What to offer on doer-upper?

[threeleftfeet]

We've seen a house we might actually be able to afford, yippee! And none of the 3 bedrooms are a box room (first we've seen in our price range!).

It's priced at £157,500, but Property Bee tells me it started at £174,950 just 3 months ago, and they've dropped the price 3 times since then. So I guess they want a quick sale? There's no one living there anyway.

Annoyingly, the estate agent wouldn't give any decent clues on how much they might be able to accept.

What would you think it was reasonable to offer?

[threeleftfeet]

Perhaps I should give some more info ...

t's dated (to say the least!) it needs new carpet & decoration throughout, and new bath just to be able to live in it. Longer term it will need a new kitchen, bathroom, new boiler and probably complete rewiring. The rooms are fairly small and the garden is small and a very odd shape with mostly wasted space.

What it does have is loads of potential for adding value by extending / knocking through to make a lovely space. The garden problems could be addressed with a bit of creativity.

Most importantly it's on the doorstep of the Ofsted outstanding school, and in a nice area.

[LaVitaBellissima]

I would get a few quotes for what it will cost you for the internal work to be done, this will alert the estate agent/owner that you are interested. I'd then put in an offer of £145k saying that the house needs lots of work and that you can't afford more. If they are really keen to sell they should come back with a counter rather than just dismiss your interest, and you'll get a better idea of what you can get it for.
I would expect that they'll only drop to £155k after such a drop already but it's worth a try

[tricot39]

The work you mention could easily eat up 100k if not DIY. Would the house be worth the money and hassle at the end? If you are not adding a bedroom be careful.

We are at the selling end of a do-er upper and i am realising we might not recoup the cost. We'll just have to suck up the time & stress! We added a downstairs loo, improved energy efficiency and reconfigured the kitchen to make a dining space. But in the cold light of day it will probably make very little difference to the price. :(

Ask some local agents what they would market at. You will no doubt discover the cost uplift to be less than you think - unless you add a bedroom of course....

[threeleftfeet]

Thanks for the reply :)

I'm hoping there would be more movement than £2K but guess there's only one way to find out!

We're cash buyers (from equity), in a chain with only 1 besides ourselves, so hoping that might help.

[LaVitaBellissima]

Well you are in a fab position, agree with Tricot about the costs involved though. Definitely do your research about costing and put in a cheeky offer.

Let us know how you got on

[threeleftfeet]

Sure we can do it for less than £100k. We did both the kitchen and bathroom at our old place for under £5K. An extension is more costly obviously.
But we have friends in the trades so that helps.

Good point even so about adding value - will it actually?!
I think it can't fail to add value as it's so unloved right now. However whether that will actually be more than the cost of the work is a different question, isn't it?!

[threeleftfeet]

Can you get a builder to quote on a house you don't actually own?

(although I do know a plaster, electrician and a plumber, none of them do projects like extensions)

[LaVitaBellissima]

Absolutely. I think if the house ticks all the boxes for you, schools, size etc. you should go for it

[noddyholder]

I don't think it would cost 100k. How much can you afford comfortably? Under 125k is no stamp duty i think. I would start at 130 and maybe go to 145

[threeleftfeet]

Wow, very different responses. Noddy you're brave! I should take a leaf out of your book :)

We won't be able to afford to do it up for a couple of years, so we'll have to simply pull up the ugly carpets, give it a lick of paint and live as it is for a couple of years.

I'm in two minds. It's definitely the best we've seen. We've seen a lot of very beautiful little houses - but little being the operative word! This one is ugly, but looking at the potential it's better than the others.

But we're not in a hurry, the market isn't moving, maybe we should wait and see what else comes up. Although we could miss out on this one! Oh this is hard!

[threeleftfeet]

"How much can you afford comfortably?" if you mean for the renovations, then no idea really - how ever much the bank will lend us when we're back in permanent employment!

We plan to live mortgage free for now (using equity from old place) and in the future get a small mortgage to do the work.

[LaVitaBellissima]

I would go for it, potential is everything, as long as you are happy to do it up over time. I think 100k would mean extending the loft, the kitchen, redoing the whole house and garden. That's what it would cost in London, I'm sure you could half that in other parts of the country.

I think 130k is rude rather than cheeky but you know your area. How much do 'done' houses of the same size go for? And larger houses of the size that you'd make it? You should be able to see if it's worth it in the long run.

The big question is did you get 'the feeling' when you walked around, could you see yourself there?

[tricot39]

OK so here are my random figures to spark some more debate!

In my head an extension is an absolute minimum of £30k, a bathroom min £5k and a kitchen min £10-15k in a family house. (Bigger properties have bigger spaces that eat up more money).

That is not going basic but not fancy either (ikea, screwfix, ebay etc) but it includes everything to get a finished product and getting some trades in to help mixed with some DIY. Depending on your taste you could easily spend way way more than that or way way less if you don't mind basic and do everthing yourself/source everything in sales or as seconds. Basically it is difficult for anyone to tell you how much you need to allow in your budget IYSWIM?

So ignoring the likely re-wire/re-plumb/roof repair stuff that comes with "dated" properties, it is easy to get close to £50k and you haven't even started on the knock through, carpets, curtains and paint yet.... The total will be twice the number you first think of

You probably need to have two scenarios going for getting prices/talking to agents:

• The dream scheme - extension, knock through, the works!
  
