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?

All great points. Thank you for taking the time to reply. I think waiting for the mortgage valuation is the best thing to do. And, in the meantime, i think we need to have a very serious chat about what we will do if the valuation comes back lower than what we have offered.

Another question...do they take into account your deposit? I was talking to someone a while back (before this was relevant to us) and they were of the opinion that the valuation will often come back ok providing the bank themselves dont stand to lose out if something goes wrong. Im not sure of that is hugely disrespectful to people who do this as a job though

Yes, because they have a calculation of loan to value and a ratio they won’t lend above. So if you have a sizeable deposit it won’t matter if the valuation is less than agreed price.

3

So many don’t understand what a mortgage valuation is.
It won’t tell you whether you’re paying a good price or not

Or will tell the mortgage Conor to whether they think they can recoup their loan in the event of foreclosure.

Totally different stance

Yes, this is what he was saying basically. We have a good deposit (we have saved hard and overpaid on our current mortgage to put ourselves in the best position for this move) so I imagine the bank will have no concerns. So I imagine the valuation will come back OK then. Thank you for replying

What’s the completion date? If it completed during the summer I would bet it was on the market and agreed before lockdown. I know a couple of people who have sold during lockdown (post stamp duty change) and most of them are just inching towards exchange right now. Lockdown caused chaos for the market.

But it’s difficult when information isn’t available at time of offer. We bought a wreck last year, and agreed a sensible price for us. We also knew that the people a few doors up paid £75k more for a similar wreck but that figure wasn’t published until after completion of our purchase. Our vendors may well have been annoyed by that (although the house was originally on for £75k more so we both got similar ‘discount’ iyswim).

Sometimes a combination of cul de sac, plus better garden aspect can increase value. Even if both houses have off road parking, entering and leaving one might be easier, street parking easier etc.

This all comes down to whether you want the house or not. If you’re not bothered you could try and reduce the price but you might lose it. It also depends how long you will stay. I think anyone buying right now needs to accept the potential that they are buying in a bubble and might ‘lose money’. That might matter more or less depending on whether it’s a 5 year house or a 20 year house. Or the size of the deposit.

Have a full structural survey to check there are no issues.

@Willowwood45

Yes, this is what he was saying basically. We have a good deposit (we have saved hard and overpaid on our current mortgage to put ourselves in the best position for this move) so I imagine the bank will have no concerns. So I imagine the valuation will come back OK then. Thank you for replying

Yes but my point was the mortgage valuation won’t tell you whether you have a good deal or not!

Have you had a full structural survey done?

If that highlights problems with the building then you have a bargaining point.

I would wait for the mortgage valuation.
It could also be the fact that your house is on a cul de sac.
If you really like the house, I wouldn’t risk losing it unless the valuation comes back with a much lower valuation. In which case you may be able to renegotiate the price. That would be reasonable based on the mortgage valuation.

The mortgage valuer works for the bank and not you. Their primary concern is whether the bank’s investment is secured - what can they sell the house for if it’s repossessed, and possibly without kitchen/bathroom etc. Their leniency depends greatly on the stake in the property. We had a 50% mortgage so it was fairly academic, less so for a 95% mortgage

I agree I with MrsMoastyToasty. Make sure you have a full structural survey done, then you have stronger grounds for negotiation.

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.

This.

Basic economics. Prices go up when demand grows and supply decreases.

We are trying to sell a small flat. Hopeless. First time buyers are not around as mortgage deposit requirements have tightened. The neighbours in the next door flat are desperate to sell. They don't want to go through another lockdown without a garden. We have actually both accepted low offers from the same investment buyer. They really struggled with finding a house to buy. Thee was very little on the market and those that came up went quickly. One even went under offer within an hour of it coming onto market, sight unseen.

5-10 years is a long time and the market will change. You will not want to lose your buyers. If you want to make the move, just get on with it. You are also gaining advantage of the Stamp Duty concessions.

I would only try to negotiate down if your purchasers do the same to you.

And by the way, expect the mortgage valuation to be conservative. Mortgage companies at the moment are very nervous. When this happens expect to need a large deposit and to receive a low valuation.

