How to offer on a property without feeling like we're pulling a number out of the air

greensalad

We are FTB and have recently viewed a property that we feel we would like to offer on. It is a 1930s semi, owned by an older couple who are moving due to mobility issues, it has not been redecorated since the 80s/90s. 

We always knew we would be happy with a property that needed some work, full decor is fine. We're also comfortable with taking on renovation in terms of knocking through to create a kitchen diner. However we feel the current layout is fine to live in and so we wouldn't need to jump on it straight away.

The property has some real positives, the garden is huge (which is very important to us, we're both keen gardeners and a medium-large garden was on our ticklist), but this is really above expectations. It's also on the outskirts of the city, which is great, as it's basically a 5 minute walk to rural, beautiful countryside, but also walkable into the city (though rather a long walk) and has good bus links, supermarket nearby, pubs etc. 

The downside is, well it's very dated however that doesn't worry us. What does "worry" us is the concept of taking on bigger projects such as rewiring and possible artex removal. The boiler at least is not too old and recently serviced. Perhaps a little more work than we were thinking, but not insurmountable. And very much liveable while we work on it. 

It's up for 500k and we feel this is overpriced. It's hard to know what feels right, other than basing it on other houses we've viewed. In some aspects it's head and shoulders above the rest and in others it's not. 

We are erring on the side of maybe 485k as a final, but it feels a bit finger in the air. It's really hard to know what's right. We've got AIP for £515,000 but Natwest offered us up to £540k so it's within our affordability and £485k would work for our comfort level of mortgage repayment. 

In terms of other properties in the area, the same build of house sold on the same road in just February for £300k, however this one is quite significantly different. The garden is more small-medium, and it does not have the attic conversion (which gives two extra bedrooms, so the £300k is a 3 bed and this is a 5 bed). Are two bedrooms and a 3x bigger garden worth £200k? Probably not. But are they work £185k? Maybe.

Other thing is that the EA has stated he thinks the buyers might take some time to find the right property for them as they really need a bungalow and obviously that cuts down on what they can look at. He said "they need a buyer who doesn't mind waiting". We are in rented and happy to stay put, and the advantage would be allowing us to save more cash prior to moving to get on top of work needed earlier. I feel this FTB status might allow us a little more chance to offer under. I feel like perhaps other viewers will be selling properties so this might help us stand out. 

Any thoughts? We were considering £480k and going up to £485k but no more. But it's hard to know if that's the "right" number. 

AdrianC

£15k on a £500k house is 3%. Not much.

Don't compare this 5-bed-big-garden with a 3-bed-small-garden simply because they're in the same road... Compare with other 5-bed-big-garden in the slightly wider area. Adjust up or down as necessary for location. What other places are you looking at for your budget? How does this compare?

user1977

greensalad said:

It's hard to know what feels right, other than basing it on other houses we've viewed.

You should be looking more at the prices achieved by properties which have actually sold, rather than other current asking prices (which may or may not reflect whatever they're sold for).

greensalad

We've been comparing further afield and it seems totally variable. Built-for-purpose 5 beds (vs attic conversions) tend to go for £550k. Equally seen some character properties with just 3 beds go for £550k too. However seen some more dated properties as low as £400k. Just feels like comparing apples to oranges. 

Not sure how much comparison can be made between 30s and 60s? Pretty much every road on the outskirts of the city in all directions are 60s build chalet style homes with small upstairs bedrooms. There are a select number of roads around the city that have these similar 1930s semis and I see them go for £450k-£550k depending on level of fit inside. 

paulj2021

if it if it’s not been decorated for 30 years it’s likely everything else is that old too (windows, boiler, electrics etc) maybe get an idea about how much these would cost to replace and deduct that from your preferred price, it may seem like a major drop from the asking price and they’ll probably say no but then you can negotiate upwards?

AdrianC

paulj2021 said:

if it if it’s not been decorated for 30 years it’s likely everything else is that old too (windows, boiler, electrics etc) maybe get an idea about how much these would cost to replace and deduct that from your preferred price, it may seem like a major drop from the asking price and they’ll probably say no but then you can negotiate upwards?

To which, of course, the answer will be that it was priced as needing that work...

greensalad

paulj2021 said:

if it if it’s not been decorated for 30 years it’s likely everything else is that old too (windows, boiler, electrics etc) maybe get an idea about how much these would cost to replace and deduct that from your preferred price, it may seem like a major drop from the asking price and they’ll probably say no but then you can negotiate upwards?

Double glazing and surrounds looked in good condition, boiler is 5 years old. Research on rewiring suggests £4-6k. 

getmore4less

my guess is this one.
https://www.rightmove.co.uk/properties/80485488#/

badger09

How long has it been on the market?
Has it had many viewings?
Has it had any offers?

You are in a very good position, in that you can afford to pay asking price & still be able to spend money on it to bring it up to date & remodel as you wish.
You are not in chain and not in a rush. That should appeal to the vendors.

I honestly think that having considered your likely competition I would offer what you feel comfortable spending. If that is £480k, so be it. But also think about how you would feel if someone else offered say £490k and you didn't get the house. It sounds to be in a good location for you and you're not likely to outgrow it. In 5 or 10 years time, that extra £10k (or whatever you decide) will seem insignificant.

Good luck

greensalad

getmore4less said:

my guess is this one.
https://www.rightmove.co.uk/properties/80485488#/

Excellent detective work, that is the property.

greensalad

badger09 said:

How long has it been on the market?
Has it had many viewings?
Has it had any offers?

You are in a very good position, in that you can afford to pay asking price & still be able to spend money on it to bring it up to date & remodel as you wish.
You are not in chain and not in a rush. That should appeal to the vendors.

I honestly think that having considered your likely competition I would offer what you feel comfortable spending. If that is £480k, so be it. But also think about how you would feel if someone else offered say £490k and you didn't get the house. It sounds to be in a good location for you and you're not likely to outgrow it. In 5 or 10 years time, that extra £10k (or whatever you decide) will seem insignificant.

Good luck

How long has it been on the market? Viewings started yesterday.
Has it had many viewings? 6 yesterday, we were the first, not sure if it's got more today.
Has it had any offers? EA said yesterday they will not be moving on offers until Monday midday, so I suspect if any viewers over the weekend have offered we'd go up against them.

"But also think about how you would feel if someone else offered say £490k and you didn't get the house"
This is exactly how I feel. We're a young couple with no kids, who want a large garden we can enjoy for years to come, and are willing to do the work to make it the "dream family home" over time. I guess we also have to balance that with not getting into a bidding war. 

It just feels hard to know "what you feel comfortable spending". I guess we feel comfortable with the mortgage payment we've ascertained we would pay on a £500k property. However needing to do the work and pay for that means we'd want to under-offer. Therefore £485k seemed reasonable to allow us to save a bit of money and do the work and still come out with a great house at the end of it.