Fantasists?

molenpad

A house I looked at in 2019 was up for £230,000, it sold for £225,000. Its now just sold again in 2023, and I know the buyer who has paid £315,000 for it, which was asking price - no work done which I would class as an improvement, per se. Though the house is in a nice suburb of Manchester, close to train links and easy access into the city by bus and car, with a new park and ride close by. 

Prices go up, expectations go down

aoleks

I used to occupy myself with similar calculations when we bought our house. what did it sell for in the 80s? what's the growth rate for this postcode over the last 30 years? what about the neighbour's house? is the owner greedy? am I being had? etc. etc. etc.

very nice work, requires a meticulous approach, it gives you some "insight" (or not, might generate more questions). at the end of the day, I found the entire exercise useless and nearly 2 years on, it matters naught. why? most numbers you will find are generic, each property is valued individually. two identical properties can be valued in different ways, because of some things you didn't even think of.

I found it more helpful to ask the following questions:

1. are there properties nearby that, for no obvious reason (e.g. flood, structural problems) sold for significantly less? a few thousands here and there are not major differences. if not, then that could very well be the price.
2. can I afford it and am I happy to pay this much?
3. what would the equivalent rental cost me in this (or similar) area? how does that stack up against my mortgage?
4. what alternatives do I have if I was to, let's say, continue renting? the house might be a bit more expensive than "expected", but if I was to rent in today's market, I'd rather take a 95% LTV mortgage at 6%, then to burn my money in a greedy landlord's property.
5. what are the costs once I move in? can I start enjoying the house straight away or do I need to spend thousands/tens of thousands to make it liveable?

now if there are 10 similar properties (area, kitchen, parking, bedrooms, age etc.) in that area and they're all priced at around £250k and these two are £100k above, then I'd be asking questions. otherwise, the prices 1-2-5 years ago is just that, a number in a transaction.

ReadingTim

aoleks said:

I used to occupy myself with similar calculations when we bought our house. what did it sell for in the 80s? what's the growth rate for this postcode over the last 30 years? what about the neighbour's house? is the owner greedy? am I being had? etc. etc. etc.

very nice work, requires a meticulous approach, it gives you some "insight" (or not, might generate more questions). at the end of the day, I found the entire exercise useless and nearly 2 years on, it matters naught. why? most numbers you will find are generic, each property is valued individually. two identical properties can be valued in different ways, because of some things you didn't even think of.

I found it more helpful to ask the following questions:

1. are there properties nearby that, for no obvious reason (e.g. flood, structural problems) sold for significantly less? a few thousands here and there are not major differences. if not, then that could very well be the price.
2. can I afford it and am I happy to pay this much?
3. what would the equivalent rental cost me in this (or similar) area? how does that stack up against my mortgage?
4. what alternatives do I have if I was to, let's say, continue renting? the house might be a bit more expensive than "expected", but if I was to rent in today's market, I'd rather take a 95% LTV mortgage at 6%, then to burn my money in a greedy landlord's property.
5. what are the costs once I move in? can I start enjoying the house straight away or do I need to spend thousands/tens of thousands to make it liveable?

now if there are 10 similar properties (area, kitchen, parking, bedrooms, age etc.) in that area and they're all priced at around £250k and these two are £100k above, then I'd be asking questions. otherwise, the prices 1-2-5 years ago is just that, a number in a transaction.

Or, "what could I buy instead?"  

This also answers whether it is the seller, or the buyer, who is deluded.  

mi-key

It's all pretty irrelevant anyway. If you want to move to Acacia Avenue, and all the houses for sale on it at the moment are £100K more than they were a few years ago, then that is  the price. The sellers may be 'deluded' in someones opinion, but if that is what they are all asking, then they aren't going to reduce them by £100K just so a buyer can afford one, regardless of what has or hasn't been done to them.

