Previous Sale Price - Does it matter??

rscott4563

I know that people always say don't worry about what the previous price of a house was as it is irrelevant to the current price and all that matters it the price/valuation now...but.....

I'm looking at a property, 3 bed (though 3rd room is a box 6'x6'7") semi with garage and it’s been redecorated to sell and is currently empty. It's a nice tidy place but is on at an over the odds price of £215,000.

I wouldn't dream of offering the asking price especially in the current market. Now I did a bit of research and found that it had been bought by the current vendors only 6-7 months before going back on the market and the price they paid was £150,000!! So they are expecting to get a £65,000 profit after 6 months ownership and redecorating and fitting a new kitchen & bathroom!!

Am I alone in thinking that this is a ridiculous increase in that space of time, especially considering the way the market has been over the last year and the way it looks like going?

What would you consider a reasonable offer to go in with??

Cheers

dannyboycey

rscott4563 wrote: »

What would you consider a reasonable offer to go in with??

Whatever is reasonable in your mind. They can only say no.

movilogo

Trying to get £150k profit in 6-7 months is a bit cheeky in current market.

You know what the house is worth for you. So, offer accordingly.

I'm currently in the process of buying a house for £158k. Then vendor bought that house new 20 years back (in 1988) for £65k.

However, every house is different on the market and each buyer/seller has different situation.

pinkshoes

rscott4563 wrote: »

I wouldn't dream of offering the asking price especially in the current market.
Cheers

Not all areas are dropping inprice, and location is VERY important, so if it's in a desirable area, the chances are properties are still selling well. Do your research into the area...

rscott4563 wrote: »

Now I did a bit of research and found that it had been bought by the current vendors only 6-7 months before going back on the market and the price they paid was £150,000!! So they are expecting to get a £65,000 profit after 6 months ownership and redecorating and fitting a new kitchen & bathroom!!

Am I alone in thinking that this is a ridiculous increase in that space of time, especially considering the way the market has been over the last year and the way it looks like going?

What would you consider a reasonable offer to go in with??

Cheers

Perhaps the place was flooded or fire damaged, and the previous owner had no insurance so had to sell it as a wreck?! Perhaps they had to spend £55k doing it up, so only made a £10k profit?? Or maybe they bought it off a relative way under market value?

Perhaps offer a cheeky £190k depending on how long it's been on the market (if it's been on a while, then £190k should be considered!).

Debt_Free_Chick

There are a number of difficulties with looking at the price previously paid ...

We don't know if they paid "less than valuation" i.e. less than what the property was realistically expected to fetch. This could be possible if it were a repo, bought at auction, probate, forced sale etc... Did they buy from relatives at a discount?

We don't know what the market was like then, in that location, for that property. Had it been on the market for a long time? Was it a buyer's market?

We don't know if there were any local issues e.g. development planned nearby? Anti-social behaviour? Crime? Neighbour issues?

For these reasons the price paid doesn't matter.

In addition, they won't be making a £65k profit. Some of that "profit" they may well have got for "doing nothing" if property prices have risen, since they bought. And, of course, we have no idea of knowing what the improvements have cost them.

Even if they were making a whopping "profit" this has absolutely no bearing on the current market, in that location and for that property. And therefore, it should not even enter a buyer's mind as a "relevant factor" to determine what is offered/paid.

At the risk of offending you, it sounds as though you are a little jealous that they might make a profit or that you think this is undeserved in some way. Don't let emotion cloud your judgement. This is really a business deal - even though few of us are able to adopt a purely businesss-like approach to the purchase of a new home.

What they paid; what they're asking now; and what "profit" they may (or may not) make are all irrelevant.

What is the property worth?

rscott4563

I appreciate all of your comments, I'd just like to clear up a few points so as to give you all a better idea of the situation.

I have lived in the area for over 20 years so I know the area and the properties.

I totally agree that a price on a sale say 2,3,4 years ago can be irrelevant, but surely a property bought and then put back on the market within 7 months must have some relevance when it comes to previous sale price?

