We think we have overpaid on a house...what are our options?

[Willowwood45]

What do you do if you think you have overpaid on a house? The house we have offered on was on the market for 575. It had been on for about 6 weeks so we made an offer of 550 and got it. However, since we made our offer, it has come to light that a house that backs onto our house sold for 500 this summer. The houses are identical in layout but the one behind our house has a large extension so loads more living space. It's not a modern, wow factor extension at all but it certainly provides a lot more space. The condition of both houses, from the pictures on right move, seems similar. The only difference is that ours is on a cul de sac whereas the other one in on the road...it is a very quiet road that leads to country lanes so minimal traffic. We don't know what to do.

1. Stick with it. Accept the market pre covid and pre stamp duty was very different. Accept paying a premium for a house with no chain. There are no other options for us at the moment, the market is drying up and we have first time buyers who have been so patient with us and who offered asking price for ours.

1. Wait for the mortgage valuation and see what it says. If they agree that we have over paid, go back to the vendors and explain and try to renegotiate at a later stage of the process.

1. Is it worth having this conversation now? Speak to the estate agent and say it has come to our attention that this house sold for 50k than we have offered. We don't want to over pay. There is a very real chance the mortgage valuation will agree with us so can we renegotiate now rather than drag it out?

1. Can we speak to the mortgage valuation people before they go and visit the house? How do they do their valuation? Do they look at the right move sold pages so they can see what has sold recently or do they just look at a printed list of sales in the area without looking at how similar the houses actually are? Can we say we are concerned as we have found out about this sale since we made our offer and make them aware of this house and ask them to look at it?

I am struggling to see how the two houses have been valued so differently. The house behind sold for 500...75k less than ours was on the market for and 50 less than we got it for. This is such a big price difference. I also spoke to another estate agent who valued our house and they valued it at 525, 25 less than we have offered.

What would you do?

If you have overpaid the mortgage valuation should pick it up. Assume that they are professionals who have been doing this for years and will know to do something as house price sales and you should be fine.

I think if you want the house you’ll have to stick with it. There could be any number of reasons the house behind sold for less such as the owners wanted a quick sale. Some houses have gone up in price since lockdown.
House prices are all over the place at the moment and houses are worth what someone is prepared to pay and you were prepared to pay what you offered. As a seller if you started wanting reductions after an offer had been accepted I’d be calling off the deal.

Pre stamp duty holiday was a different market. We bought in Feb and this summer during the buying frenzy our house was valued at almost £50k more!

You haven't overpaid because you haven't paid yet. Wait for the mortgage valuation and survey then amend your offer if you want to. At the end of the day a house is worth what its worth to you. If you amend your offer and lose the house would you be OK with that?

How does it compare to other similar houses available now?

At the start of the year the market was a bit flat although recovering, then the pandemic put people off moving. Once things opened up, plus stamp duty break, there has been a mini boom.

Some roads are more desirable than others, round here 2 similar roads near each other command very different prices. There is literally a dividing line between them. Do you know the area well enough to gauge this? You can check sold prices on Rightmove to compare both roads, bear in mind though that it’s quite out of date at the minute.

I would wait for the mortgage valuation. If you decide to drop your offer I guess it depends how much you’re willing to lose the property.

Not sure if I'd be ok...its not what we thought we would go for and there are some big compromises. But it ticks a lot of boxes and would be a lovely house for the next phase. I would be upset in the sense that we have been looking for a long time..way before covid...and have missed out on a number of houses so it has been a relief to actually have an offer accepted. Also, this is our third set of buyers for our house. We kind of just want to get moved now and I also don't want to mess our buyers around. Renting seems risky...small children, little choice in the area where our children go to school (0 at the moment on rightmove), rents way way more expensive than our mortgage when houses do come up. So in that sense, yes I would be disappointed if this one went wrong.

There is nothing else on the market now in the area so very hard to compare. A house on the cul de sac sold for 75k less than we have offered 2 years ago and then this house behind ours sold for 50k less during lockdown.

I think one of my concerns is if we want to sell it. We changed our expectations and have gone for a house that we don't necessarily see as being our 'forever house.' A bit worried that, if we want to move on in 5-10 years, will we lose money if we overpay now. But then who knows what the market will be like in that time. Probably silly to be thinking that far ahead.

It's just a rubbish to be buying really! So much uncertainty. Prices seem really unpredictable. Thank you for your replies so far. As ever, lots of good points and thought provoking comments.

As a seller if you started wanting reductions after an offer had been accepted I’d be calling off the deal - it quite often happens after a mortgage valuation and the same thing would happen to the next lot of buyers at their valuation so I wouldn't call off the deal on this basis. I would agree about calling off the deal if it was for no reason other than trying to rip me off!

You really should have done this research before you offered (I appreciate that the might have been hard if the sale price hadn't been published by the Land Registry). You were happy to pay that price until you found out about the other house, so I would stick with it, any attempt to renegotiate now is frankly a shitty thing to do - although you may have some leeway after the survey and valuation if they throw up any issues. Raising this before they are back will cause alarm bells to ring with the vendors thinking you are getting cold feet, which could jeopardize the sale & also risk losing your buyers. You may not find something else, and your currently patient buyers may not be quite so patient as they are currently.

£50K sounds a lot, it's only 9% of £550k. The other house might have had structural issues, needed to be a quick sale, or house prices locally may have gone up that amount anyway.

Good luck!

