Thinking about buying a house that needs total renovation...

[LovelyOnion]

Hi, fellow parents! Recently we are interested in a house in Zone 3, London that was released just a week ago. The location is ideal, with a large and lovely garden, off-street parking and have potential to extend via side-extension or roof extension.

The caveat is that the house needs a total renovation. It's a 2-floor, 1300sqft, 3 bedroom 1930s detached house that has been lived by the previous owner for a few decades. If we refurbish it, it will need:

• new carpet (and floor?)
• new paint on every single wall
• modernizing the existing central-heating and gas system
• modernizing the existing kitchen and bathroom
• removing a sink (why does it exist in one of the bedroom?)
• repainting the external closure
• new windows (Optional)

So we don't expect any structural change, and we just expect a basic renovation. Something like this (fifimcgee.co.uk/blog/10-of-our-favourite-before-and-after-renovation-photos) is more than enough for us.

And the obvious problem is going to be money. Currently, the property is listed at around 780k, with houses nearby in a hospitable condition being bought at around 780 - 810k. Upon viewing, the agent (no idea about renovation) told us that she expected it to be around 760k, and proved that others are interested in this property as well, although no offer was made or accepted yet.

Questions, is my estimated renovation cost at 130m2 * £500/m2
= £65000 correct? Or £80000 with every fee included. Is it realistic for us to make an "low-ball" offer by 9%, that's £710000, and expected a final decision at £725000 or below?

Honestly, we have no connection with any builders out there, and we are scared of buying such an old house with unexpected renovation cost...

How old is the house? Ime houses that need a total renovation are hard work & often go over budget.

You can offer what you like, think is reasonable & the buyers can decide to hold out if they want. In my area of SW London I've noticed that doer uppers are often priced pretty high considering the cost of those you can move straight into. The ones that have sold near me have gone to couples who are in the trade/can do work themselves which is of course a huge saving.

@howsers the house and the ones around the area are all around 1930s. We actually viewed another house at £770k in the same area which was at much better condition. We offered exactly £770k but forgot to ask about other people's offer and in just a few days, the house was sold without the agent noticing us!

In a similar position (but in a different area, so it's not the same house). I don't understand why you're estimating based on cost per square metre. A new high-spec kitchen might cost 20k, whereas painting and carpeting a bedroom will be a lot less than that, so the cost per square metre of the kitchen will be vastly different to that of the bedroom - regardless of the size of each room.

The way we've approached it is to price up each job that needs doing and compare it to what we'd expect the house to be worth if already done; minus a bit more for the hassle of having to do it.

That said, the numbers you've arrived at seem reasonable to me - but if you're going to be justifying your offer, I think the cost per square metre thing would just cause confusion.

I've noticed a lot of renovation jobs going at asking price where I live. People seem to like the challenge of making it their own.

The way you descibe the house makes it sound like it's pretty standard renovations as opposed to structural renovations.

Unless it's hideous I wouldn't expect much of a discount.

We need a link

We renovated a 2 story 3 bed semi approx 900sqft in zone 4 for around £30k a couple of years back.
That equates to approx £360 psm, but that model wouldn't have worked for us. The cost of a new bathroom for example well exceeds that cost, whereas a small spare bedroom perhaps wouldn't. Take it with a pinch of salt and maybe look at each thing that needs doing and cost it up that way as best you can.

We had the benefit that it did not need new central heating/boiler but we did virtually everything else- windows & doors, flooring, plastering, new kitchen and bathroom etc

We did most of the work ourselves like laying flooring, fitting the kitchen, decorating, installation of new bannisters. We only used professionals where we had to, such as for plastering and getting fensa certified windows and doors. Doing a lot ourselves brought down costs a lot.

With renovations, there is certainly an element of it can cost £20k or £100k, depending on fixtures and quality of finish and how much you need to have done by tradesmen. £250 a day + materials was a typical day rate.

Don't overlook costs which individually are small as they can quickly add up. Things like new light switches and fittings, plug sockets (if needed) kitchen cabinet handles, skirting boards, internal doors. Also don't forget that during the course of renovations you often come across something else that you didn't realise needed doing, so over budget rather than being conservative in your estimations.

Do also bear in mind that with it being in zone 3 it will be hugely desirable and there will likely be a lot of competition to buy as renovations can be incredibly lucrative. It used to be that you'd get a bargain on fixer uppers, but that doesn't seem to be universally the case any more as increasing they are being bought up by people in skilled trades (or professional flippers) who can renovate on a shoestring due to being able to DIY or call in favours for a lot of the work.

When making an offer also consider your position- do you have a property to sell, a mortgage etc? Cash buyers or first time buyers will typically be favoured, so ultimately if your first offer is rejected, moving forward only offer as much as you can realistically afford and don't get caught up in the competition element.

