Price adjustment for smaller homes

MeteredOut

jake_jones99 said:

GixerKate said:

Buying houses doesn't really work like that, the market changes so what was sold 18 months ago doesn't have a huge impact today.  Do you like the house and do you want to live there?  Do you think you could buy something better for less in the same location?  These are the questions you need to think about not crunching the percentages.

Based on the info provided I don't see a justification for lowering your offer and if I was the seller I would be suspicious that you are going to be 'that' kind of FTB and mess about.

If you truly don't like the house then drop out and look for something else.

The one 18mo ago was only to show some pattern. The main comparable is the one that completed a few days ago. 

The problem here is you do not know the circumstances of that sale. Maybe they were moving to their dream home and had to sell quickly, so marketed at a lower price. Maybe they sold to a family member at the lower end of all the valuations they received. 

If you want to use sold prices of other houses, you'll need data, not anecdote.

jake_jones99

MeteredOut said:

jake_jones99 said:

GixerKate said:

Buying houses doesn't really work like that, the market changes so what was sold 18 months ago doesn't have a huge impact today.  Do you like the house and do you want to live there?  Do you think you could buy something better for less in the same location?  These are the questions you need to think about not crunching the percentages.

Based on the info provided I don't see a justification for lowering your offer and if I was the seller I would be suspicious that you are going to be 'that' kind of FTB and mess about.

If you truly don't like the house then drop out and look for something else.

The one 18mo ago was only to show some pattern. The main comparable is the one that completed a few days ago. 

The problem here is you do not know the circumstances of that sale. Maybe they were moving to their dream home and had to sell quickly, so marketed at a lower price. Maybe they sold to a family member at the lower end of all the valuations they received. 

If you want to use sold prices of other houses, you'll need data, not anecdote.

Thinking they sold cheaply twice nearby the house seems a bit of wishful thinking on my side. I have collected data from all the neighborhood, it is hard to find anything more expensive at the same floor area. So I then concluded maybe there's something about this particular cul de sac (which is marginally more central)  And then ended with the two sales above, the only ones available. 

ReadySteadyPop

jake_jones99 said:

I am buying a house in a small cul-de-sac where a larger house just completed a few days back.  I am close to exchange. Both houses have the same characteristics: 3 bedrooms, 2 driveway spaces, condition, number of bathrooms, build year/company etc. However, the house I am buying is 20% smaller than the larger house (both in terms of floor area and garden space) and my accepted offer makes it 8.8% cheaper. 1.5 years ago, another house sold in the same cul-de-sac identical to the larger one. My house would be only 5.4% cheaper relative to that one (and still 20% smaller).

I am aware I am paying a premium. The question is simple, is the premium potentially justified, or is there good justification to drop out? Or propose another decrease - there were a few already - with the risk of dropping out.

I am not in a rush to move, and I am a first time buyer.

How many other offers did they have?

RedFraggle

MeteredOut said:

jake_jones99 said:

GixerKate said:

Buying houses doesn't really work like that, the market changes so what was sold 18 months ago doesn't have a huge impact today.  Do you like the house and do you want to live there?  Do you think you could buy something better for less in the same location?  These are the questions you need to think about not crunching the percentages.

Based on the info provided I don't see a justification for lowering your offer and if I was the seller I would be suspicious that you are going to be 'that' kind of FTB and mess about.

If you truly don't like the house then drop out and look for something else.

The one 18mo ago was only to show some pattern. The main comparable is the one that completed a few days ago. 

The problem here is you do not know the circumstances of that sale. Maybe they were moving to their dream home and had to sell quickly, so marketed at a lower price. Maybe they sold to a family member at the lower end of all the valuations they received. 

If you want to use sold prices of other houses, you'll need data, not anecdote.

Do you know what the one that completed recently actually sold for rather than the asking price? 

ReadySteadyPop

GixerKate said:

Buying houses doesn't really work like that, the market changes so what was sold 18 months ago doesn't have a huge impact today.  Do you like the house and do you want to live there?  Do you think you could buy something better for less in the same location?  These are the questions you need to think about not crunching the percentages.

Based on the info provided I don't see a justification for lowering your offer and if I was the seller I would be suspicious that you are going to be 'that' kind of FTB and mess about.

If you truly don't like the house then drop out and look for something else.

Sales over the last few years were based on VERY low borrowing rates, as mortgage borrowing rates start to normalise prices paid 18 months or two or three years ago get harder to achieve.

jake_jones99

RedFraggle said:

MeteredOut said:

jake_jones99 said:

GixerKate said:

Buying houses doesn't really work like that, the market changes so what was sold 18 months ago doesn't have a huge impact today.  Do you like the house and do you want to live there?  Do you think you could buy something better for less in the same location?  These are the questions you need to think about not crunching the percentages.

Based on the info provided I don't see a justification for lowering your offer and if I was the seller I would be suspicious that you are going to be 'that' kind of FTB and mess about.

If you truly don't like the house then drop out and look for something else.

The one 18mo ago was only to show some pattern. The main comparable is the one that completed a few days ago. 

The problem here is you do not know the circumstances of that sale. Maybe they were moving to their dream home and had to sell quickly, so marketed at a lower price. Maybe they sold to a family member at the lower end of all the valuations they received. 

