Price per sq m - good to justify an offer?

btcp

I am thinking of making an offer on a house. The problem is that it’s hard to make a comparison to determine the right offer as there were no similar houses sold on the street in the last couple of years. All houses on the street are slightly differ in size and renovation condition. This house needs lots of updating. I was thinking of looking through sold prices on this and a neighboring street and calculate average price per sq meter for renovated and outdated houses. Then use this number, applying to the size of this house. Any suggestions? 

rik111

It doesn't work like that at all.... A good point to start from would be the asking price plus how long it has been on the market. Plus it doesn't really matter what you "think" its worth, its what seller is willing it sell it for.

btcp

rik111 said:

It doesn't work like that at all.... A good point to start from would be the asking price plus how long it has been on the market. Plus it doesn't really matter what you "think" its worth, its what seller is willing it sell it for.

Interesting. Because it worked like that for me when I put my house on the market. I looked up sold prices for similar houses, considered renovation condition and priced it. You have to start somewhere. 

Of course it doesn’t matter what I think in terms of a seller accepting my offer, but it does matter to me in terms of making a fair offer and not overpaying. I fully appreciate a buyer of my house may apply the same logic. 

btcp

Oh, and about how long it’s been on the market - how would you apply that? Say it’s in the market since September.  Does it mean it’s ok to offer 15% off, 10% off?

[Deleted User]

btcp said:

I am thinking of making an offer on a house. The problem is that it’s hard to make a comparison to determine the right offer as there were no similar houses sold on the street in the last couple of years. All houses on the street are slightly differ in size and renovation condition. This house needs lots of updating. I was thinking of looking through sold prices on this and a neighboring street and calculate average price per sq meter for renovated and outdated houses. Then use this number, applying to the size of this house. Any suggestions? 

When you say renovating what do you mean? A bit of decoration, a new kitchen?  Outdated decor doesn’t really make a property worth less than a nicely decorated one to the tune of how much you’d spend redecorating. 

There’s no rule of thumb as to how much less to offer because a property has been on the market for a while either. You don’t need to justify the offer you’re making you just need to decide how much the property is worth to you, and looking at recent sold prices nearby is a good starter for ten, and then make the offer. 

eddddy

You can calculate the amount you want to offer in any way you like - it's entirely up to you.

But your calculation approach is a bit unusual. I don't think that explaining your calculation approach to the EA or seller will increase the likelihood of your offer being accepted. In your position, I'd just make the offer, and see what response you get.

btcp

Lover_of_Lycra said 

When you say renovating what do you mean? A bit of decoration, a new kitchen?  Outdated decor doesn’t really make a property worth less than a nicely decorated one to the tune of how much you’d spend redecorating. 

I mean it wasn’t updated for 20+ years. You can live in it I suppose, but I was under impression that a house with new “everything” should cost more than the one that wasn’t touched for a long time. 

btcp

Lover_of_Lycra  you just need to decide how much the property is worth to you, and looking at recent sold prices nearby is a good starter for ten, and then make the offer. 

That’s when I am struggling a bit. I don’t t buy houses every year to have a good sense of what it worth to me. It may worth to me what I have on my bank account but the reality on the market is different. Sold prices nearby vary 50-100k which is a lot. 

btcp

eddddy said:

 In your position, I'd just make the offer, and see what response you get.

I’ve been reading that it’s a good practice to explain why  you are making an offer lower than asking price. That’s why I thought I’d provide some logical explanation rather than saying -“I offer xxx,  that’s what I am prepared to pay”. 

[Deleted User]

Would be more 'normal' just to say 'I am making this offer after looking at nearby properties comparable in size and condition'

btcp

Deleted_User said:

Would be more 'normal' just to say 'I am making this offer after looking at nearby properties comparable in size and condition'

I appreciate your view on what is more “normal”. If someone would offer 10% less for my house saying that, I would be slightly disappointed as it would look like they haven’t done enough research and just trying their luck. I would appreciate some examples that in my case I cannot provide.