Lucky escape or missed opportunity?

[firstworldprob]

Please talk some sense into me. I am irrationally disappointed tonight on missing out on a potential nightmare/eventual dream property.
Yes I have name changed and realise we are so lucky compared to 95% of people right now. We had our sights on a house in a fab location. It needed modernisation. We had our architect booked to see it. It was just about within budget if we sold at or just below market value. It was about 50% LESS than the sold price of a ‘done’ house in the same location last year and our only chance really to buy there. (We are in a slightly cheaper area though our house is nicer/bigger at moment though we would extend the other house and it would eventually be much bigger). We have been on the market for three weeks (same agent) and a few offers but only one of them was proceedable. Agents had made out that they did want us to be the purchasers as they had signed up other houses on the back of ours. The prospective next house has lingered a bit on the market. Now someone has come in at about 10% over asking price and agent has said if we can’t match it and are not proceedable, we are out. They then tell us that the building work is going to cost even more than we were initially led to believe. (We wanted our architect to give us some options this week but had some ballpark idea). We were slightly dreading the building work but could see the massive potential for a very long-term house. We are late 40s, mortgage free but the next step up requires a big loan. We don’t see current house as forever house anymore. Should we sit tight or try to get ours under offer or pull off and wait for spring? DH now resigned to walking away from the whole market. Does this sound like the agent is messing us around/selling to their mates? The proceeds of house are going to an organisation… Why would anyone offer 10% over right now if there is no other serious contender for the property?

Sounds like the agent knows full well you can afford to better the apparently existing new offer due to your financial position and is trying it on. Maybe you over egged the enthusiasm?
I’d walk away.
I’d also question why you’d want to mortgage up at your age in life. There’s a very real change in peoples perspectives when they get into their 50’s and working for another 17 years fills most people with dread, and they want, where possible, to retire at 60.
Each to their own of course, but I’d side with your husband (who already can’t be arsed with this by the sounds of it).

Sounds like agent is driving the price up. Walk away.

Developers often pay over the odds for detached properties that they can demolish and put several small houses on the plot. It was a nightmare for us as we found our dream place - on a 0.5 acre plot. Developers were all over it.

We got it in the end by going 10% over asking price and even then we weren’t the highest bidder. The lady selling it wanted it to go to a family and not a developer, although it sounds like there’s no heart strings to pull for the seller.

I would add that the cost quoted by the architect is never the same as the builders. You also need nerves of steel and a healthy contingency as unexpected things crop up. For us they found a massive soak away under the house which had to be filled (cost tens of thousands) and a whole host of other things.

We don’t regret it for one minute though. We are getting our dream house in our dream location. We have had several “what have we done” moments though!!!

Thanks both. Why would they do that when ours is also with them and several people interested in ours only listed with them as they want our house but also need to sell? 10% over isn’t a few k, sadly it’s six figures plus massive renovation costs on top. When I said we couldn’t go up to that, they gave an even higher estimate for the works needed so sounds like they’re trying to deter us.

It does sound like the agents are trying to deter you for some reason. Why would an agent be quoting renovation costs to you? That's not their area of expertise?

It’s a lucky escape. You say it was 50% of a done house sold at the peak boom.
Now that’s gone up to 55%, plus peak boom was just that, prices are now dropping.
Now add on the horrendous renovation costs, plus the year or so to do it, and you’ll end up paying most likely the same price as a renovated house, which you said you couldn’t afford in the first place.

in our 50s and went from mortgage free to mortgage and renovation….

firstly we missed out on a couple of places in favourite area, which I was really torn about but in retrospect was fine as something more suited to us did come up.

secondly the one we did buy turned into more of a renovation than we thought, We got tenders in just pre covid,they would now be eye watering. As it is we spent £200k in all from income and savings and have a £200k mortgage we have a plan to pay by 58.

so you may well have a lucky escape.

Renovation projects are eye wateringly expensive at the moment. I have done three and wouldn't start another one at the moment as the costs are so high. Chalk this one down to experience. The right house will come along at the right time if you are meant to do a project house. You aren't in a rush to move so you have the luxury of patience. It took us 5 years of looking to find our current house but it was definitely worth the wait.

Not saying this is the case in your situation but we went to final bids on a house once and I am convinced there were no other real bidders as we only raised our offer by £500 and still got the house.

The agent really won’t care that your house is on with them. Ultimately they have to take all offers to the seller, why wouldn’t they take a higher offer and note that you need to match it?

Honestly, in the current climate, I would seriously question whether any renovation project is a financially good idea. Labour and materials costs seem to be skyrocketing - look at all the threads about how builders won't guarantee prices for more than a week, because they're going up so quickly, and how they're struggling to quote at prices people can accept, and so on.

So, leaving aside any potential estate agent shenanigans, I'd only go for a renovation project if I a) had absolutely oodles of spare cash lying around to cover price rises and inevitable contingencies, or b) could live with it in its current state for the foreseeable future and make changes as part of a very long-term project, or c) were incredibly handy myself, or had loads of family connections to the building trade that would make it possible to bring the costs right down. Absent at least one of those factors, I don't see how buying a house of this kind is viable at the moment.

You are all making me feel better, thank you. Turns out it is a local cash buyer who grew up there and doesn’t need to sell to buy it. (That figures, it’s a wealthy area so we cannot compete with that). I hear what you’re all saying about the renovation costs could be the same as buying a ‘done’ house. The problem is stamp duty as anything over £1.5m attracts 12% on the final increment and in that area that’s a decent minority of the price. So basically in the current mortgage market we couldn’t afford the upfront mortgage to buy a ‘done’ place whereas if we did a superficial job to make the place habitable, we could wait for a year or two till rates come down to even 3% and several investments come in. I realise we are very lucky hence my user name and coming on here to vent rather than to people in real life who will have much much greater struggles right now.

I would disagree with the rapidly spiralling costs comment above. Yes, over the last 24 months there have been shortages but things have very much stabilised at the moment. My quotes from last November are about where they are now. No shortages, although long lead times on some items.

There is, however, a labour shortage post Brexit. Daily rates have increased significantly. A builder with in house Labour who doesn’t rely on subcontractors is a godsend. Unfortunately they get booked up and some won’t even quote as they know their availability doesn’t match your timescales.

I started talking to builders almost two years before the work started so they knew the job was on the radar. They were all invited to tender and two of them had deliberately held back on booking any other major works (both had huge lists of interested customers if they didn’t win). It meant that they were able to start literally the month after planning was granted.

It sounds like your house is pretty similar to ours. Rubbish house in fabulous location. Ridiculous prices for “done” houses plus stamp duty. If you have the funds then in my experience it is worth it. Estate agents have valued our new house at double what we will be spending on it. It’s honestly VERY scary though and you have to work out your limits.