A full on renovation can feel overwhelming at the outset, but if you really want to go for it, take it one thing at a time. Prioritise what needs doing first, what will make it safe and liveable and get those things done first. You can muddle through with more than you realise and it does feel hugely satisfying when it's all done.

Good luck!

I suspect you're looking to do everything you'd ever want to the house rather that what's reasonably necessary so you may struggle getting it at the price you want.

The main questions are:

1. Do the figures work for you at a certain purchase price?
2. Are there other buyers prepared to pay more than you will?

We're buying a total doer upper. We went total Low ball offer and are paying only a little above it. You can always put in an offer lower than you think it could be accepted for.

Glad to see so many responses! Perhaps I will supply more information:

• no buyers have offered a price, bc the house was just released
• It's actually in the border of zone 3/4
• We're actually cash buyer, ideally buying a house at £800k
• House actually has 3 shareholders
• We're currently renting with half a year left, so can wait for a bit
• Can't provide link because reasons

We've not made the offer yet, but we plan to on next Monday. I was afraid that if our offer was too low, the owners may blatantly rejected and never reached us with a counter-offer.

No sane vendor would ever strike you off a potential buyer list if you put in a low offer. I'd definitely really consider what you think it's actually worth, bearing in mind what you know anyone else would need to pay to modernise it too. You won't annoy them with a low offer, this just isn't how house buying works. It's not like going into Boots and offering to buy a shampoo at half the price. The list price is only a guide. I wouldn't just go slow because you have half a year on your rent - things are moving slowly in buying and selling houses right now and you'll benefit from not living in it to start the renovations, if you can.

To be honest it sounds quite expensive for Zone 3/4 borders. Is it North, South?

To be honest if I had 800k in cash I would probably take out a mortgage & look at 1.2m houses as you probably could get something amazing in this current climate.

What do you mean by ‘shareholders’? Someone died and 3 people inherited it?

If it’s hasn’t been done for decades, I’d expect 100k for a renovation and more if you want to extend or convert the loft. That’s assuming cost of materials and labour. 65k might be doable with an Ikea kitchen, cheap flooring and generally everything on a budget.

Do you know how much the house would be worth done up? I’d work backwards from there.

To be honest it sounds quite expensive for Zone 3/4 borders

Not in SW London. I’m in zone 5, south of the river and have seen 3bed fixer uppers go for 700k.

@JoJoSM2 Yes, previous owners passed away and got inherited by their children.

Unfortunately we wouldn't be able to afford a mortgage as we are going to retire, as well as other reasons.

Tbh I would consider a 3 bed 1300 sqft property that needed work in Sutton on for 780k to be expensive.

@LovelyOnion sorry I just assumed you were younger.

It sounds good to me. It probably can go to cash buyers only so the demand will be from a smaller pool of buyers. Why wait until Monday?

That sounds alot of work for that money. Also factor in that if it has one the bay might have failed like ours did. Is the roof in good nick? Walls are thin in 1930s properties so if its attached what are the neighbours like? Will you need soundproofing?

I was thinking it was cheap for the price if zone 3/4 but I guess it depends on the area.
OP - do go see it quickly. We've seen such houses fly off the books quickly around here. One which was inhabitable went for asking price within a week!

That sounds like a lot of work is needed - I would estimate £50k would cover it but often old houses where they have been not renovated for 30 odd years often have hidden costs. I would get a full survey if you proceed. If renovated ones are going for £780k-£810k ish it sounds overpriced. I think its fine to go in at £700k or so as a cash buyer but I'ld be prepared to walk away rather than pay over what its worth. Difficulty you will have is its just gone on unless what previously on and has come back. Check home.co.uk price history to see.

We viewed a house recently that needed complete renovation including rewiring, walls knocking down, the garden levelling and literally about 12 tons of hard-core and concrete taking out of the garden etc.... it went for 264k then next door went on the market for 290k which was all done and immaculate, the garden levelled and usable, all walls knocked down for more usable space. There is no way you could get next door down for 30k. Even if you were a builder. The materials alone would cost more than the 30k.

The property market confuses my head sometimes.

People like to do it up the way they want it and don't like to rip out, say, a high end kitchen just because they dislike the style, so they buy a house that needs total renovation instead.

Hi OP, we've just bought and renovated a 1930s house (in Somerset though!)

You may have left electrics off your list of jobs - is that because they are sound or you've forgotten them? Do check the condition of the electrical consumer unit and for red flags like pendant lights in bathrooms, etc. We spent £5K on a full rewire of the house and then additional fees to replaster every wall to hide the channels... (Will be more expensive with London tradesmen I'm sure) so it can be a big cost to factor in!

IMO there's no harm making a low-ball offer if you can justify your refurb costs but also remember that finding tradesmen, managing a project and living elsewhere during dust and disruption are all very stressful (and potentially costly). It may well be much preferable, and simpler, to negotiate a good "cash-buyer" deal on an already liveable property.