wise MNers - private purchase and EA valuations - advice please

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NC. Our elderly NDN have just announced that they are going to downsize and we have expressed an interest in their property (we'd like to knock both houses together to make one). It needs gutting and doesn't have storage heaters, never mind central heating. They have just had it valued at £50k less than our perfectly liveable in house with a garden double the size of theirs....and central heating. We think that if it goes on the open market it will eventually sell for about £100k less than the asking price. We would be prepared to pay £50k less in cash. Knocking both houses together to make one certainly won't be a money making experience....if we live in the house for 10 years we will probably break even...but we love the area and this would be our forever home. BUT, we aren't prepared to pay what the EA have suggested and now feel like we are stuck.....we think we can still end up with the house but only after its sat on the market for 6 months and they've dropped the price significantly and got really pissed off with us in the process. There is very little on the market where we are and similarly priced properties are recently updated; similar properties i.e. needing significant investment are £100-150k less. How would you navigate this to keep relations as harmonious as possible...and end up with the house?

I'd be tempted to be really honest. Say you can only afford the 100k less price because of the work that needs doing, and you think that's fair compared to other similar properties- but you understand that that might not be enough for them and you understand if they would prefer to put it on the market. No hard feelings, let us know if they'd be happy to sell at X price.

Then wait...

OP I know this isn’t your question - but have you checked if you need planning permission to knock through the two houses into one? Some neighbours of ours in London try to do it a few years ago, and got turned down. The council were opposed because (I believe) it was effectively reducing the housing stock, and especially two smaller houses for one larger house (when what’s needed is more smaller houses). But I only have that anecdotal evidence and it might be complete rubbish.

I would also advocate being completely upfront with your neighbours. You really haven’t got any other tactic. Good luck!

Can you get your house valued (probably by a different agent) so you know exactly what your updated / done house would go on for?
You may find that next doors valuation is a bit more accurate than you think if yours is worth more than you think.

But regardless of actually valuations, if yours isn’t worth only £50k more and the gap is more like £100k then you can discuss that with them.
Maybe invite next door round (I know, I know Covid) to see yours, maybe they don’t realise quite how much is to do in theirs as they are blind to it.

Otherwise get estimates for the work and put your offer to them backed up by costs

It depends on how much £50K is as a percentage -like if their house was valued at £200k then £50k is a 25% drop which is a lot but a house valued at a £1 million its a 5% drop and what an estate agent may well have told them to expect.

If its more than a 10% drop you are suggesting I would imagine they would go on the market to test it but may come back to you if that fails. It maybe worth getting yours valued and see what they say - be interesting to see value they give and what they say to expect. Also check the government site for recently sold house prices in your area to see what things are really going for. Ours we were told to put on for £650k, expect £625k, in the end we got £590k after 5 weeks, if we had stuck it out for longer we might have got £610k or so but ours was empty so racking up bills / cgt and lockdown was looming. I think the average house was going for about 5% under asking price but obviously some are overvalued and reduce, often those with small / no gardens atm.

Do you know the estate agents? Might’ve worth giving them a call. I would be pretty annoyed I think, ignore I got a valuation, and my ndn started telling me it was overvalued and offered my 50k less. (Even if they were proved right eventually). I would tread carefully.

@ImKeri we had ours valued 5 months ago; valued at £50k more than theirs with no real investment needed.

Same sized fully updated period terrace house in the village has just sold for £125k LESS than their top valuation.

@Daisydoesnt - we don't need pp, but thanks for suggesting we check.

@Silkies very similar property sold recently in the next village. Went on at £650, dropped to £600 still didn't sell, they took it off for a year, put it back on at £575 and eventually it sold for £489.

We think its worth £450, but would 'happily' pay £500 and begrudgingly pay £525.

Its worth more to us than anyone else. We are cash buyers and wouldn't need searches as they will be the same as our house. We could exchange in a month and have a delayed completion date to enable them to find somewhere. I don't think buyers come better placed than us.....or they could hang out for another £50k and not get it.