If you want to use sold prices of other houses, you'll need data, not anecdote.

Do you know what the one that completed recently actually sold for rather than the asking price? 

Yes. I spoke to the agent from the agency that sold it (from a different agency that the seller's agency). He told me it completed a few days before, checked his phone and told me the price. That is how I worked out my offer is 8.8% cheaper for a 23% smaller home. So it was not an anecdote as was said here previously.

However, I did check the prices when these houses first sold brand new, and I found amongst them two that sold in the same month. Same situation, all characteristics the same, the smaller one 20% smaller and 9% cheaper. So not very far off, but my offer is clearly more expensive that the data suggests.

jake_jones99

ReadySteadyPop said:

jake_jones99 said:

I am buying a house in a small cul-de-sac where a larger house just completed a few days back.  I am close to exchange. Both houses have the same characteristics: 3 bedrooms, 2 driveway spaces, condition, number of bathrooms, build year/company etc. However, the house I am buying is 20% smaller than the larger house (both in terms of floor area and garden space) and my accepted offer makes it 8.8% cheaper. 1.5 years ago, another house sold in the same cul-de-sac identical to the larger one. My house would be only 5.4% cheaper relative to that one (and still 20% smaller).

I am aware I am paying a premium. The question is simple, is the premium potentially justified, or is there good justification to drop out? Or propose another decrease - there were a few already - with the risk of dropping out.

I am not in a rush to move, and I am a first time buyer.

How many other offers did they have?

I do not know but last time I checked, a few months ago, I was the only one. They started very high, and had to reduce a lot. It is still not cheap.

jake_jones99

ReadySteadyPop said:

GixerKate said:

Buying houses doesn't really work like that, the market changes so what was sold 18 months ago doesn't have a huge impact today.  Do you like the house and do you want to live there?  Do you think you could buy something better for less in the same location?  These are the questions you need to think about not crunching the percentages.

Based on the info provided I don't see a justification for lowering your offer and if I was the seller I would be suspicious that you are going to be 'that' kind of FTB and mess about.

If you truly don't like the house then drop out and look for something else.

Sales over the last few years were based on VERY low borrowing rates, as mortgage borrowing rates start to normalise prices paid 18 months or two or three years ago get harder to achieve.

I know this isn't making my point, but 18 months ago BoE rates and swap rates were significantly higher than now. It may be that it takes a while for the market to get the point that rates won't just drop to 1% any time soon, so may be a delayed effect on the market. But the actual affordability is a bit better now than 18 mo ago. 

silvercar

jake_jones99 said:

RedFraggle said:

MeteredOut said:

jake_jones99 said:

GixerKate said:

Buying houses doesn't really work like that, the market changes so what was sold 18 months ago doesn't have a huge impact today.  Do you like the house and do you want to live there?  Do you think you could buy something better for less in the same location?  These are the questions you need to think about not crunching the percentages.

Based on the info provided I don't see a justification for lowering your offer and if I was the seller I would be suspicious that you are going to be 'that' kind of FTB and mess about.

If you truly don't like the house then drop out and look for something else.

The one 18mo ago was only to show some pattern. The main comparable is the one that completed a few days ago. 

The problem here is you do not know the circumstances of that sale. Maybe they were moving to their dream home and had to sell quickly, so marketed at a lower price. Maybe they sold to a family member at the lower end of all the valuations they received. 

If you want to use sold prices of other houses, you'll need data, not anecdote.

Do you know what the one that completed recently actually sold for rather than the asking price? 

Yes. I spoke to the agent from the agency that sold it (from a different agency that the seller's agency). He told me it completed a few days before, checked his phone and told me the price. That is how I worked out my offer is 8.8% cheaper for a 23% smaller home. So it was not an anecdote as was said here previously.

However, I did check the prices when these houses first sold brand new, and I found amongst them two that sold in the same month. Same situation, all characteristics the same, the smaller one 20% smaller and 9% cheaper. So not very far off, but my offer is clearly more expensive that the data suggests.

Sounds to me that you are near this " smaller one 20% smaller and 9% cheaper" mark.

ReadySteadyPop

jake_jones99 said:

ReadySteadyPop said:

GixerKate said:

Buying houses doesn't really work like that, the market changes so what was sold 18 months ago doesn't have a huge impact today.  Do you like the house and do you want to live there?  Do you think you could buy something better for less in the same location?  These are the questions you need to think about not crunching the percentages.

Based on the info provided I don't see a justification for lowering your offer and if I was the seller I would be suspicious that you are going to be 'that' kind of FTB and mess about.

If you truly don't like the house then drop out and look for something else.

Sales over the last few years were based on VERY low borrowing rates, as mortgage borrowing rates start to normalise prices paid 18 months or two or three years ago get harder to achieve.

I know this isn't making my point, but 18 months ago BoE rates and swap rates were significantly higher than now. It may be that it takes a while for the market to get the point that rates won't just drop to 1% any time soon, so may be a delayed effect on the market. But the actual affordability is a bit better now than 18 mo ago. 

The conditions are there for them to shoot up again though, that is my point, all the central banks co-ordinating to drop rates to zero (or 1%) isn`t going to happen again (IMO)