I expect our investment buyer to try it on with us. I have told the agent that there is no way we will accept an attempt to renegotiate. He is getting it at a good price. If need be we will put the flat back on the rental market. But then we can afford to.

A house is not worth what a buyer chooses to pay IF they are depending on a mortgage. A big buyer where a mortgage is involved is the bank. A house is worth what an independent surveyor says it is worth. For example, someone might wish to buy a house that the bank deems unmortgageable.

Perhaps the vendors of the other house needed a quick sale and so someone got lucky and paid less than market value for theirs. You can’t know you are overpaying based on one sale. You need to look at other comparable properties in the area although the time for that was probably before doing any viewings or making any offers!

Agree with NeedMoreSleep.
You want to be in that area for school and say there are no other options. A shortage of properties is when prices rise.

You loved the house enough to make an offer - an amount you thought it was worth and were happy to pay UNTIL you found out about the neighbour. Think about that. You wouldn’t be doing these mental gymnastics in pre internet days when it wasn’t so easy to find out what other properties sold for. I repeat, you were happy with your offer on a house you want to live in.

You have NO IDEA of the circumstances surrounding the sale of the other house. It may have been a cash buyer, a private sale (no agents fees), a sale forced by divorce or death, a dodgy survey report.

Again, pay what you are happy to pay to live in a house that suits you. Don’t get obsessed by what others might have paid. Reminds me of those apocryphal holiday poolside conversations about what people paid for identical packages!

Perhaps the vendors of the other house needed a quick sale and so someone got lucky

Exactly. Estate agents were not able to do viewings during the last lockdown, and so potential buyers were limited. I am a landlord and had tenants move out the first week of lockdown. I priced it low (through Foxtons!) and found new tenants based on a video. They were delighted with the house when they got to move in. I simply calculated that I was better off with tenants than with a three moth void.

Once lockdown was over the rental market in that area went crazy. I would have got more rent. I am still happy with the decision I made. he vendors at the back may well feel the same. Plus you don't know what survey problems they had. Maybe their extension does not meet regs?

Please don't mess the sellers about. You offered 550, nobody forced you to, and you obviously thought it was worth it at the time (as you said you've been house hunting for months). What a similar house sold for months ago is immaterial. You have no idea what situation the vendor was in, whether they needed a quick sale, sold to a relative for a good price etc. We got a fantastic deal on this house as the vendor was desperate to sell and we were cash buyers.

As a side note, we lived in a cul-de-sac for a few years. Never again.

Our valuation came in lower for our house , £275 k and it was on the market £290k. It was a newly modernised house in a popular road where houses were selling fast. We just had to go straight in at the asking price. As we had a large deposit it was no bother to the mortgage company. It was worth it to us to move straight in and not have to modernise it ourselves, no regrets. Several have sold over £300k since.

Surely if you wanted to pay XXX for a house, that is the worth of the house to you?

if you have a large deposit the valuer will take that into account .

The stamp duty holiday has pushed prices up . when it ends they will fall - but if you are looking at a 10/15 year plan then things will even out because hopefully no covid and no Brexit .

Tbh if we all knew what will happen with house prices we would be millionaires - its only relevant when you have to sell .

Wait for the valuation and then go back and have the discussion. There are housing selling for less than ours was bought for, in better nick but they are on a main road. We were very happy to pay a premium to be i na quiet culture de sac where our children and pets would be safer. The house needed quite a lot of work, this was picked up in the survey. The survey said it was worth 5k less than our offer, even with all the work. Which means, when done up right, it will be worth what we paid for plus what we invested. At the end of the day, we decided we needed a family home in the right area, regardless of what the market was doing - as we were likely to stick here for some time. Since then, in lockdown, we have discovered that we have absolutely fantastic neighbours. This is a priceless bonus.

Rengeotiation on the basis of the survey is possible. Our nasty sellers told us to 'stuff it' and we went ahead, but we found out later that they had bodged so many things in the house! We still love it. Hope that helps.

It's quite possible that the other house has problems which you wouldn't pick up from looking at the estate agent's photos. It might need rewiring, a new roof, new boiler, new windows, damp problems to be fixed... impossible to say.