How much to offer on rundown house

[curiousquestion2]

Could do with your advice on what to offer as we're not cheeky people, but as always, money is tight!

We saw a house today that is on for £725k but needs a lot of work doing in it. It's 4 bedrooms and is on for the same price as other 4 bedrooms are on for in a better area (I'm comparing to 1.5 miles down the road, where offers are made the day after they come into market). The houses for sale in the better area tend to be in good nick - usually decorated to a high standard. And they have a little bit of room for improvement, like loft conversations.

The house we saw today is a proper granny house - no work's been done for at least 30 years. You'd need to knock through walls, replace doors, do the bathrooms and kitchen, even replace ceilings. Avocado bath and all. But we think it has more potential for the kids - bigger garden etc. And it's difficult to renovate in that area because there are a load of massive houses with better jobs and of course Brexit etc. So, unusually, it's been on for 4 months and no offers. No one is willing to take on the work.

We are seriously thinking of offering, but have no idea what's fair. I know we need to price in work etc and do the calculation. My question is at what price would they be likely to tell us to piss off?

We also found out that the costs of moving there (childcare particularly) is going to be a lot more than we'd initially budgeted for, so if we can get this place on the cheap, the plan will be to sit tight for a few years after doing a basic job and then start the renovations properly when our costs are lower and our wages are higher (as is the plan).

Any advice would be appreciated!

If it's been on the market for 4 months it sounds as though they are holding out for £725k. I'm guessing they're not bothered about a quick sale and the all already have their own homes.

I'd offer 20% less which they will refuse, and then move on to look at other houses. I'd then come back 3 months later and up my offer to 15% less - if they want to sell they'll use that as a negotiation point.

If it’s in probate then they probably won’t be in any rush to sell and they will be holding out for an offer close to asking price.

We just tried to buy a bungalow for MIL and the survey came back with some major issues - almost guaranteed asbestos (advised a specialist survey), structural problems with the roof, total rewire, new heating system etc. The buyer refused to let us do the asbestos survey and refused to knock anything off the price for the roof - we had two quotes, both around the £10k mark.

So we had a survey that backed up a legitimate £25k of things wrong with it and they just wouldn’t budge. Not helped by the EA being their mate and telling them to hold out. We walked away.

Just because it’s been on the market a while, don’t assume there’s significant wiggle room on price. They may have already had plenty of lower offers and rejected them.

Whenever I've looked at houses like this I've always been surprised at just how much they go for, often within 2-5% of the value I'd guess they'd be worth 'finished' - I guess lots of people see value in being able to start with a relatively clean slate. I wouldn't hold out for a bargain

was it advertised as a renovation and priced accordingly

Wow. We offered on a similar house last week and there were nine offers and it went £30k over guide (we didn't get it).

I'd make an offer at where you can afford. Anything else is pointless.

I would recommend comparing price per sq m or sq ft space instead of bedroom numbers

Given this “We saw a house today that is on for £725k but needs a lot of work doing in it. It's 4 bedrooms and is on for the same price as other 4 bedrooms are on for in a better area”
I’d be pretty pessimistic about your odds of getting it I’m afraid.

It sounds like it needs £100k spending on it?

We bought a house like this 12 months ago, 98 year old man lived there most of his life. no central heating, complete rewire, every wall stripped back to bare brick replaster, every floor board replaced, all ceilings replaced and just got PP for the extension. Was up for £375k and we offered £350k 3 days after if went on the market got accepted straight away.

I imagine however, a few months later it would have gone for well over asking price given the location and surrounding countryside (and crazy housing market).

We had to get a new mortgage 2 weeks after the sale completed and the mortgage company valued it at £20k more than we paid!

It's had zero offers the whole time it's been on - estate agent said that no-one's willing to do the work it needs. I reckon @SheWoreYellow has it right - needs about £100k at least. And that's before thinking about doing anything big to make it the dream house.

@DenholmElliot I am now dreaming that I'm that brave! But actually thinking in terms of percentages does make it easier.

