£3000 psm for refurbishing?

GDB2222

We are thinking of downsizing, so we have been talking to estate agents. We have been in the house for 25 years and done very little to it during that time. It’s not a wreck, but it’s not been updated like some of the other houses in the area.

I am being told by the agents that the most likely buyers will want to refurbish the house completely, including air con, underfloor heating, etc, and probably a complete change of layout. I’m being told that this will probably cost £3k psm, and hence the price I can achieve will need to reflect that. 

It does seem odd that I am being expected to pay for the buyer’s refurbishment on a house that is entirely habitable as it is, but that’s a different issue. I am really just questioning whether the cost being bandied about is in the right ballpark?  

Martin_the_Unjust

If a house has been neglected for 25 years that is going to be reflected in the price but get another couple of EA’s around to give you a broader picture.

Doozergirl

It really depends on where you live.  If your house is worth over a million and in a particular area, then people will have expectations of what that should buy them.  London houses, particularly, have a very strong modern aesthetic, certain layouts are favoured and people are keen to maximise every square centimetre.  If you've done very little in 25 years, how much was done in the preceding 25? If it's a period property then the plaster is probably screwed behind the decoration and you're straight back to brick. 

I have to say that the need to retrofit houses and install insulation etc is high now, I think people are paying far more attention to EPC ratings as well.  

Whilst I believe quite strongly these days that the period property premium is totally illogical and that a houses should be down-valued by the cost of decent retrofit, the reality is that they still aren't.  People underestimate the cost of building works and subsequently overvalue the houses they buy all the time. 

You can and should, of course, get three agents in to value the house and you should come to some sort of sensible conclusion as to the valuation.   Even then, if it is undervalued, the market will set its price.  

Could you decently renovate your own house for less than £3,000 a metre?  Of course you can and you can reap the financial reward of doing so, although you probably couldn't live in it whilst it was happening and that would also have a financial cost.  

You could also spend an awful lot less and simply fool people, like people on Homes Under the Hammer.   It's the question asked on the house selling board all the time - how much work to do to maximise selling price.  

I'm just looking at a major, major reno we did in central London a few years back and it came in around that price - in a conservation area and where putting waste outside was impossible, but we extended it too and that was really complicated as it was such a tight plot and not the  sort of extensions you'd build in other areas as they'd not be good value for money unless your land price is sky high. Spec was nice, not outrageous.  Prices have risen a lot but people shouldn't expect you to pay for extensions, of course, albeit my price included all of the final internal area. 

FreeBear

GDB2222 said: I am being told by the agents that the most likely buyers will want to refurbish the house completely, including air con, underfloor heating, etc, and probably a complete change of layout. I’m being told that this will probably cost £3k psm, and hence the price I can achieve will need to reflect that.

My home hadn't had much done to it for a very long time. I'm slowly doing one room at a time catching up on repairs & redecorating. There is no way in hell that I'm spending £3K per square metre. The budget is £1K to £3K per room !

If I were to sell today, I might accept £10-15K under asking, but no way would I reduce the price if the (potential) buyer wanted to change the layout or add air-con/UFH. The existing layout has served well for the last 90 years with this house and countless others in the neighbourhood.

GDB2222

That’s very informative, thanks. One of the things that is worrying me is that the house is only insured for a rebuilding cost of £2k psm. That’s in accordance with the insurance company’s recommended calculation.

Doozergirl

GDB2222 said:

That’s very informative, thanks. One of the things that is worrying me is that the house is only insured for a rebuilding cost of £2k psm. That’s in accordance with the insurance company’s recommended calculation.

It definitely needs to be more than that now.  There will be no VAT on rebuild, but £2,000 is a low estimate, especially with inflation, thought to be in the region of 40% on materials over the last two years.  Averaged, I don't feel like it's that low!! 

mi-key

I'm sure they may want underfloor heating, aircon and major building works, but those aren't really things you can use to reduce the price on a house if it is perfectly functionable ( like 99% of most houses in the UK that don't have those things ! ).

It's like saying I would like to buy a house for half price because I would like to buy a Ferrari to look nice on the drive !

mi-key

Also the rebuilding cost for a house is a lot different than the refurb cost. A refurb cost wouldn't include stuff like building walls, new ceilings etc... 

silvercar

Having a vague idea of where you live, I would say property is much in demand in your area and the MSE view of things may not tally with the sort of people that will be looking to buy in your area. Saying that, the general view of speaking to 3 estate agents who specialise in your sort of property holds true, so I’d start with speaking to them and see what guide price they suggest.

TELLIT01

Much of what the EA has mentioned is upgrades to a property, not simply bringing it up to standard.  Gut feeling is that he wants the price reduced to make it easier to sell and therefore gets his commission faster.  Cynic that I am he may even know somebody 'who want a project' and could complete the purchase quickly.

An identical house to ours, just 4 doors away, is now on the market.  Nothing has been done to it for years and it also requires complete refurbishment.  The asking price is roughly £60k lower than the asking price for identical homes in good state.  These are 1930s 3 bed semis in Gloucestershire.  The people who purchase the house next door to us have converted the ground floor to completely open plan, formerly 3 rooms, but they certainly didn't get the price reduced because they wanted to do that.

mi-key

TELLIT01 said:

Much of what the EA has mentioned is upgrades to a property, not simply bringing it up to standard.  Gut feeling is that he wants the price reduced to make it easier to sell and therefore gets his commission faster.  Cynic that I am he may even know somebody 'who want a project' and could complete the purchase quickly.

An identical house to ours, just 4 doors away, is now on the market.  Nothing has been done to it for years and it also requires complete refurbishment.  The asking price is roughly £60k lower than the asking price for identical homes in good state.  These are 1930s 3 bed semis in Gloucestershire.  The people who purchase the house next door to us have converted the ground floor to completely open plan, formerly 3 rooms, but they certainly didn't get the price reduced because they wanted to do that.

Exactly, you can't expect a discount because a house doesn't have aircon or underfloor heating seeing as hardly any houses have those as standard ! or because you want to change the layout...