How to price a house with "potential//doer upper"

[deepest]

Read some where recently (on here/in press?) that so many people are after "doer uppers" that they are now just priced as if they had already been done up minus the cost of doing it IYSWIM?

So if a property would be worth x if developed (extended/rennovated) and the cost of development was y -- then the value of the house would be x-y?

What do you think? Could the price of an undeveloped house be pitched like that -- or is there some sort of formula where the purchaser would want to see a % of the development uplift in their pocket?

You need to give more detail, does the double glazing need replacing ?

I bought a doer upper 7 years ago 2 bed semi. I spent about 20 k did all but double glazing myself. So at today's prices with labor you must be looking at a lot more than that. That was kitchen bathroom walk in wardrobe.replacing leak damaged kitchen floor. skim 2 walls and french doors to garden. Oh and decorate whole house. Some garden fence as well

I would want at least 30k off a doer upper to be interested

10 years ago you could get a really good deal with a fixer upper and expect to make some money on it. Ie buy for £100k, repairs cost £20k, new value £150k = £30k profit. In the good old days prices were also rising quickly, so you'd probably actually sell for £180k= £60k profit.

Loads of house renovating programes later, everyone thinks they can make a fortune and no-one is afraid of doing DIY - so in same scenario as above - you cant buy it cheap now, so you pay £120k, repairs cost £20k still, new value £150k, less in a slow market.

You should only buy a doer-upper if its a house you do/will love.

I agree with sunny shores

The doer uppers in a desirable / sellable location will probably have developers all over them like a rash. These people can do up more cheaply.

I would say where I live doer uppers are actually more expensive than price plus doing up costs because people like having things "how they like them '

Homes under the hammer has a great deal to answer for. Thing typically do not work like that nowadays.

Thanks all -- not sure why the developers are all over them if the margins are so tight - I agree that some people want to make their mark (I am one of those...) but others must want the finished turn key option as this explains the new developments and show houses.

This is regarding a property already in the family which I have discussed on this thread and to WIW (thx) has already contributed...
www.mumsnet.com/Talk/property/2125305-Help-me-pimp-this-house-for-wealthy-downsizers

And wrt location it is very desirable.....so maybe I just need to do the desgn/drawings/etc to accompany the sale?

Would it work if you sold it with the option for the new owners to select the finishes - ie paint colours, flooring, kitchen, bathrooms....?

Developers make money because they employ permanent workers and/or do the work themselves - so in example above the works wouldnt cost them £20k, maybe £10k. Larger developers also dont have to borrow money @6%, it only costs them loss of savings interest ie 1%.
With employing people permanently they also take smaller/less profitable jobs in between larger jobs, so their crew have something to do (as they're being paid anyway). Also doing 6 a year at say £10k profit soon becomes a reasonable return!

The only way to 'beat' a developer is to live in the house (so you'd be paying the mortgage anyway), or be a cash buyer and to do the work yourself. Or be happy to make a small profit.

Thanks Sunny - that makes sense....

You also need to consider that professional developers will often be buying the properties that are uninhabitable and/ or unmortgageable, those are the properties that are sold at a level where there is a potential for worthwhile profit, partly because there is just a smaller pool of buyers.

If the house is a family home, liveable, and has work that can be done over time and will not present any issues for getting a mortgage then there is automatically a much larger pool of buyers and therefore less potential for a 'bargain'.

A lot also depends on the local market, if the difference between the price of a three bed and a four bed house is less than the amount than an extension would cost then there isn't likely to be much scope for profit.

I remember your previous thread, another point is that some downsizers would prefer the slightly larger garden, or want a kitchen with windows; ideally the kitchen opens directly into the garden

Not only are you competing with professional developers, you're also reducing the potential pool of purchasers to by curtailing their choices. No one will pay to undo your changes.

Well-off downsizers have time and money. It's not like selling to overstretched young families.