• The basic - the minimum you will have to do to repair the house to make it liveable/safe without reconfiguring the spaces.
  

LaVita is right - "potential is everything* - but not at ANY cost - especially in the current economic climate!

[discrete]

I agree with tricot on the total being twice what you expected!

You certainly need a contingency fund at least the size of the original budget.

Why don't you look at what other properties of a similar size which are in good order go for, subtract 2x what you estimate the works would cost (even if they come in on budget, for your time and effort) and see what the price should be? That will give you an idea whether they are still overpriced or not so much, and therefore how aggressive you can be with an offer.

[threeleftfeet]

Just for the purposes of working out the value, trying to work out how much it'd cost to bring up to scratch, to make it the equal of a nicely done up house in the same area. So - not an extension or any of the work we want to do long term. Just painting, plastering, making good, new kitchen and bathroom. Reckon we could do that for about £13.5K.

This is a small property by the way! We did both the kitchen and bathroom in our old place for £5K, so have allowed a whopping £9K this time! We won't be buying from a showroom - we'll be buying where tradespeople go, and doing plenty of work ourselves. So this is a very conservative estimate, obviously if there was no DIY or bargain hunting involved it'd be more.

So, that brings us to £27K when doubled.

I reckon a "done" house should be about £175K or so.

[threeleftfeet]

So that means the price should be about £148K.

Very, very approximately!

[threeleftfeet]

In reality we have about £3K to make it liveable! Certainly not £27K!

We're going to have to do our best with that and then live with it for a couple of years until we're in a position to get a small mortgage.

[FishfingersAreOK]

And you can definitely ask to take a builder round with you to get a ball park of what the work will cost. Put you in a stronger bargaining position with the cheeky offer. "We have got quotes/estimates for what work the property needs and therefore the most we an offer is x"

BTW not sure if this is true or not but I heard somewhere that if you offer a slightly weird amount - as in 132,450 say rather than 133,000 it suggests that you have scraped the bottom of the money barrel and there is no more to be had. You have cashed in the ISAs worked out to the penny the budget and this is it. It makes the estate agent and buyer think this is as good as it is going to get let's not try and push it higher.

[tricot39]

That all sounds very promising......

You dont mention the expensive invisible stuff tho: re-wire/re-plumb/roof repair/damp? Can you get estimates for that from your friendly tradespeople?

[noddyholder]

A house at that price point would not be worth spending 100k on which is why imsaid it could and should be done for less. Otherwise it is hugely overpriced and ifmyou ever need to move you will never recop as it would have to be 'worth' about 250 to break even. You can do a small refurb on a small house for about 35k

[CherylWillBounceBack]

Doer uppers are, relative to the finished article, often look way overpriced round my way - e.g two near identical houses on the same road - one which is immaculate and the other which would require 30 grand worth of work to get it up to the same standard, yet only a 10k difference in asking price.

That doesn't mean however, that the price of the second one is 'wrong' - it could just means that the market value of having that extra bling may be perceived as a lot less than what it cost....or it could mean the second seller is delusional - that is a judgement you can only make by looking at more data.

However, over all the data I've looked at, I'd be very, very cautious about doer uppers at the moment. If it's a genuinely good deal you should be able to say to yourself :

If I do X thousands worth of work to this house it will be worth at least what I paid for it + X (ignoring market conditions).

To get some 'proof' of that, you probably need to find the sold prices of a few houses in the same area that are in the state you want to finish up with, and compare that to what you are going to be paying in total.

You may find you're better off saving up more and getting a better house in the first place - plus the market whilst you're doing this might just move in your favour (I think it will).

Of course, if you can afford it and it's your dream home, that may be worth more than the cost....up to you!

[noddyholder]

The difference between a real dump and the finished article here in Brighton in the same street is minimal now. Maybe 10-15k and requiring upwards of 60k to make good

[MrsJREwing]

You have had some great advice, good luck.

[Brugmansia]

I disagree that doer uppers are overpriced now. In my view the issue is that done up houses in the past were comparatively overpriced. A lot of the perceived additional value related to cosmetic differences. In a rising market people may be happy to pay more for a house with a fancy kitchen and freshly painted walls. When you compare the underlying property the done up and tatty house are basically the same in terms of plot size, square footage, layout of rooms. Why pay loads more for someone else's taste when you can save some up front and take your time doing it exactly as you want.

Rather than look at how much you could spend hypothetically to get it perfect I'd work out if there are any fundamental problems that definitely need to be dealt with, eg structural, serious damp, roof, electrics. Just because it's neglected and hasn't been lived in for a while doesn't mean mean these will be a problem or need money being spent on them.

[Mamf74]

Hey,

We knew our house needed work on it, however when the survey came back it needed a lot more "hidden" work so we arranged for a builder to come in and assess the work required just to bring it up to standard. For the stuff that the owners wouldn't allow us to check for, such as damp & rewiring, we phoned a few places and asked for ballpark figures and deducted the average from the asking price.

The original asking price was £202-205k, we got it for £180 after intially offering £195 due to the estimates we'd received for the work. Tbh the biggest pains were the estate agents as they'd not told the seller what we were doing (despite us asking them to) so when we made the revised offer they were a bit shocked. Rather naively I'm hoping that this means once we've done the work we'll get the money back (fingers crossed)......