Despite what some people claim about their amazing bargaining powers, that is very rarely going to work unless you find one of the tiny percentage of sellers who are desperate to sell.  

peterhjohnson

mi-key said:

Or sensible people make reasonable offers they can afford on houses that are within their budget range, rather than wasting their lives making low offers on houses they can't afford that will never be accepted.

I once made an offer of 17% below asking on a house that I liked and could see was overpriced. The vendor refused my offer but reduced the asking by 14%. I stuck to my guns and after a couple of weeks my offer of 17% below the original asking price was accepted. This was during a crazy "seller's market" when I was losing sensibly priced houses even when bidding full asking!

Moral: It can be worth a low bid on an "overpriced" property if you have done your research and can see it really is overpriced 

Interestingly, when I sold that house, I had 2 offers at 15% below asking. But I also had offers at -3% and +1% and accepted the -3% because the buyer was more procedable 

diystarter7

jimbog said:

lookstraightahead said:

Each to their own, but I don't trust what a house goes on the market for 

not sure what it is to 'trust' the asking price of a house

Hi

Judging by the content of the reason of this thread the poster you quoted is not "trust"(ing) the advertised prices and I agree as many properties are still coming on a lot higher than what they are likely to acheive

Thnaks

diystarter7

peterhjohnson said:

mi-key said:

Or sensible people make reasonable offers they can afford on houses that are within their budget range, rather than wasting their lives making low offers on houses they can't afford that will never be accepted.

I once made an offer of 17% below asking on a house that I liked and could see was overpriced. The vendor refused my offer but reduced the asking by 14%. I stuck to my guns and after a couple of weeks my offer of 17% below the original asking price was accepted. This was during a crazy "seller's market" when I was losing sensibly priced houses even when bidding full asking!

Moral: It can be worth a low bid on an "overpriced" property if you have done your research and can see it really is overpriced 

Interestingly, when I sold that house, I had 2 offers at 15% below asking. But I also had offers at -3% and +1% and accepted the -3% because the buyer was more procedable 

Hi

A great and excellent example of knowing your markets, sellers and buyers.

Credit to yo fo being on the ball.

Years ago we got 3 EA's to value our property, one was quite rude and good as said we were dreaming. However, we wanted a reslistic price so even the other two EA were happy to go along with out price but they said it would be deifficult. However, we knew (about 20 yrs ago) that around our area we were one of the handful of houses that has extra side garden space and OSP which was very rare around that area and factoring that i plus the lack of avialibit of of the footprint and the levels we done it up to, we went for top dollar - sold STC within the week and exchanged a couple of moths later

Know your markets and what sells and sell to the right people and buy from the right people IE, smallest chain or no chain if possible. Kepp on the ball chase EA's if you need to and the solicitors etc to get to exchange of contracts, job done

Thnaks

Elliott.T123

lookstraightahead said:

There are thousands and thousands of buyers where the valuation is vital, or they just don't want to pay for a house that the lender won't even risk. And of course those who have a specific LTV bracket which makes a wealth of difference. This doesn't just affect the buyer, it affects the seller, who has to remarket when the buyer has to, or wishes to, pull out.

I agree that both parties need to be realistic. The issue is that the seller is often the initial one not being realistic. There's a definite theme with sellers being over optimistic (I mean greedy) and that just starts a spiral of events that wastes everyone's time.

A buyer needs to remove all the marketing that so often comes with selling a house (or any product) and see it for what it really is. After all, that's why it's called marketing. There to entice. And often people see something that's more expensive as better quality. Sometimes it is, often it isn't. 

I don't doubt for one moment though that lots of sellers are after that one particular buyer who is happy to pay whatever for their "dream home". There are lots of people who never want to negotiate as well, as it's uncomfortable to do so. So they either get lucky or their house waits around for ever. Recently lots have sold so they're still holding on to this. There are also buyers who bought recently holding on to this. The fact is that generally house prices are heading downwards now. Who knows how long this will be for, but it does pose a question more so to a buyer now. They're going to take it into consideration when offering.

Each to their own, but I don't trust what a house goes on the market for any more than what my daughter used to 'sell' her veg for in her pretend shop when she was little.  