We kind of just want to get moved now and I also don't want to mess our buyers around. Renting seems risky...small children, little choice in the area where our children go to school (0 at the moment on rightmove), rents way way more expensive than our mortgage when houses do come up.

Look, if the valuation comes back as acceptable and you can afford it then given the above I'd go ahead. No one knows what will happen in 5 or 10 years' time.

Given the two data points you've mentioned (50k and 75k under) yes, it sounds like you offered too much.

A house is worth what someone will pay for it. The survey will highlight if you are overpaying. They can't sell houses quick enough round where I live if they are the 'right' kind of house e.g family sized but not huge, garden, good transport links.
I doubt an estate agent would put something on the market for 75k more than they should - they also want to sell it!

You shouldn’t ever go by valuations as a guide to base your offer on.

We are considering selling our house, I had 3 valuations which varied by £300k, so got 4 more which varied by £400k, I still have no idea what to market it at. I guess a house is worth what someone will pay.

Ask yourself how much you want it but I would speak up sooner than later, go into renter rather than rush to buy.

Thank you for replying. Unfortunately, the land registry was only updated after our offer was accepted. We did as much research as we could with the information that was available to us at the time.

I agree that renegotiating now would be morally questionable. I would fully expect them to say no and then put the house on the market again. And even if it didn't sell and they had to drop the price, I would fully understand if they wouldn't even consider us as buyers in the future.

either retract your offer, or crack on. You can't really reduce it now and expect the process of buying to continue.

if i was the vendor and you made your thoughts known to me, i'd be straight back on the market.

There may be other factors driving the price differential that you haven't considered e.g. if it backs onto yours, their garden could be north facing and yours could be south facing. Also theirs is on a through road whereas yours is on a cul de sac, their vendors might have needed a very quick sale but yours don't, theirs needs a new roof etc The houses on our road sell for quite different prices depending on the specific house even though superficially they all look the same.

I doubt an estate agent would put something on the market for 75k more than they should - they also want to sell it!

Exhibit A, Foxtons.

If you happy to lose the house then amend your offer that’s how I got my house someone made an offer full price was accepted 4 weeks later then said i will pay x amount less before survey carried out estate agent said right ok to buyers, rang me and as I offered full price at similar time the seller told original buyers to sod off and I bought the house

• the house behind is on a road not a cul de sac
• the house behind will have a different facing garden
• the house behind may have had lots of things wrong that came up in the survey
• the house behind was for sale during peak pandemic uncertainty and may have been on the market a long time

Your chosen house has no chain Your chosen house is for sale, stamp duty freeze will expire soon and market is drying up.

This is how you justify £50k. If it’s valued significantly less then readjust your offer knowing you may lose both this house and your own buyers (who will want to take advantage of stamp duty).

If you have decided the house is really not for you then withdraw and rethink, but if poss please don’t dither and mess your buyers/sellers about.. it’s a horribly stressful period at the best of times.

As pp said, good luck!

You need to look at more than two comparable sales, because there are too many variables that might have affected the prices. Try looking up a range of properties in the area to get a wider picture.

If it's a property with a garden the value is likely to have gone up post lockdown. You also have to factor in whether you really want to lose another purchase and be left in limbo for several months longer.

I think you have to wait for the valuation

Either it says your offer is ok, in which case you need to decide if you want to risk losing this house in order to reduce your offer... or if there really is so little available, accept you're paying that price due to limited supply.
Or, it will say you're overpaying but you have a factual basis to start the discussion. It may piss the seller off (presumably they are offering on properties based on what you offered so could lose their own move) but at least there's a professional factual basis for the discussion.

I doubt an estate agent would put something on the market for 75k more than they should - they also want to sell it!

Exhibit A, Foxtons.

I think you need to consider all the different sorts of value this house offers you. There is the house value which may be say £500k as you think. Then there is the location value and I can tell you that culdesac vs road is easily another £25k value (I live in a place where the equivalent difference between two locations 59 yards apart can be £250k). Then there is the value of actually getting your move done - and that convenience And rarity value may well be worth £25k to you. Don’t panic, wait for the valuation and survey. And consider what your alternative is and whether you prefer to not move at this time? You may conclude you are sort of overpaying for the house but not overpaying for being able to get in with moving when you look at all the value to you.

Wait for the mortgage valuation. Stop comparing what the other people sold for. This house was on for £575, you thought it was worth £550.

For all the reasons you have stated, you chose this house. We have moved several times, we have now been in this house 10 years. Some we have paid asking price for as that was the market at the time.

Stop thinking of this as losing money or making money. Think of it as moving on from your current house which no longer suits your needs and moving to the next stage. We paid asking price for a house due to the housing market at the time, knew it was a stepping stone house. Banks crashed, we moved a few years later, had put over £20k into the house, didn't see a penny of that when we went to sell it. Practically bought it and sold it 7 years later for the same amount of money. It is just the way the market works.

@Willowwood45

It’s technically a different street to yours so maybe that’s what you’re paying the premium for.

Also, maybe the other house had a north facing that is a bit less attractive to buyers - and yours has a south facing garden which is gold standard that everyone wants?

It does seem like they accepted your offer £25k below asking quite early. 6 weeks (or did you mean months?) is not that long to be on the market.

There could be a myriad of differences that are not obvious at a glance from a right move posting. For a start it’s in a much quieter street by the sound of it and possibly different facing garden? Could need more work doing on it etc? If you love the new house I see no reason not to move forward unless the valuation comes up significantly less.