How do you know if the property is overpriced?

[TheRealMrsSmith]

We're house hunting after recieving an offer on our house. We've seen two houses we love. One needs lots of work (A) and the other is ready to live in (B). The house next door to A was on the market for £5k more than A, needed some modernising and decorating. House A needs approx £20k spending on it including full rewire and central heating.
House B is simply beautiful and ready to move straight in but I'm not sure about the asking price. The house next door but one sold a few months ago for a staggering £50k less. There is currently a house further up the road on the market for £80k less than house B.

How do we work out if the prices they are asking are reasonable or overpriced. Especially on house B where there are no other houses currently or previously priced at a similar level. Any help or advice appreciated!

A house is only worth what someone is prepared to pay for it, so only you can decide really. Having said that, the mortgage providers surveyor will need to provide a valuation for the lender - then you'll have a more objective idea.

Thanks choirmum I guess that must be the case. It's just that when we had the estate agents out, they were all saying that there's a ceiling price for houses in certain areas/streets. I would hate to buy something and lose out when I come to sell it though because we paid over the odds.

Is house B comparable to the other houses in it's street that have sold? i.e. do they have the same number of rooms, size of garden, etc.?

How does the house further up the road compare? Do you know the size of each one? If you do, you can calculate a price per sqf. That is a good starting point for seeing whether a house is overpriced.

Agree with Liara - are they completely comparable? Type (semi etc)?

Thanks both!

The house that sold next door but one was the same size and type (terrace). Garden the same size too. The main difference is the finish on the inside. House B moved the kitchen into the 3rd reception room and uses the original kitchen as a utility. The decor is lovely and in keeping with the period of the house.

The house further up the road is of the same type and similar size but has a downstairs bathroom which no doubt lowers the expected price. Will try to see the exact measurements ans work our the square footage.

I know it seems a bit sneaky but have you looked at sites such as zoopla to see what the sole price history is. Previous sold price and length of time someone has been there can give an indication of whether someone is asking more because they paid over the odds and are looking to make their money back or whether they paid a similar price to other houses at a similar time. It's only a rough idea as sometimes you still can't compare but if you can look at the way prices have gone over the last few years and compare properties around that area it can sometimes make things a bit clearer. If you look at the previous history in zoopla you can sometimes see archived property details as well which can be really helpful for seeing how much value has been added and whether a property is worth the asking price compared to what was paid previously.

Thank you shelsco. I tried looking at Zoopla but the price history for this property isn't listed. It shows that the average house price on that street is 50k less than that house. That's also what the last two houses sold for in the last 8 months. However there are quite a lot of the houses on that street with no estimates listed. I guess that means that lots of the houses have been owned by the same people for a long time.

I always thought no data is a good thing, that means the house has been owned by the same family since 1995 (when Land Registry started uploading data?) Sounds like there are quite a few houses around, it's definitely worth viewing all of them. Think what you could do with £80k!

Mmm, hard to tell then. I think I would ask myself can I get a property in the same area (same school catchment etc ) in the same state for that price? If you could, then it's fair. If all the others are much less then it's overpriced. It is really difficult to know why it's been valued for so much more. Have you spoken to the estate agents? It might be worth asking them why it has been valued so much more highly than other properties nearby and saying that it is putting you off. Sometimes the vendor just has an elevated figure in mind. We recently viewed a property and told the estate agent there was no way that we would pay the asking price or anywhere near as it needed too much work. The price was dropped by 15k in a couple of days. It was still overpriced so we didn't pursue it.
When you look at asking prices then look at what people actually pay, sometimes it can be quite a bit less so if you like property A and think it needs 20k of work I would say that and offer 20k less because of that. Nothing ventured etc. like someone else said, a house is only worth what someone is prepared to pay. If you are having these doubts, I would think that other buyers will be thinking exactly the same thing!!

If get the do-er upper. You can make it your own. No point overpaying to have a ready done house as it's be such a bad investment if you came to sell it. It really depends on how comparable these houses are.

What's the house up the road like?
The one that's on the market for £80k less?
How much would it cost to do it up to a similar standard?

Is the agent known for over pricing?

Agree the house is worth what someone will pay! Depends on the demand in that area.

Thanks all. I think the agent for house B does over price. When they valued ours they came out far higher than any of the other agents we had in, so we chose one of the others. They're prices were much more realistic for where we are.

House A had just reduced the asking price by £10k before we viewed it. We told the estate agent that we would only offer £20k less than the asking price, but he said he'd had higher offers than that.