I would argue that it is impossible for the seller to waste everyone's time. The seller has advertised the property at a price they are looking to receive. If a buyer makes what they feel to be a fair offer and it is rejected for being too low how has the seller wasted their time. They made it clear what price they wanted.

The only person who has wasted time is the buyer wasting their own time looking at a property they do not feel is worth the value that the current owners feel it is worth....

RelievedSheff

diystarter7 said:

peterhjohnson said:

mi-key said:

Or sensible people make reasonable offers they can afford on houses that are within their budget range, rather than wasting their lives making low offers on houses they can't afford that will never be accepted.

I once made an offer of 17% below asking on a house that I liked and could see was overpriced. The vendor refused my offer but reduced the asking by 14%. I stuck to my guns and after a couple of weeks my offer of 17% below the original asking price was accepted. This was during a crazy "seller's market" when I was losing sensibly priced houses even when bidding full asking!

Moral: It can be worth a low bid on an "overpriced" property if you have done your research and can see it really is overpriced 

Interestingly, when I sold that house, I had 2 offers at 15% below asking. But I also had offers at -3% and +1% and accepted the -3% because the buyer was more procedable 

Hi

A great and excellent example of knowing your markets, sellers and buyers.

Credit to yo fo being on the ball.

Years ago we got 3 EA's to value our property, one was quite rude and good as said we were dreaming. However, we wanted a reslistic price so even the other two EA were happy to go along with out price but they said it would be deifficult. However, we knew (about 20 yrs ago) that around our area we were one of the handful of houses that has extra side garden space and OSP which was very rare around that area and factoring that i plus the lack of avialibit of of the footprint and the levels we done it up to, we went for top dollar - sold STC within the week and exchanged a couple of moths later

Know your markets and what sells and sell to the right people and buy from the right people IE, smallest chain or no chain if possible. Kepp on the ball chase EA's if you need to and the solicitors etc to get to exchange of contracts, job done

Thnaks

And yet you now say that sellers who ask for top market value are greedy?

You can't have it both ways!!

lookstraightahead

Elliott.T123 said:

lookstraightahead said:

There are thousands and thousands of buyers where the valuation is vital, or they just don't want to pay for a house that the lender won't even risk. And of course those who have a specific LTV bracket which makes a wealth of difference. This doesn't just affect the buyer, it affects the seller, who has to remarket when the buyer has to, or wishes to, pull out.

I agree that both parties need to be realistic. The issue is that the seller is often the initial one not being realistic. There's a definite theme with sellers being over optimistic (I mean greedy) and that just starts a spiral of events that wastes everyone's time.

A buyer needs to remove all the marketing that so often comes with selling a house (or any product) and see it for what it really is. After all, that's why it's called marketing. There to entice. And often people see something that's more expensive as better quality. Sometimes it is, often it isn't. 

I don't doubt for one moment though that lots of sellers are after that one particular buyer who is happy to pay whatever for their "dream home". There are lots of people who never want to negotiate as well, as it's uncomfortable to do so. So they either get lucky or their house waits around for ever. Recently lots have sold so they're still holding on to this. There are also buyers who bought recently holding on to this. The fact is that generally house prices are heading downwards now. Who knows how long this will be for, but it does pose a question more so to a buyer now. They're going to take it into consideration when offering.

Each to their own, but I don't trust what a house goes on the market for any more than what my daughter used to 'sell' her veg for in her pretend shop when she was little.  

I would argue that it is impossible for the seller to waste everyone's time. The seller has advertised the property at a price they are looking to receive. If a buyer makes what they feel to be a fair offer and it is rejected for being too low how has the seller wasted their time. They made it clear what price they wanted.

The only person who has wasted time is the buyer wasting their own time looking at a property they do not feel is worth the value that the current owners feel it is worth....

But I've never paid what a seller has initially asked for. 

My experience is that you don't just pay what is asked - or have we changed how we buy houses now, and it's all about not upsetting a seller?