped off but just don't care.

Crashy_Time

The first answer you will get is - It doesn`t matter about historical price, the second will be something like - Just buy if you want/like it etc. etc. all very predictable. My take is that it probably isn`t even worth 200k with the way things in the economy are panning out, be very careful unless you don`t care about negative equity.

blue_max_3

Don't trust those predictions, they never seem to work.
Maybe watch it a while and see if it gets reduced. If it gets a reduction, your offer may not be so far off.
You could have a word with the agent and maybe suggest you're in a strong position, but feel the price is unrealistic and see if they can take that back to the seller and maybe start a dialog.

DireEmblem

blue_max_3 said:

Don't trust those predictions, they never seem to work.
Maybe watch it a while and see if it gets reduced. If it gets a reduction, your offer may not be so far off.
You could have a word with the agent and maybe suggest you're in a strong position, but feel the price is unrealistic and see if they can take that back to the seller and maybe start a dialog.

This / put in a note of interest.  It is also worth considering what the value of the house is to you.

danlightbulb

The nationwide house price inflation calculator also says £230k if you put in Q2 2015 £200k, and select north west from the drop down. https://www.nationwide.co.uk/about/house-price-index/house-price-calculator

So the question to ask would be, why is this house or area going beyond the average increase for the region? Is the property better than the average property? 

Jeepers_Creepers

Hi Bradyhv.

Good research indeed :-)

Have you actually looked round the property? Has the garage been converted properly - does it still have a garage door?! If so, and even if it has a partition wall immediately inside the garage door, it's very unlikely that PP was applied for to make this conversion to a habitable room, and - even if PP was not required - it's equally unlikely that Building Regs were followed. 

When was this 'conversion' carried out? It's probably too late for the LA to act on it, but I understand it's equally naughty for the EA to be passing this off as a valid conversion when they should know - or suspect strongly - that regs weren't followed, nor a completion cert obtained.

There is absolutely nothing wrong with you having a detailed conversation with the EA (making sure it's a proper 'negotiator' who knows this property you are talking to, and not a receptionist/viewer) where you can ask about this garage and its validity ("Does it have a completion cert? No? Should you be advertising it as a bedroom...?" I understand that an EA should now be upfront about such info - once they are made aware of it), and also ask them how they arrived at the asking price; "Was this set by yourselves, or was it insisted on by the seller?" If the latter, ask the EA if they don't agree it's a bit 'excessive'... 

Finish by telling them that you love the house, are genuinely interested, but simply do not recognise the asking price as being remotely reasonable. Your research points to the house's current value as being circa £240k, so there is nothing wrong with you putting that to the EA. 

Ultimately, of course, a property's 'true' value is what it ends up being sold for. And what it's worth to you. How gutted would you be to miss out on this one? And how likely is it that an equally attractive - but likely cheaper - house will come along in that area? 

MysteryMe

I think you are wasting your time and everyone else's putting forward your "evidence"  justifying how you have arrived at your offer.  Just make your offer, provide relevant information such as FTB, finances in place, and if it's rejected you either increase it or walk away.  
IMO you would be spending your time more productively seeking out properties that do meet your criteria of a fair price.

Robby1988

Offer what you think the house is worth & stick to your guns, it sounds like you have done enough research to justify your position. Estate agents probably won't give much of a toss about what online valuation tools like Zoopla say though.

The worst that can happen is that the vendor says no, but you might be surprised; first time buyers are attractive if the vendor already seen another property they want.

Better to lose a property you like than get ripped off to the tune of £30k, especially as we head into a recession.

AdrianC

bradyhv said:
Taking my research into account and the size of the property I truly do not believe it’s worth any more that 240k, but is offering 30k less than asking pricing just a giant waste of time?

The only person that can tell you that is the vendor.

You've got two choices:
1. Offer. Maybe get laughed at, maybe get accepted.
2. Don't offer.

Who cares if they laugh at you...?

bradyhv

MysteryMe said:

I think you are wasting your time and everyone else's putting forward your "evidence"  justifying how you have arrived at your offer.  Just make your offer, provide relevant information such as FTB, finances in place, and if it's rejected you either increase it or walk away.  
IMO you would be spending your time more productively seeking out properties that do meet your criteria of a fair price.

I do think that’s a little rude as I never said I would put any of what I said above to the EA or the Vendor, why would wouldn’t I do research as well as a viewing to the help me reach an offer figure. Surely every lower offer has justification behind reaching it - I would be a fool to just pluck a misguided figure out of the air so I’m not really sure how I’m wasting my time - I was just trying to provide as much context as possible to get some advice. I think searching for properties in my criteria for a lower price is fairly obvious advice - I was more looking for some opinions on the offer process in similar situations but thanks for your time anyway I guess.