Help us make on offer

WiseOwl00

Me and my partner have just viewed a house which we would be interested in putting an offer in on, but are a bit unsure what to offer. The property is a 3-bed detached in the north of England. It's in a pretty standard working-class village with an average house price of about £150,000. The street has a big mix of houses from detached 4-beds, 3-bed semis and 2-bed terraces. The last two houses that sold on that street were 3-beds semi-detached properties and they sold for £125,000 and £145,000. The couple who own the house bought it for £150,000 last year in a fairly standard condition but have completely renovated it with no expense spared. They converted it from a 4-bed to a 3-bed with larger rooms, re-wired the whole property, fitted a new boiler, added an ensuite to the master bedroom, fitted new carpets/wooden flooring throughout, fitted a very modern kitchen with a wine cooler, integrated appliances (including a washer/dryer) and an induction hob, fitted new blinds throughout which they are leaving, modernised the family bathroom + even added a Jaccuzi bath. They are also currently in the process of renovating the back garden and even suggested leaving the house entirely furnished. They are only moving as they have found a bigger house which they thought they'd get whilst there is no stamp duty. The property is on the market for offers over £200,000. 

The house is now incredibly modern and luxurious and needs no work doing to it at all. My only concern is that the house was only worth £150,000 a year ago in a reasonable condition, can making a property luxurious really add a third onto the value of a house? They have obviously spent a lot of money on it, definitely in the 10's of thousands. We'd love a house we don't have to do any work to, and know we wouldn't have to spend any money on it, at least for a good 5 years. We're both first-time buyers, I don't know if this is our forever home purely due to the fact that I don't know what our future plans are. My concern is that we pay over £200,000 for the property, and then it begins to devalue as the modern novelty wears off and we end up selling it for a lot less (~£150,000-£160,000) losing lots of equity. We are seeing a 4-bed property tomorrow in a different area, in a good condition, which is on the market for £210,000 which is actually less than the average for that road. 

I'm looking for some advice on what to offer, if these houses lose value, etc. as we haven't yet come across a house like this. The couple seem keen to sell to us as we are first-time buyers, and will probably accept a lower offer from us because of this, but I don't want to offend them with a very low offer as they are rightly so very proud of their house. I was considering going lower than the £200,000. 

Candice-Marie

How long has it been on the market?  Also don't over think making a low offer and worrying about offending them.  Your offer should reflect what you are prepared to pay to secure this house (ie what the property is worth to you) albeit with some wriggle room for upwards negotiation.

WiseOwl00

Candice-Marie said:

How long has it been on the market?  Also don't over think making a low offer and worrying about offending them.  Your offer should reflect what you are prepared to pay to secure this house (ie what the property is worth to you) albeit with some wriggle room for upwards negotiation.

It's been on for a week, they have some viewings this weekend. 

ciderboy2009

Do you need to get a mortgage?  If so then have you got a massive deposit (£75k plus)?

From what you've described you are unlikely to get a mortgage valuation for much more than £150k - mortgage valuations don't particularly worry about the nice luxuries, they just want to know that they will be able to get their money back by selling the property if you default. 

WiseOwl00

ciderboy2009 said:

Do you need to get a mortgage?  If so then have you got a massive deposit (£75k plus)?

From what you've described you are unlikely to get a mortgage valuation for much more than £150k - mortgage valuations don't particularly worry about the nice luxuries, they just want to know that they will be able to get their money back by selling the property if you default. 

We will be needing to get a mortgage and only have a 10% deposit.
This was exactly the type of thing I was worried about. Cosmetically it is lovely, but obviously cosmetics fades and goes out of fashion over time which would cause devalue. I was just wondering what level of devalue. 

Candice-Marie

Is it on with an Estate Agent?  Always keep in mind that they work for the seller, not you, but you could say to them that you're very interested, but based on your research you're concerned that your lender would not value the property as much as the asking price.  See what they say and how they justify the price.  It might not tell you anything, but it's worth having the conversation.  Again - remember they do not have YOUR interests at heart.

WiseOwl00

Candice-Marie said:

Is it on with an Estate Agent?  Always keep in mind that they work for the seller, not you, but you could say to them that you're very interested, but based on your research you're concerned that your lender would not value the property as much as the asking price.  See what they say and how they justify the price.  It might not tell you anything, but it's worth having the conversation.  Again - remember they do not have YOUR interests at heart.

Thanks for the advice. I agree - I will give them a call and see where they got the valuation from, I've never seen a house go up in value by £50,000 in less than a year. 

[Deleted User]

I can see your worry here. It was sold as a 4 bed for £150k - by making it a 3 bed, that generally devalues a property. The finishings will grow old but the bricks, mortar, size and location remain the same and you could lose money over time. Rather like the new house premium. 

I’d think carefully if I was you 

AnotherJoe

Densol said:

I can see your worry here. It was sold as a 4 bed for £150k - by making it a 3 bed, that generally devalues a property. The finishings will grow old but the bricks, mortar, size and location remain the same and you could lose money over time. Rather like the new house premium. 

I’d think carefully if I was you 

I agree and I think a valuation is going to be a big (unpleasant) surprise to the sellers. 

As for the OP, if that's right, this house will be out of your price range because  you will have to make up a huge gap between valuation and what the sellers expect. 

SpiderLegs

Link please.
i agree with the above posters, this could have some real valuation problems so at 10% its a real risk.

NinjaTune

Seems crazy that someone would do all that work and then sell after a year.  

As you say, by the time you come to sell all the 'shiny new things' will no longer be shiny and new to a prospective buyer.  It's like a new build premium, but on an old build.  Also, as mentioned earlier, they have devalued it by removing a bedroom.  Unless the downstairs was too small for a 4 bed then there was no real reason to do that; en suites are nice but rarely a necessity and a 4th bedroom is more valuable.

Unless it's your dream home then you need to decide what the value is to you and make an offer on that basis.