Valuation figure v previous price paid

[3asAbird]

I know its really hard to say as different areas / different markets and circumstances.

But what do sellers consider as decent return on investment per year?

Do sellers have a figure in mind ie I be happy if I get 10k for every year I have been there.

I have seen a house thats massively overvalued.

Brought 7 years ago £139k
Listed 290k
Agents said seller has 275 in mind.

No house has ever sold that rd and recent sales come in at under 250 for similar house just smaller gardens.

Thinking making cheeky offer what i think it's worth as 1st time buyer ready to go.
It's ex local in still not great area.

If I offer 245k thats 15 increase ever year
Seller posted at 290 that's massive 21k increase per year.

175k which indicated what the seller wants is a tidy 19k a year return.

When trying to negociate is it useful to work out difference between what they paid and what they listed and if the range is huge and year on year figure is high there maybe room for movement and deal made.

We looking at loads but 1 estate agents is over pricing every property.

That's massively simplifying though... do you know if they've spent £100k on an extension/loft conversion/full renovation?

Totally unrelated.
You can't expect a fixed return on property.
For example, I doubled my money on my first house in 4 years. The house we bought on selling that one is worth about what we paid for it, a decade ago.

That’s not how it works op.

Thanks i wondered if it's factor for over priced valuations.

Also if it's a factor for buyer working out a offer price.

It's glaringly obvious even if homeowner only brought recently they have made money.

No one likes to break even or worse sell at a loss.

Everyone assumes they going to make profit.

I'm looking at so many and don't understand the valuation price as substantially higher than others in same rd some sold on 2017 or 2018.

I can only assume sellers must have figure in there head that they want to make say 100k of value.

The value of any house is merely the price the market is willing to pay when sold by a willing get buyer. If the seller agrees to sell at £260k and the buyer wants to pay that much then that is the value. A surveyor might then value it at £250k (or indeed £270k) for mortgage purposes but that's only saying that is the amount that they can be confident in general the market would pay, which is a different matter.

Well we have mortgage in place which mentions lower valuation point as we had a house sale fall through with offer of 245.
Lowest it could be valued at was 234.

Should get valuation and survey on whichever house we buy.

What happens if surveyed says its overvalued Does the selllers then reduce price or place back on the market and hope for a gullible cash buyer?

I'm possibly over thinking and researching.
But with brexit interest rate rises and economy in decline we can't overpay .
We buying as family home so to stay there long term.

A recent survey Barclays said most 1st time buyers overpay.
General advice is offer 10% under and work upwards to figure we happy with.

We have 2houses we may potentially offer on I think.

1 is being sold due to divorce but its ugly house and only ticks some boxes.
The other overvalued house owner is moving away.

Value is based on what the market will bear rather than calculated returns. Sellers can make losses too - very easily.

Properties for most people are homes as well as investments.

In my area it's very rare to make a profit on a house. Unless you buy a complete wreck and do it up, or if it was bought 10+ years ago when prices were cheaper. Most houses sell for very similar prices that they were bought for.

We tried selling our house last year and the best offer we got was 7k below what we paid for it and was a very good offer.

Local market and what they have done with the house will have the biggest effect on its value.

For example I managed an increase in value during the credit crunch because I'd done work on the property.

If you go in too low you'll only insult them and make them think your not a serious buyer - unless you have researched and found various houses that have sold in the local area, that are of the same or better standard for much less. If you started talking investment return on each year of being there, when you have no idea what they have/haven't done to the property and are taking no account of local market and general percentage increase in that specific area, I would think you were living on cloud cuckoo.

Also if your mortgage company's valuation comes in lower than your offer most sellers would be willing to renegotiate.

Also I am right that this is an ex council / housing association house? They can rise much faster than other parts of town, as the area becomes more privately owned. There is one area of the town I'm in that has seen prices skyrocket in the last 18months because it's now an up and coming area with very little of it still council/ housing association owned - people are getting massive returns on them, especially in comparison to elsewhere in town.

How does it compare to others on the street?

We bought a house off family and while be paid what it was worth, we inherited my fathers share of teh house, so we paid 1/3 less than it was valued at. Then we did a lot of work, I mean pulling up floors, taking walls back to brick, damp treating, woodworm treating, electrics, boiler etc. So we sold at what seemed like a profit but wast actually a profit when you look at what we spent doing it up.

In the first two years after buying our house we spent £60k renovating it. It needed everything - windows, doors, kitchen, bathrooms, decorating, log burner, etc. If we sell for £60k more than we paid that does not translate to £60k profit. That would be breaking even. You need to know more about the individual house and what’s been done to it, it’s not as simple as purchase price vs sale price.

The price previously paid is not necessarily relevant to the current value of the house. Depending on the market, the value of a house can double or halve in a few years, even if no improvement work is done.

Just offer what you are willing to pay, and it will either be accepted or not. There is no point spending time trying to prove some "correct" value for the house - there is no such thing, just what the market will pay, and what the seller will accept.

Yes its ex council and the whole street seems be privately owned now.
It does look like money has been spent on kitchen.
Bare floorboards upstairs
Windows look quite old

And houses in same street sold 50+k less in 2017.

The footprint each house looks the same.
I can't see why new kitchen would add so much value.
No extension out or loft.
Looks like dining room and kitchen knocked into 1.