@LittleOverwhelmed- we probably will......but a valuation is really only a guide.A house is only worth what someone is willing to pay for it, so if they put it on at £575 I don't think anyone will, its just wildly overpriced compared to everything else available locally with nothing particularly special about it.

Yeah, but 6 months ago houses were cheaper in most areas, definitely been a buyer's market recently.

There isn't a big a gap between done & not done in most cases, as people prefer either immaculate or one they can do to their own taste.

We fell out with neighbours over 5k, I'd valued it knocking a bit off for agent's fees. They disputed the valuation, so I put it on the market, sold for the expected 5k more...

Apparently still slagging us off, 20 years later.

@wandawombat...don't you mean a sellers market? Sellers can ask insane prices and get them as there is literally nothing to buy.

I wouldn't fall out over £5k, but I'm not paying another £50k on top of what i feel is already an overpriced house.

What age house is it? Interested in how you’re planning to knock through

What @Daisydoesnt said. Local authorities are required to provide x amount of new homes over the next few years. They’re very very reluctant to reduce the available housing stock.

If you weren’t to combine them officially you’d end up with 2x the council tax / insurance etc

Many estate agents have agendas, and are often overly optimistic. One approach is to use a RICS surveyor to do the valuation. It what you often have to do during probate in order to calculate the inheritance tax due. They are independent and HMRC trust them more, but you have to pay.

That said if you are £50,000 to £100,000 out I suspect you can’t bridge the gap and your neighbour is better off putting it on the open market. They could always explain to the agent that you are already in the picture and that you have right of first refusal.

@Porridgeoat. They are 1930s. Both have been extended. I’ve attached how our house is and a sketch of what we’d do. Red wiggly lines = walls down, red dotted lines = walls up. We’d take out the set of stairs on the right.
I’ve just spoken to a local builder who doesn’t think it’s as bonkers an idea as the 2 EAs I spoke to. The builder said it would be a lovely home, that we wouldn’t make money on, but done properly wouldnt loose money.

Just calmly make the offer you are prepared to make, through the EA. Include all the info that is relative to your ‘proceedability’ , can pay cash and buy quickly.

If it is turned down, ask for your offer to be left on the table.

Do this through the EA, and don’t involve your NDN directly. Certainly not by badgering her about comparative price / condition.

@RainingBatsAndFrogs - there is no EA involved atm other than valuations - and neighbour wants to avoid using EA (and spending the fees).

I think we are going to offer £525 and say that we do really want the house, but can't justify more than that given the work that needs doing and the final value of the combined properties. It will be a standing offer and if they want to try the market first our offer will still hold. I might add that 2 EAs have told us we are bonkers.

But check with the planning officer first.

You can submit a planning application on a property you don't own. You need to say that any purchase is subject to you receiving permission to knock the two properties together. It depends on area. Some Local Authorities are very opposed. The Planning Officer will be able to advise.

(If you don't have the planning you might be forced to undo the work, or you won't be able to sell!)

Oh, I see! So...your NDN is at the stage where EAs dazzle them with what they could sell it for.

Here at least, it's frequent that an attempt to turn semis into detached houses is refused. I would definitely check unless you intend to keep two entrances, kitchens, etc. That is keep them entirely separate which defeats the purpose.

@RainingBatsAndFrogs, yep. That stage. I went through every house in a 3 mile radius including sold ones on rightmove yesterday. 550-650 seems the asking price for similar sized houses which are already done up. I cannot see anyone paying that for their house, unless they are desperate to live in the village (and there are other options.... with central heating..... in the village)

Done up doesn't always fully reflect a price difference, though.

I have been looking at done-up and non-done up houses and 'done up' was better value because it was only a bit more than a 'project'. Because people like to do their own doing up to their own taste.

I do mean sellers...

Sorry, brain fog!