Giving myself the best opportunity at closing date.

jennifernil

£95k to wanting £110k is a big jump......what is the Home Report valuation?

[Deleted User]

@Alderbank You're spot on: they changed agents after the gazumping but I was told it was because theirs was in hospital with sepsis. Thank you for your insights and for saying it's an obscene amount of money. It does seem high considering the valuation...though I want the best chance of getting the place. I'm letting my heart rule my head at the moment. Appreciate you bringing me back down to reality!

@jennifernil The valuation is £95k. Admittedly, I think that's low considering the home report (and the seller stated this too), but that's what it is. 

Caz3121

the main thing to bear in mind is that mortgage will be based on home report or selling price, whichever is the lower
if home report is £95k and you were going for a 90% mortgage then you will need the difference between £85.5k and your offer in cash.

[Deleted User]

@Caz3121 Yes, this is definitely a consideration. The higher I go over the valuation, the more I will have to borrow essentially. It's tricky coming up with a figure that seems 'just right'.

Caz3121

Deleted_User said:

@Caz3121 Yes, this is definitely a consideration. The higher I go over the valuation, the more I will have to borrow essentially. It's tricky coming up with a figure that seems 'just right'.

It really is a juggling game and difficult for FTB
your mortgage lending will be capped based on the home report value so borrowing more will likely impact in interest rates
eg if you had a £30k deposit and were buying for £95k you would be under 70% LTV with potentially decent rates
if you offered £120k and you would be looking at a 95% LTV mortgage (95% of £95k = £90.25k) at higher rate + just under £30k deposit

Your competition at closing date will be those with high deposits and cash purchasers

[Deleted User]

@Caz3121 Thank you for this. I hadn't considered the fact that a higher offer would potentially compromise a better mortgage interest rate. Lots to consider! I am certainly rethinking my instinct of offering around £122,500.

jennifernil

Somewhere between 5% and 15% over home report value, depending on how popular the area is, and whether it needs any work, would be reasonable.   Assuming you have reserves to cover that.  More would be madness IMO!

However, if you plan on staying there a very long time, it may be worth the extra.

Your solicitor should be able to advise on how much above home report properties in the area are going for.

[Deleted User]

@jennifernil Thank you. I have been keeping an eye on the area (a small, rural village) for some time. For reference, the property I was gazumped on was valued at (if I remember correctly) £100k. It sold for £133.3k in March, despite having been bought only 18 months prior for £91.5k. It's just silly really, so it's difficult to balance logic (i.e. your recommendation of 5-15% over HR valuation) with the current market conditions to know what a winning offer might be. Good to get some perspective from people on this forum as I could easily be overzealous with this!

user1977

Have you kept track of other sales and how the registered prices compared with the HR valuations?

[Deleted User]

@user1977 Yes. Generally, they go for higher than the HR valuation (another one I viewed was offers over £155k and went for £190k), though there are occasionally exceptions that stay on the market for several months then go for around the valuation. These tend to be the homes that need some work done, and possibly have more 2s on the HR.