How much should we offer for this house?

[ninkyno]

House Needs a lot doing. Hasn't been updated since perhaps the 70s- new kitchen, bathroom, wallpaper peeling off the walls, etc. Been in the same family since the 1950s when the house was originally built. It's on for sale at £775K. Our budget is £740 max. How much should we offer on it considering how much work needs doing to it. This is our second property purchase after a long time and I'm totally out of ideas on how to approach the whole process cautiously but wisely.

It's a probate property and offered with no upper chain. We have just one person below who is a FTB (currently living with parents).

NB. Property prices are mad here- this property would've pre-pandemic been listed at around £650K.

Thank you all- a unanimous 'don't do it'. I think you're right. Though we've budgeted for stamp duty, legal fees, etc. we really haven't got any contingency for unexpected fees, repairs, etc. it would be £740k all in. The plan was to move in as the house was (IF our offer was accepted), decorate lightly and then save for a full renovation in 5-6 years time but the kids would be well settled into school at that point and it wouldn't be fair to put them through the upheaval of the works that would be necessary. I've rang the EA and said I want to cancel our viewing but he's insisting we visit just to see the house- I'm not sure if it's to keep the numbers up to prove to the vendors that viewings are taking place or what but I'm tempted to pop over.

So you haven't actually viewed the property?! In the gentlest way possible, next time it might be wise to view the property first before you think about how much you should offer. This is the risk of not seeing a house in the flesh. Good luck.

We weren't going to offer UNTIL we'd viewed the property. We have a friend that lives there and have been up and down the road it's located many, many times.

Friend that lives on the road*

Simply, you offer what you can afford to pay. The guide price will have factored in that the buyers will need to renovate.

I would go and view it, if the agent is doing the viewings then you might be able to get some feelers for the level of interest there's been already and what sort of offer might be accepted. Ultimately though, it should be priced to take into account the condition it's in. If it's not then you're more justified in making an offer under the asking price. Probate sellers will often hold out for the best possible price as there's less rush to sell.

@ninkyno

Thank you all- a unanimous 'don't do it'. I think you're right. Though we've budgeted for stamp duty, legal fees, etc. we really haven't got any contingency for unexpected fees, repairs, etc. it would be £740k all in. The plan was to move in as the house was (IF our offer was accepted), decorate lightly and then save for a full renovation in 5-6 years time but the kids would be well settled into school at that point and it wouldn't be fair to put them through the upheaval of the works that would be necessary. I've rang the EA and said I want to cancel our viewing but he's insisting we visit just to see the house- I'm not sure if it's to keep the numbers up to prove to the vendors that viewings are taking place or what but I'm tempted to pop over.

I think you have made the right decision too. It's more than you can afford. It may or may not have been priced to the reflect the work; you are in a better position to know than anyone else on here. Even if it has the prices of materials and labour have been rising and rising. Additionally, I you can't over estimate the amount of disruption which you need to take into account particularly with several children. It also seems likely that you are under estimating the amount of work as it's very likely that structural work will be needed, not just new kitchen, etc. I guess there's no harm in seeing it but I would look elsewhere for something with less work needed.

You've nothing to lose by visiting

At least you will have your own take on what needs doing urgently and what could wait and have a comparison against other properties

If you love it - maybe offer £710k as you know they won't entertain offers below £700k

This was us 8 years ago. Property on at 625k, we offered 519 and got it. Needed everything doing to it, was like a 1950s museum. We didn't have any spare cash at the time so lived in it and did bits as we could afford it. It took us years. We've eventually done a full refurbishment, 2 extensions and planning a 3rd extension. It's now worth £1.2m, probably £1.4m after 3rd extension. We absolutely love it, everything about the home is as we'd want it. I'd thoroughly recommend it. See it as a long term plan, you don't need the cash straight away to do it up. For us it has meant missing a few moves to go up property ladder, so we have saved on moving costs, stamp duty etc.

We renovated a similar property last year and it cost £70k for labour alone which included full rewire, new central heating, new kitchen, new bathroom, redecorating, plastering etc.

Materials, fixtures and fittings were at least another £40k on top of that.

You will also need to budget for unforeseen issues eg rotten floorboards.

We also used the opportunity to future proof the house by getting new, bigger diameter water/gas pipes, new telecomm cables and HD TV aerial.

@Scottishgirl85

This was us 8 years ago. Property on at 625k, we offered 519 and got it. Needed everything doing to it, was like a 1950s museum. We didn't have any spare cash at the time so lived in it and did bits as we could afford it. It took us years. We've eventually done a full refurbishment, 2 extensions and planning a 3rd extension. It's now worth £1.2m, probably £1.4m after 3rd extension. We absolutely love it, everything about the home is as we'd want it. I'd thoroughly recommend it. See it as a long term plan, you don't need the cash straight away to do it up. For us it has meant missing a few moves to go up property ladder, so we have saved on moving costs, stamp duty etc.

