Cash buyers ruining it for everyone

RelievedSheff

spoovy said:

If you think the £250k cut off is too low in Belfast imagine how people feel looking to buy in the south east!  A new build block near me (Staines -- not a posh area) has flats starting at £400k for a tiny -- and I mean tiny -- one bed shoe box, with views of the main road and dry cleaners.

Mad isn't it. For £240k where we are the OP could get a new build 4 bed detached property overlooking woods and open countryside beyond yet with easy access to the A1, M1 and M18.

RelievedSheff

AskAsk said:

must be where you are, the estate agents are advertising the properties below market value and then it gets bid up.  from my experience, in our area, it is the other way round.  the estate agents overvalue properties so the sold price is often below the asking price.

When we were in Sheffield we found that the asking price was generally the starting price for bidding with sold prices being higher in most cases than the initial asking price.

MEM62

o_johnston said:

MEM62 said:

Cash buyer ruining it for everyone?  Hardly.  In some any cases you will get away with a slightly lower offer as a cash buyer as you are in abetter position to proceed. The reality is that you are being out bid by buyers that are willing to may more for the property than you are.  Nothing more than that.  

Nothing wrong with that, just in my experience so far of really wanting 2 houses, they've both been inflated over and above the asking price by cash buyers, which gives 0 chance of out bidding since they have the cash to just get a mortgage if they really want to beat you, then the risk of the bank valuing the house much lower which = higher deposit or higher LTV. 
Plus Belfast has a LOT of people buying property just to rent it out, so it keeps renters renting whilst the rich people inflate the market. My current house was for sale when I wanted it 4 years ago, then I got outbid and then the seller rented it to me because I liked it so much.

I think the market in Belfast works differently from the UK from some of what I have read.  If I recall correctly, there were stories a while back about individuals loosing fortunes on property.  The market can work the other way too.  When I bought a house with my girlfriend five years ago, I kept my flat (not far from Heathrow) and rented it out.  It is one in a block of ten and I have recently considered selling.  Five years ago is was worth circa £300k and the market has not moved much since.  Recently, two flats were put of for sale at that figure, then, a few weeks later, another owner marketed theirs at £250K - which is not only very low for the area but also very low for these properties.  By that action she has instantly devalued everyone else's property to the tune of £40k.  You can only imagine uproar this has caused between the owners but, at the end of the day, it is her property and she can sell it for whatever she likes and the remaining owners have no redress.  I am lucky because I can afford to hang on until the madness had passed and will sell later next year at a more realistic value.              

AdrianC

MEM62 said:
When I bought a house with my girlfriend five years ago, I kept my flat (not far from Heathrow) and rented it out.  It is one in a block of ten and I have recently considered selling.  Five years ago is was worth circa £300k and the market has not moved much since.  Recently, two flats were put of for sale at that figure, then, a few weeks later, another owner marketed theirs at £250K - which is not only very low for the area but also very low for these properties.  By that action she has instantly devalued everyone else's property to the tune of £40k.

No, she hasn't. It simply doesn't work like that.

Yes, somebody got a bargain.
But that doesn't have any knock-on effect on other flats in the block, because they're still comparable with other £290k properties in the area, not with other £250k ones. Somebody wanting to buy a flat simply cannot choose not to buy your flat for £290k, instead buying that flat for £250k - because it's not for sale for that, because it's already been sold.

Of course, that assumes that the £290k flats are selling for £290k, and the £250k one sold like a shot for £250k... If the £250k one lingered but sold, and the £290k ones are being ignored, then the £250k price is correct.

Listing something for a particular price doesn't make that its value. If somebody listed one for £500k, the others wouldn't suddenly be worth £500k. Likewise, if somebody listed one for £100k, the others wouldn't suddenly be only worth £100k.

MEM62

AdrianC said:

MEM62 said:
When I bought a house with my girlfriend five years ago, I kept my flat (not far from Heathrow) and rented it out.  It is one in a block of ten and I have recently considered selling.  Five years ago is was worth circa £300k and the market has not moved much since.  Recently, two flats were put of for sale at that figure, then, a few weeks later, another owner marketed theirs at £250K - which is not only very low for the area but also very low for these properties.  By that action she has instantly devalued everyone else's property to the tune of £40k.

No, she hasn't. It simply doesn't work like that.