The area is nice but it is on a major road (the busiest A road in the county) and the property was not derelect/fire damaged/flooded etc when it was last bought. The price of £150,000 was a fair price for a house of its size in 2006 in its area. It was sold on the open market via an estate agent not at an auction.

The additions have been to redecorate, new kitchen (small galley style), new bathroom suite and thats it, no extension or structural work.

I am not bothered by the profit the vendors will make, I just want to find out if people think this is a extremely large increase in such a small time frame (43% rise in it's price in 6 months???) considering this isn't a wreck thats been done up...

I would be less bothered by the price increase if we were talking about the south and it was 2005-2006 but its not the south and we certainly aren't looking at average price rises of 15-30% a year at the moment are we??

So does anyone think the price difference on this property is right and if not what would you go in with???

chappers

They can try and sell their house for whatever price they like , if you have an interest in the house it is up to you to make a jdgement based upon the prices of similar property in that area, its all down to what you feel the property is worth.You can offer them twice the asking price if you feel it is worth it. as to whether the price is right , this can only be assesed against similar properties in the area.

Running_Horse

rscott4563 wrote: »

I appreciate all of your comments, I'd just like to clear up a few points so as to give you all a better idea of the situation.

I have lived in the area for over 20 years so I know the area and the properties.

I totally agree that a price on a sale say 2,3,4 years ago can be irrelevant, but surely a property bought and then put back on the market within 7 months must have some relevance when it comes to previous sale price?

The area is nice but it is on a major road (the busiest A road in the county) and the property was not derelect/fire damaged/flooded etc when it was last bought. The price of £150,000 was a fair price for a house of its size in 2006 in its area. It was sold on the open market via an estate agent not at an auction.

The additions have been to redecorate, new kitchen (small galley style), new bathroom suite and thats it, no extension or structural work.

I am not bothered by the profit the vendors will make, I just want to find out if people think this is a extremely large increase in such a small time frame (43% rise in it's price in 6 months???) considering this isn't a wreck thats been done up...

I would be less bothered by the price increase if we were talking about the south and it was 2005-2006 but its not the south and we certainly aren't looking at average price rises of 15-30% a year at the moment are we??

So does anyone think the price difference on this property is right and if not what would you go in with???

If its that bad, don't buy it.

kingkano

rscott4563 wrote: »

The area is nice but it is on a major road (the busiest A road in the county) and the property was not derelect/fire damaged/flooded etc when it was last bought. The price of £150,000 was a fair price for a house of its size in 2006 in its area. It was sold on the open market via an estate agent not at an auction.

I am not bothered by the profit the vendors will make, I just want to find out if people think this is a extremely large increase in such a small time frame (43% rise in it's price in 6 months???) considering this isn't a wreck thats been done up...

Which is it 2006 or 6mths?? (its 2008 now so something bought in 2006 we're talking atleast 13mths).

If someone is willing to pay this price then its the right increase. If they can't sell it they will realise its too large an increase and reduce it. You can try offering whatever you think its worth and see what happens. You seem to have all the answers so why ask us? It doesnt matter if we think its a large increase or not.... we aren't the ones who will be considering your offer!

I just discovered sainsbury only pay £1 for some chicken breasts and they sell them to me for £4. They don't even package them or anything. I think its a large increase but I have !!!!!! all change of doing anything about it!

scope

kingkano wrote: »

I just discovered sainsbury only pay £1 for some chicken breasts and they sell them to me for £4. They don't even package them or anything. I think its a large increase but I have !!!!!! all change of doing anything about it!

Ofcourse you can, go somewhere else (like Asda, where they normally are 1/2 price to Sainsburys).

Same goes for the OP, offer what you think its worth, if its rejected go elsewhere.

TJ27

If they had bought the house six months ago for £265k, would you be saying, "a price drop of £50k is just so unfair on them. Should I offer £235k?"

It's not relevant. Either you think it's worth it or you don't.