I know im being quite simplistic we never expected last seller to change their minds.
If I was selling and made 10k profit every year I would be happy.
We now looking at only serious sellers and reasons for sales as dont want next purchase to fall through.

Read so many articles on value
All the houses on with this agent are high priced and not selling.
They say its a stagnant market.
Other agents who price sensible they are selling.

The market decides.

Time is not our side hence why considering 1 random cheeky offer.

You need to stop thinking about how much profit they are making, it's not relevant.

House prices are market based pricing, it's what someone is willing to pay. It's not cost plus.

If you think it's over valued based on similar properties then offer what you think it's worth. It's their decision on whether to accept or not. They can keep it, or ask anything they wish for it, no one has to pay it and they don't have to sell it.

The surveyor does a valuation, if he comes in at lower than your purchase price, which is very, very rare but happens, then the mortgage company only lends up to that value, you have to pay the rest, and clearly you can pull out or renegotiate.

It's more about where your property fits in the market rather than an expectation of what value increase you'll potentially get.
If three bed semis are selling for between 300k and 325k but yours has a new kitchen and bathroom, you'd be hoping to get the top end of that range.

I bought a house in 2005 for £152k and sold it in 2012 for £155 . It had a new bathroom and new driveway but we'd had the recession

Hi OP. I think having in mind previously sold price is part of the picture, it also depends on many other factors. Not least of which is that buying also includes emotion ... which can throw rational anything out the window

You can only offer what you feel you are prepared to pay for that house. The agent has valued at what they think (ha ha yes I know). The sellers may be chancers and not serious. its not a simple mathematical calculation. Also if property has floooded previously and new flood barrier protection now in place that would make a big difference in value for example

Also you can't factor gaining x% per year. Too many local environmental factors. Planning decisions, infrastructure design, godawful neighbours. The list is endless

Make a cheeky offer if you want. No harm done.
By valuations do you mean Zoopla? Dont hang your hat on that. At the end of the day most people, unless they have to move have a price in their head that they need to move to next house. It may or may not be realistic.
When we moved last year, we wanted to move quickly. I researched sold prices and picked a price that would get interest. Sold it the same day to a person that i knew would complete come hell or high water (kid starting school in sept). Once i knew what i had sold for i went looking for a house at a specific price. We paid 5k above Zoopla and 20k below their asking price. Again did it because they were motivated sellers.

I think you need to get this ‘profit per year’ out of your mind as it’s really not relevant. House prices go up and down based on the market, for example 10 years ago (ish) friends of mine were selling at the price they bought for. No profit at all.

The house is worth what you are willing to pay and what the vendor is prepared to sell at. This may be to recoup money for work done, or to fund an onward purchase. If you want to buy and think it’s overpriced, put in an offer based on what you are prepared to pay.

You are right that some agents do overprice to get people to sign up with them.

You're focusing on the wrong thing, a house is worth what you are willing to pay. Others which sold in the same area should give you a good idea of what a reasonable price is but every house is different so you can't decide just based on that. If a house is overpriced it is unlikely to sell. If you don't want to pay what the seller wants then don't offer it. I wouldn't consider at all what profit the seller had made in that time, it doesn't matter.

its ex council and the whole street seems be privately owned now.
It does look like money has been spent on kitchen.

I think both of these things make far more of a difference than you realise. The area in my town that was housing association but is now mostly private has seen around a 80-90% increase in value since early 2017 because it's an up and coming area. It's brought it inline with private built parts of town for the first time.

Kitchens also make quite a difference to how easily a house sells and what someone is willing to pay for it. - recently I've seen houses in poor condition but with a nice kitchen sell for more (and a lot faster than an identical house, in the same street that was in better condition in every way except the kitchen was poor). The general market seems to value a nice kitchen pretty highly.

Kitchens and bathrooms sell houses because people don’t want the inconvenience and stress of having them done. They are also expensive to replace, other rooms you can paint for £50. You’ve received great advice on this thread. You can speculate as to why the asking price is so high - it’s unlikely to be anything to do with a specific % profit per year of ownership. Often it’s the EA flattering the seller by telling them it’s worth that much. Sometimes a seller will have calculated they need Y in order to buy their next place. Doesn’t mean they’ll get it.

Well went to veiw. The kitchen and bathroom were nicely
The rooms were actually quite small as porch to lounge no hallway.
Kitchen diner odd shape and no actual dining table.
Steps to front door pain with a buggy
Needs to flooring and possibly new doors/ window.
The street was nothing special neighbour kept their xmas decs up or put them up early.
The garden is more like a feild.
The garden is why they say its worth the silly price.
I think its too small for our family.
It's most definatly over priced.

Seller is relocating and wants quick sale.
It's currently rented out.

I normally do not even bother with making an offer at all on very overpriced properties (compared with other recent sold). Some sellers are just dreamers. The matter of fact is that 70% - 80% of properties on the market never even sell. So the start point is that 70% - 80% of sellers are complete time wasters at any given time in any given market. I agree with others that whether it is a reasonable profit for the seller is completely irrelevant to you. Actually, none of the millions of reasons that sellers overprices their houses, are relevant to you in anyway.

it's currently rented out - No way in hell would I buy it based on that alone. I'd worry about issues re vacant possession.