To be realistic though, I don't think your case would be common. For a house to have a ceiling price so much more than what was paid for it, it must be in a fantastic location. And generally this means you'd still pay £££ no matter what state the house was in - as you're paying for the plot.

@Laptopsandmouses

Offer what you can afford, they either accept or not, we can’t guess their mindset as we don’t know them personally. There is no magic formula.

I’d not be keen to buy a doer upper that I’ve no money to do up. That’s a recipe for disaster. Go in at 725, with an idea of going up to your max of 740, which they might let it go for. But again, if it leaves you no money to do the work, I am not sure it’s a good idea.

What it was worth two years ago before the pandemic is irrelevant.

I completely agree with @Laptopsandmouses. If you've stretched yourselves to your limits to buy this house, leaving nothing for doing it up immediately, you'll be miserable when you move in. As another poster mentioned, the present estimated cost of refurbishment will almost certainly have increased a lot by the time you get the work done. I really wouldn't want to do it, in your position. To quote Mr Micawber, "Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery."

I'd cost what you'd need to update it to a reasonable state and take that off the asking price. If you could make it pleasantly habitable for 50k, then offer £725k. I really wouldn't offer £740k if you then can't afford to upgrade it. You'd be paying every penny you have to live in a dive. The stress of that would be tough on marriage and kids, I'd have thought.

I’d go and view it. Get your head totally straight about whether you could live with it like that for a good few years until you have saved enough to renovate. Bear in mind that jobs always take/cost longer/more than you expect! (That’s from someone who has been living in a half renovated house for a decade and has lost hope of it ever being finished!!)

Your £740 is already a good way below the asking price. You might get it for that, but much lower and you’re getting into cheeky zone. The buyers have already taken great offence at the £700k offers.

The majority of your value increase is probably down to rising house prices I would imagine

@gingerhills

I'd cost what you'd need to update it to a reasonable state and take that off the asking price. If you could make it pleasantly habitable for 50k, then offer £725k. I really wouldn't offer £740k if you then can't afford to upgrade it. You'd be paying every penny you have to live in a dive. The stress of that would be tough on marriage and kids, I'd have thought.

That’s bad maths,

She has 740. If she needs 50 to make it habitable, she needs to offer 690. And they have already rejected 700. She will need a lot more than 50k though.

I'd go round with a builder to get a ballpark figure for the work. Then offer low (700?) with a view to increasing depending on what the builder says. I have no time for that nonsense about not entertaining other offers- if that's their approach then they wouldn't take anything you could afford anyway so who cares? I also suspect it's often just an EA strategy to scare you into making a high first offer.

If they won't let you take a builder round, I'd walk. If they've priced it fairly, it will sell. If not, you can always go back in 6 months when they might be a bit more amenable.

Anything that comes up in the survey but isn't apparent on a viewing is fair play for deductions.

It’s a sellers market at the moment, so why think you can haggle on a house already out of your budget? And not factor in renovation costs? They don’t have to accept your low offer just because it’s all you have.

I would offer £730 then you have £10k wiggle room. You have protection from offering too much if you are buying with a mortgage as the BS will order a valuation which tends to be conservative and if they think it is worth less they will say so. Then you can go back to vendors and say valuation from building society says it is only worth £x amount.

OP, are you and DH really good at DIY or have family in trades who will charge you family rates? If so you would be in a good position but if not consider how much prices are going up, so that means tradesmen will also be putting up their prices.

Id probably echo a lot of other posters here - don't do it.

We did this 2 years ago. House hadn't been touched since it was a new build in the late 50s.

It's been nothing but a money pit - we've had to have central heating fitted, full rewire, new kitchen, bathroom, full replaster, full repaint. Plus all the issues that came up along the way! We still aren't finished and honestly I resent the house now.

It's also miserable having to live in a house, with children, while trying to renovate. You can't enjoy it, everything is dusty / dirty and everything takes longer than you want it to!

I’d go in at £715 and up to £720 if declined on a best and final

Can you provide a link to the property?

Update: we went to see the house today and were massively underwhelmed. It looked huge in the photos and floor plan but felt like the walls were closing in on us whilst we viewed the property- really claustrophobic. The house/walls looked and felt like they were made out of cardboard and it needed a LOT more work doing to it than we'd originally thought. We will not be putting an offer in.

Can you not just offer £230k just so we know whether they’d have accepted your offer or not!