@Zodlebud Not in probate - they're downsizing and moving closer to family.

@DonGray that's a good idea

@BlanketsBanned - not really!

Interesting to know the market on places like this! I'm also surprised it hasn't gone.

Get proper quotes
You need to deal with achual numbers
Compare cost of renovations to a house that has these things done
It’s a simple addition and subtraction sum

We made a 10% lower offer on a house in a similar circumstance, they were not interested at all. They held out for a long time and it eventually sold for 5% under. Meanwhile we’d found our house for the same price as what we’d offered them and it’s better anyway

If it's been off for four months and no offers then I can imagine that there is a lot of work needed. The prices of work and materials have shot up hugely in the last year and good tradespeople are hard to come by so it's understandable that people have been put off. For me personally, it's not just the very significant expense but the disruption too that would need to be taken into account.
I guess you could start negotiations at a very low figure, 100k off, citing the huge amount of work and see what the response it.

We bought a similar sounding renovation about 6 years ago. Started with a cheeky offer about £70k below asking and got accepted £50k below. Be cheeky. If they say no you can raise the offer, you can't drop it though.

It seems really odd that it's had no offers. Even if it's been massively over priced you'd assume it would have had offers, cheeky ones if nothing else. The estate agent doesn't sound very proactive if they haven't given you any idea of how open the vendors are to offers.

Just offer what the house is worth to you and what you can afford with renovations taken into account. I don't think you can expect to deduct money for walls coming down etc - this doesn't need to be done, it's just what you'd like to do.

You have nothing to lose, although I do think going ridiculously low can annoy some people... but if you can't afford anywhere near the asking price anyway, with the reno money on top, then it's irrelevant anyway whether you offend them! Good luck!

If it’s 4 bedrooms and hasn’t been touched in forever. And if it has a large outside space too that needs work, you won’t see change out of £300k if you were to do it properly, even over time. But as they say, location, location, location. If it’s a desirable location, it will be money well spent. Also how do you they haven’t had any offers. In any case OP, not harm in making a serious offer 5% under and then walking away if you don’t get it. Also, are you chain free?

Also if you post a link to the listing you will get better advice.

It's difficult to say. We paid 8% over asking for our last reno. They're usually priced to reflect the work needed and the potential resale once done. But this hasn't sold in 4 months suggesting it is over priced. I'd go in 10% under.

The EA is totally having you on! The reason there has been no interest isn't because it's too big a job, but because it is too expensive and the owners are being greedy and unrealistic! You would probably need to spend hundreds of thousands on it over time, even if not immediately.

If its been on for 4 months then it’s overpriced. Correctly priced doer uppers tend to get snapped up everywhere, but if it’s going to cost £725+£100 = £825k (+ time and trouble) to get it to the same standard as local houses at £725k then it’s not worth it.

Unrealistic vendors, sadly.

If it needs £100k of work, I'd start off with an offer £100k under, explaining my reasoning, and increasing from there as they will almost certainly reject it.

That would be 14% under asking, so I'd probably only be willing to negotiate up to 10% under (up to around £650k), and walk away at that point if still rejected.

Is it a genuine renovation that is needed such as new wiring, windows, roof, CHeating or is it just redecoration? You mention knocking walls down but surely that's personal taste.

Don't forget just because it's advertised at the same price as similar in a nicer area, doesn't mean those house are selling for that price, they may be going for over asking price for "finished" houses in the current market. So perhaps them wanting asking price is actually more realistic than you think.

If superior properties are selling for the same down the road why don't you buy one of there?

@Monty27

If superior properties are selling for the same down the road why don't you buy one of there?

Oh yes, why didn’t the OP think of this. Honestly, this place.

As others have said, make an offer you can afford and feel is fair.

Their response will be based on a variety of things outside of your control, including how keen they are to sell.

We are about to put our house on the market. It needs renovation. We’re putting it in at about 75k below what a pristine house in this location would cost, although it probably needs £150k spent on it. The location is desirable and houses don’t come up often + we aren’t desperate to sell, so we won’t be accepting offers below.