Very concerned we are significantly overpaying for flat??

FTBJo

Hi there,

We are first time buyers and a couple that had an offer accepted on a 2 bed flat ground floor in south london right at the end of May this year. 

We viewed the flat we have had the offer accepted on, which was on the market for 350-375k. We decided to put an offer in, We really tried as much as possible to search sold prices on land registry and properties currently on the market that were similar. Given the current sellers market we felt we couldn’t offer lower than 350k and we felt that was approximately the going price for similar properties. The seller is not in any chain, though we weren’t in a huge rush so that didn’t sway us too much. 

A couple of weeks back,  I looked again on land registry sold prices. And there were two sold flats in our block, one sold for 283k and the other for 306k ins February and March respectively, both 2 bed flats in the same block! I was shocked, I can see the add for the 306 k flat advert, it’s in a similar decorative state, but has a different layout and is smaller than our flat, it is 63 sq metres versus 70 square metres. It is a first floor flat whereas ours is ground floor (but there’s no garden doers or direct access to garden so not a big perk).

I can’t find any details on the other flat that sold in February this year for 283k but it is a 2 bed flat in the same block. And massively cheaper than we are paying.

Then a couple of days ago, I checked current properties for sale and another flat in the same block has just come only the market. It’s marked at OIEO of 300k, again it’s a first floor flat and it does need a fair bit more work than ours e.g. pretty dated kitchen and bathroom. 

So three flats all selling for ~300k in the last few months in the same block, we are buying a flat for 350k! I’m actually sick worrying about it. That’s pretty compelling evidence. 

I would like the point out that sold prices on these three flats were not available when we made the offer.

Looking at current flats on for sale we also feel prices are starting to reduce, due to the current financial situation (higher interest rates, cost of living). Lot of flats that were out of our price bracket e.g. 375k we have since seen reduced to ~350k and we are kicking ourselves.

Meanwhile, since having the offer accessed the mortgage application have been going through and the solicitor has been progressing things. We just had the valuation report back and the mortgage application accepted. We were sure the valuation report would come back lower and that would help us to renegotiate but to our surprise it came at the value we offer at 350k. All I can think is because we have quite a large deposit 20%, the lender is not concerned about getting their money back.

We have fixed our mortgage for 5 years. We see ourselves staying there for between 5-6 years. 

We are yet to complete a survey but we were going to do one . The valuation report noted that they found asbestos containing materials in the communal areas but that they looked like they were being managed adequately. But that has worried us. We raised with the solicitor and she said the management company should have as asbestos management plan in place which will come as part of the idk we are receiving from them. 

Will a structural survey pick this up? Will they look at the communal areas and will this give us further room to renegotiate.

We are prepared to loose the flat if we renegotiate. We like the property and it ticks a lot of boxes but we don’t absolutely love it. Currently with prices being reduced, there are better flats for the same money on the market, that is for certain. 

Really we have three options but we need to decide sooner rather than later:

1. Renegotiate and risk loosing the flat (should we wait till after a survey)
2. Just pull out
3. Stick with it and risk overpaying in order to not loose it

Really in need of advise.

Many thanks . 

Grumpy_chap

This is entirely your choice and anyone can pull out right up to Exchange of Contracts, which you say has not happened yet.

Have you viewed the £300k flat?  Nothing stopping you.

FTBJo

I would also add to the above that we did our mortgage application early so have fixed at a low deal 2.63% for 5 years. Lenders were pulling deals before you even finished your application. I’ve looked again and the cheapest deals now are much worse +0.7% approx. So if we pull out, we risk loosing our mortgage offer and fixing on a worse deal. 

[Deleted User]

FTBJo said:

Currently with prices being reduced, there are better flats for the same money on the market, that is for certain. 

Buy one of those then, if you don't mind 'loosing' the current one, or even losing it. 

Just make sure you do the maths in terms of purchase price and mortgage, and whether you will end up in a bidding war which pushes the price up.

hpsauce86

The mortgage rates are expected to go up tomorrow also…I deal with Rightmove as part of my job (I’m a civil servant), and they are expecting another 0.5 on interest rates. 

The fact is, you offered what it was worth to you. If you don’t think it’s worth that now then try to renegotiate (they can say no and you’ll know where you stand), or back out. We can’t really tell you how to best spend your money. I would say a difference of 50k is a lot where I live, but in London I’d imagine it’s not unrealistic, especially with your flat being on the ground floor. 

Really only you can make the right decision, you can try, they can say no, you could try again for 330k, they might say yes. But equally they could just relist it, so it’s down to how much you like the house and are willing to spend. But of course, there’s no harm in asking (and I probably would!)

user1977

The asbestos isn't, from the sound of it, out of the ordinary or relevant to the price. And a (normal) surveyor isn't likely to say more than there are some bits which look like they might be asbestos.

FTBJo

user1977 said:

The asbestos isn't, from the sound of it, out of the ordinary or relevant to the price. And a (normal) surveyor isn't likely to say more than there are some bits which look like they might be asbestos.

Thank you that’s good to know. I pressume they wouldn’t say anymore than that. 

FTBJo

Grumpy_chap said:

This is entirely your choice and anyone can pull out right up to Exchange of Contracts, which you say has not happened yet.

Have you viewed the £300k flat?  Nothing stopping you.

It’s a different estate agent so yes nothing stopping us. It’s a good idea. Good for thought thanks. 

FTBJo

hpsauce86 said:

The mortgage rates are expected to go up tomorrow also…I deal with Rightmove as part of my job (I’m a civil servant), and they are expecting another 0.5 on interest rates. 

The fact is, you offered what it was worth to you. If you don’t think it’s worth that now then try to renegotiate (they can say no and you’ll know where you stand), or back out. We can’t really tell you how to best spend your money. I would say a difference of 50k is a lot where I live, but in London I’d imagine it’s not unrealistic, especially with your flat being on the ground floor. 

Really only you can make the right decision, you can try, they can say no, you could try again for 330k, they might say yes. But equally they could just relist it, so it’s down to how much you like the house and are willing to spend. But of course, there’s no harm in asking (and I probably would!)

Thank you for the reply. Yes I’m glad we are fixed in for five years, they are definitely continuing to rise. Okay, yes as you say can only say no. Thanks for the food for thought. We will mull it over. 

FTBJo

[Deleted User] said:

FTBJo said:

Currently with prices being reduced, there are better flats for the same money on the market, that is for certain. 

Buy one of those then, if you don't mind 'loosing' the current one, or even losing it. 

Just make sure you do the maths in terms of purchase price and mortgage, and whether you will end up in a bidding war which pushes the price up.

Yea fair point. Often reasonably priced properties do go to a bidding war in our experience so likely to go for more. Thanks for the advice 

propertyhunter

Also consider that if your current mortgage offer expires, what you might gain in a cheaper flat, you lose out on in higher interest rates. If we didn't complete on a recent transaction when we did (3 weeks to expiry), then we would have paid £28k more in interest over 5 years (it's a large mortgage but still 40% LTV).