Undervaluation and cold feet :/

Lyd00

Hi all, it's my first time posting here thank you for reading in advance. We're total newbies. 

Our experience buying our first house so far goes like this:

>House went on the market in Feb and within an hour of it being advertised ourselves and 6 other couples were booked in to see it the next day (crazy!) 

>It was on for OIEO £300k. It got several offers all above this. 

>We offered £300k which was turned down so then we offered £305k. Apparently our offer wasn't the highest but they accepted ours due to the others being in a chain.

>Our lender then undervalued it by £15k at £290k (which is still a £45k profit on what the seller bought it for). This concerned us however the house is only 3 years old on a new build estate and there was nothing to compare it to. 

>The seller initially wouldn't budge on price but then renegotiated with us to £300k.  We considered asking a different lender to see if they valued it differently but our mortgage broker didn't think it would be. 

>Since this has happened a similar house on the same street approx 15 houses along has gone on the market, initially for £10k less at £290k and it was then further reduced by another £10k to £280k. It's very similar with 4 bedrooms, 3 bathrooms, detached, driveway, not overlooked at the back. The only difference is the fancy upgrades ours had when it was built (nicer tiles and carpets etc) and ours is 2nd from the end whereas rather than right in the middle of the street. Our garage can be accessed internally and theirs can't. Ours is nicer, but is it £20k nicer ? It's been on the market a good couple of weeks so far. 

The price of this other house isn't what's worrying us, it's the fact it isn't selling and has even been reduced. Maybe our lender was spot on with our valuation of £290k. 

On top of all this our solicitors searches have come back and there are 2 more new build estates going up that we didn't know about. One had planning permission granted on 1st April. Another is across the field from us so it will impact on our view. The market will become very saturated in our area with approx 300 houses going up around us on 2 estates. 4 bed detaches are starting at £304k - £365k; do new build estates negatively or positively affect the value of your house? 

Should we be worried?

Should we take it as a bad sign that a house not too dissimilar is not selling/slow to get offers? The undervaluation didn't worry us too much at first but now I think we could be paying too much. 

Thanks in advance for reading this far. 

AdrianC

You were happy to pay £305k for it. Some people would even have paid more.
You are now, I presume, even happier to be paying £300k for it.

How much equity do you have, how much are you borrowing? Can you still afford to purchase?

£10k of £300k is 3.3%. It's insignificant.

Fiesto88

I know it’s hard to think of it like this, because it’s your hard earned money - but it’s only a down valuation of ~3%. In the grand scheme, the opinion of the surveyor is pretty much in the same ball park as your opinion when you offered. As long as it’s not affecting your mortgage offer and you plan to stay in this house for a reasonably long time, I wouldn’t say it matters much. Regarding the other house - you don’t know what it’s sold for yet and what the reasons are for the reduction. They may be doing it just to generate maximum interest/viewings. Maybe, if you want a more in-depth opinion, give us a link to both listings?

You do need to make your own decision regarding the new builds and the view though. If you have doubts now, don’t proceed unless you’re confident they aren’t going to bother you. 

GDB2222

Personally, I’d offer £270k on the other one. If accepted, I’d probably buy that one instead. Secondhand tiles and carpets are clearly not worth paying significantly extra for. 

I have no idea what the demand is for housing in your area. The developers can drip feed their stock onto the market, so as not to depress prices too much. You will have to decide whether you are okay with the extra development nearby.

user1977

Valuation isn't an exact science - normal margin for error is +/- 5%, or more if (as you say) there's a lack of comparables. So you're still in the right ballpark (though admittedly that works in the other direction too!).

And if something was built only 3 years ago, yes you can fully expect land nearby also to be developed. You can check out planning applications yourself for free, you don't need to pay for and wait for your solicitor's searches to come back. None of the house's value is coming from an expectation that it will have views over that field.

The_Real_Cheddar_Bob

You made a point about ho much profit is there for the seller, thats irrelevant in this situation. 

Thrugelmir

Lyd00 said:

>Since this has happened a similar house on the same street approx 15 houses along has gone on the market, initially for £10k less at £290k and it was then further reduced by another £10k to £280k. 

If this property still hasn't sold at £280k. Then suggests the surveyor (at the time) wasn't far off the ball park at £290k when appraising the one you are considering. Doesn't sound like a down valuation at all. Easy to bid up when it's not your money that you are spending. 

theartfullodger

It's not been undervalued - you've simply offered more than it's probably worth 

Your choice.

JJR45

So you can get virtually the same house for at least £25k less.
Seem a simple decision to me, buy the other and get yourself brand new flooring etc with what you saved. 
But chances are you won't until you need to.

JJR45

Lyd00 said:

 The market will become very saturated in our area with approx 300 houses going up around us on 2 estates. 4 bed detaches are starting at £304k - £365k; do new build estates negatively or positively affect the value of your house? 

I think you have answered your own question there, more houses being available will make it harder to sell.
So you will be in competition with builders who can offer a shiny new house and incentives.
In a normal market newbuilds attract  around 20% premium for their newness.
But that can be difficult to achieve if newbuilds going up around you. But on average an EA will say a newbuild usually gets back to its buy price within 3-5years.

Keswick1uk

Remember most houses when furniture is taken out show wear. We moved into our first house with blue carpet.  They moved their sofas and the carpet underneath was darker as it hadn't seen the sun. Our furniture was a different size!