I definitely think we'll keep looking to find something that we can make our own and that doesn't seem overpriced

After my last post last night I found a house that is similar to both houses but has an asking price which is £30k less than house A and £45k less than B. Needs some modernisation but could be done to similar standard as B and cost us no where near the £45k price difference! Will be booking to view that one asap!

I think the only way to tell if something is overpriced is "would you pay that for this house?" If no, then yes it is overpriced.

It is so difficult - I hope the one you've just seen is a goer.

We offered less than asking on our new place, which we're about to complete on (touch wood!) and it wasn't much less, only about 1-2% of the price. That was as low as they would go. It took us 8 months till now since our offer was accepted, but a month or so ago, we pulled out as it was taking too long and we thought we could find something better.

Then we realised we couldn't, but they had put it back on for 10K more than the original asking price - and this isn't a high end purchase, it's first time buyer territory, so that was a good percentage increase.

It had been on for two weeks when we rang up and asked if we could go back into the deal, and we had to offer an extra 5K, but they did accept - then they had an offer at full asking price a few days later but being lovely people, they stuck to our offer Thank God

It's surprising to us as it is in a lovely road, with a nice big garden and it's a big property BUT it's a little tatty round the edges, needs the wiring and plumbing looking at, some bits of plastering etc. so I think it must be all about the area.

There are other things that are just not selling at all, and being reduced constantly, not far away, so I am fairly sure it's the location.

I actually feel really lucky to be moving there now. But it took all that trauma to get here, you know, making the stupid decision to pull out and then waking in the night and knowing we would regret it for ever if we let it go.

It's worth more to us now, just to secure it against the competition (not sure but think they are still doing viewings 'just in case', and we've already signed the contracts!!!)

Thank you. ManAlive I guess that's right. When we were discussing house B we said if we could pick it up and move it a few streets away, we'd happily pay the asking price!

Rooners it is difficult isn't it! I'm hoping that the other one is a goer too. We've actually spotted a couple of others that could be good. They're in a better locations, so fingers crossed.

8 months seems like a long time to complete so I can see why you had a wobble, glad you got it back! That house is definitely worth the price to you as you've found out. Wishing you the best and hoping it's not too long until you're in!

I agree with all the other advice given - especially online research at similar properties (in equally good locations) using zoopla, mouseprice, etc. And talking to Agents and telling them you know how much other houses sold for - am I missing something? Why is this house valued so much more, etc? We saw two houses who overvalued because of a) not being in a hurry so could take a gamble or b) needed to sell for x to buy their next house (divorce I think). Neither have sold yet although one is under offer (but suspect lower than the asking price).

I read some good advice about not buying a perfectly done up house - in that all you can do is maintain it or reduce its value. It sounds like house B is one of those and not even in your ideal location. On first impressions I would think a house that needs doing work in a better location at a fair price is more your cup of tea?

The price will be boosted by the standard/quality of the decor and fixtures but that's only worth paying extra for if you genuinely love the style and would choose similar yourself, and most importantly, that it is the right house in the right location for you. No amount of fancy decor and smoke and mirrors should sway you into making a mistake on the location or the layout.

If you do love everything about house B then bite their hand off for it because it will make your quality of life so much better to not have to spend years saving and slaving and having all the upheaval of doing the work yourself.

As far as price differences go, talking about '5k more' or '80k less' is pretty meaningless. You need to think in terms of percentages in relation to each house as every local market has its own value, and even that can vary hugely within a few streets, or from postcode to postcode, school catchment, proximity to amenities etc.

5k is neither here nor there on a 200k house, but quite a lot on a 50k one.

Also, prices in most areas have boomed in the last six months so do take that into account.

In my experience of house buying (which is quite extensive) it generally costs people rather more to fit new windows, kitchens, driveways, boilers etc than they ever see back when they sell, (assuming they've fitted to a high standard to please themselves rather than just a builder-refurb job to turn a quick profit) in comparison to the house next door which may be still in need of some or all of those things. Ultimately buying a nicely done up house can save you loads of money because the biggest factor that determines price is the location, whether the house is in good nick or not.

We're coming near (I hope I hope) to the end of over a year of refurbishment and building. It has cost us a LOT more than we thought and has been pretty miserable at times. I am in the position now of desperately trying to finish before DC3 turns up in five weeks, while battling carpal tunnel syndrome :( so unless you have very robust estimates to do all the work, consider the ready to move into house. We should have added value to our house over what we spent on it, but not much. It is pretty much now perfect for us for the next ten years so worth it on that account.