To want to know the value of a property before I offer on it?

[Chester1980]

I live in Scotland, where you can see a Home Report which tells you the market value of a property before you out in an offer. I am interesting in a property in England where I hope to move. The property has been on the market for 6 months.

This property guide price seems to be waaaay over what I would expect (based on sold prices in the area and its condition). It seems so risky to invest your time and hope into putting in an offer when you don’t get an official value until the mortgage company send someone who is independent to look at it. The guide price can be based on the owner, who clearly is a little unrealistic about it.

Do you put in what seems like a silly offer (although is more realistic to value)....or a higher offer and try and negotiate it down following the mortgage valuation? By then you’re so heavily invested it seems crazy!

You definitely don’t attempt to negotiate down after mortgage valuation (Dow valuations are not that common either unless the pricing is ridiculous).

You could pay a surveyor privately to value it, but then you can’t guarantee the mortgage company’s surveyor would agree, so it would probably be money wasted.

I would offer what you are happy to pay, and if the mortgage surveyor down values it you can negotiate from there.

A property is worth what someone is willing to pay for it. So offer what you think it is worth.

Do you put in what seems like a silly offer (although is more realistic to value)....or a higher offer and try and negotiate it down following the mortgage valuation

Yes, it is more common to put in a 'silly' offer, which is likely to be refused, most likely because the owner has an unrealistic expectation about the value of their property, rather than your offer actually being silly. The fact that it has been on the market for six months is a big giveaway.

There is some chance that you could negotiate down after a valuation, but that is rare and frowned upon, and would mark you out as a cheeky timewaster - probably due to the fact that in England, people have to invest time and money before they are legally committed to a purchase, or a sale, and before exchange, people are free to walk away without penalty. Yes, it is shit, but that's the way it is.

You possibly wouldn't be able to negotiate down anyway, depending on what your loan to value is, because if you have a big deposit and get a basic valuation, all the lender is really interested in is whether they'll get their mortgage loan back if you default on the mortgage.

So say you're paying £300k and have a £150k deposit/equity, unless the £300k purchase price is a wildly obvious over-estimate, they'd just go with it.

Thanks all. We think it’s worth £90k below the guide price, which is the problem as it is a huge difference. We’re genuinely not trying to pull a fast one on them. We are used to paying over, which is how the market usually is where we live.

It’s all v risky. Potentially having a huge move and negotiations can easily fall apart.

Are we talking £90k off a £250k house, or £90k off a million pound house?

£90k off a £450k house. One on the same street (the same style), but which was extended with 4 extra rooms and modernised went for £300k 5 years ago.

In the same area you can get detached houses which don’t require modernisation for the same price. But they go quite quickly.

Look at similar properties on Zoopla to see what they sold for

It’s likely the biggest purchase we’ll ever make - but just to have all the information before you go for it, so you know where you stand, would be so nice right now.

It seems crazy that that info isn’t made available in the first instance.

The maximum for that style on that street sold for £300k. And that one had been extended and modernised. It was in 2015 though. I don’t think things would have changed that much to warrant such an increase.

If its been on the market for 6 months they probably have already turned down reasonable offers. It's worth having a chat with the estate agent to see if they're serious about moving or are insisting on a certain price and holding out for that.

There is also the possibility its a divorce or probate sale and the sellers aren't particularly motivated for a variety of reasons.

Thanks @Sindragosan. I’ll do that. There’s no forward chain, which indicates something like that and they’re holding out.

A house is worth whatever a purchaser is prepared to pay and a vendor is prepared to accept!

If you think it's not worth the asking price, then go in with your offer, state your reasoning for the reduced price and see what happens. Be prepared to walk away.

We were in a similar position about 20 years ago. Saw a house we liked but which we felt was overpriced for a number of reasons. We offered what we were prepared to pay, citing our reasons. Offer was rejected, so we moved on and looked elsewhere. About 4 months later, we had a phone call from the estate agent, asking if we were still interested in the property and would we like to resubmit our offer as the vendors now wished to accept it! We declined.

London, but we offered 75k less than an asking price of 550 and we had our offer accepted.

"You definitely don’t attempt to negotiate down after mortgage valuation"

Really?, I think that's happened in almost every house sale I've been involved in. If the "expert" valuation says the price is too high, why would you still pay it?. Plus, often it means the buyer simply can't get the mortgage they need to complete at the original price.

I don’t think things would have changed that much to warrant such an increase.

We bought our house in 2014 for £210k. Similar houses on the same estate are now for sale at £280k or more. There does seem to have been a huge increase in the last 5 years or so in some areas.

Another on the street sold for £280k in Nov 2018, but it had a smaller garden and needed upgrading (new kitchen, bathroom). This one could do with a new kitchen and bathroom, but it is more habitable.

It definitely seems wrong that it’s frowned upon to try and negotiate down if the value is found to be lower by the mortgage company. It’s like being mis-sold a property. I know you can pull out, but still.

For what it is worth we bought our first flat in 2015 for £200k and sold it less than two and a half years later for £275k, so, obviously depending where you live, there has been a big increase in recent years.

That said OP, i do think you are making a mistake with what something cost 5 years ago, as prices have changed and it is worth what someone is willing to pay. We went for our second house thinking it was overpriced, but then we saw lots of other properites at the same time that cost the same for less, so it was actually a good price considering the local market.

I think you need to look at wider trends i the town you are in, not just that particular street as it is hard to compare against something that happened 5 years ago, you need a recent comparison.

If its been on the market for 6 months they probably have already turned down reasonable offers.

I agree. They probably have a particular sum in mind that would make selling viable for them, for whatever reason. All you have to do is decide whether you want the house so much you're prepared to pay them that amount. There's nothing wrong with going in low but you need to know in your own mind at what point you would walk away.

House prices rose hugely up to the referendum in 2016 then seemed to stall. 90K is a huge reduction - circa 20%. I'm not sure many house sellers would go for that yet - they'd have to be pretty desperate sellers. No harm in trying it as an opening gambit but expect to be knocked back.

@Chester1980 sorry I was bit unclear there - what I meant is don’t use that as a strategy - the chances of it being down valued aren’t that high unless it’s seriously overpriced.

Thank you all. I appreciate you taking the time to comment. I’ve found it very helpful - I have a bit more insight into how it works in England now :)

Interesting update - I googled the property and found it’s actually been on the market (with another agent) for a year! They reduced the price by £10k

Sounds like maybe the are not that motivated to sell. Have a chat with the estate agent.

If similar sold for 300k 5 years ago then with the market moving on so much in that time I highly expect going 90k under a 450k asking to a 360k offer would be under what it would be worth.

A friend of mine sold her flat last year for 45% above what she paid for it in 2015 and the house she then bought had a similar price rise in that time. Whilst I cant speak on the specific area, house prices have moved on a LOT since 2015 with some areas moving on more than that - particularly in the north where price rises may even be higher (she lives in the East). You certainly need a much more recent similar sales price to make any kind of price comparison to local houses.

Another thing to bare in mind is if the sellers have put up on the top end this does indicate that they are in no rush to move and so likely to hold out for the right price in their eyes.

Also you can totally pull out if your mortgage values lower or ask to renegotiate! That is a completely fair excuse in that the bank wont cover the asking. I also know of houses having prices renegotiated due to banks not agreeing to the asking price. If one bank wont agree on the price it is in the owners interests to lower the price otherwise they are only going to have the same issues again with the next person who comes along. I'm sure it happens but I don't know anyone the bank has ever decided to down value.