Yes, somebody got a bargain.
But that doesn't have any knock-on effect on other flats in the block, because they're still comparable with other £290k properties in the area, not with other £250k ones. Somebody wanting to buy a flat simply cannot choose not to buy your flat for £290k, instead buying that flat for £250k - because it's not for sale for that, because it's already been sold.

Of course, that assumes that the £290k flats are selling for £290k, and the £250k one sold like a shot for £250k... If the £250k one lingered but sold, and the £290k ones are being ignored, then the £250k price is correct.

Listing something for a particular price doesn't make that its value. If somebody listed one for £500k, the others wouldn't suddenly be worth £500k. Likewise, if somebody listed one for £100k, the others wouldn't suddenly be only worth £100k.

Adrian,
It will work like that to a degree.  Firstly, none of the three flats have yet sold.  I don't think that this is a price issue as flats generally are not selling in the area whereas houses are.  Where we are flats are usually very popular with airport workers and cabin crew and the current crisis in the travel industry may partly explain the current situation.  Therefore, all three being unsold the two flats that are at the higher price are disadvantaged whilst the cheaper property is still available.  In addition, when a lender comes to underwrite the value for mortgage purposes they will take into account the prices of recently sold properties so this is likely to drag down the mortgage valuation.  At the end of the day, you cannot have a situation where one property in the block is valued considerably less than the others without their being an impact.  As for my sale, as mentioned, I can wait but it does make the glad that I bought mine in 1987 for £50k.    

AdrianC

MEM62 said:
Firstly, none of the three flats have yet sold.  I don't think that this is a price issue as flats generally are not selling in the area whereas houses are. 

Of course it's a price issue.
Definition of market value: A price at which a willing seller and a willing buyer can agree to a transaction.
Therefore, all three being unsold the two flats that are at the higher price are disadvantaged whilst the cheaper property is still available.Nope.
Nobody wants to pay £290k for the flats. They are not worth £290k.
Nobody, it seems, wants to pay £250k, either. That means they are not worth £250k, either - else it would have sold...

That fact is not the fault of the person marketing at £250k - by blaming them for "devaluing" the other flats, you're just shooting the messenger. The simple fact is that there are three flats that nobody wants to pay £250k for, let alone £290k.

It would need a sale to be agreed to determine a value. Perhaps it's £230k. Perhaps it's £200k. Perhaps it'll be £290k once the immediate market has ceased to be badly affected by the pandemic, but until then... What are other, similar, flats selling for in the wider area?

MEM62

AdrianC said:

MEM62 said:
Firstly, none of the three flats have yet sold.  I don't think that this is a price issue as flats generally are not selling in the area whereas houses are. 

What are other, similar, flats selling for in the wider area?

As I said in my post - they not selling.  Although houses are. 
As all three flats are recent to the market then we cannot conclude that they are not being sold due to price.  Very few properties sell at the drop of a hat and, at present, I would expect the process to be slower with the current restrictions in place.  Therefore, it is just a likely that there has not been sufficient time for them to be sold.          
Although, as mentioned, flats do not appear to be selling in the wider area they are being marketed around or just over £300K with a couple of new ones from developers at £327K.   

AdrianC

If they were listed for £100k, they would sell instantly, right?
Of course they would.

So we know that they are not selling because of price.
You want to sell in the short term, you need to reduce the price.
That flat has tried that - but £250k is still too high, it seems.

Let's see the RM listing... and then we'll put the "Sold STC" filter on.

MaxJones

This is the problem with chains

achain is only as strong as it’s weakest link

warwick2001

Prices in surrounding areas/houses/flats may have a small effect, but not much (IMO).

Myself and my neighbor both put our terraced houses up for sale at the same time. Mine was valued at £99k, the neighbor's £90k (different EA's). The houses are identical in layout/footprint, the only difference is the choice of décor. Fast forward 2 months, and we complete and exchange tomorrow after accepting full asking price, the neighbor's house is still up for sale, still for £90k. So you could argue that their house is too cheap compared to the 'market value', or mine was too expensive, and yet I've shifted mine, no problem, at £9k more.

I appreciate its a house, not a flat, (and the overall values are far lower than yours) but still, my house was competing directly with the house next door. Mine was more expensive, by 10%. Mine sold. Did the cheaper 'value' of next door affect the value of mine? Apparently not.