What adds value?

[wereonthemarket]

So there's a house we are thinking of offering on - sold in 2021 for £380,000. It's on the market for £435,000.

They've redone the kitchen and bathrooms and changed fitted wardrobes for different fitted wardrobes and changed the flooring. We would probably change these again as they look like they've been done on a budget.

House prices in the area seem to be quite static and, if anything, decreased slightly over the past 2 years. Do you think that the price increase is justified? Or do you think we can offer the £380,000 they paid without seeming cheeky?

Very cheeky - if I were the vendor I wouldn’t even respond

They bought it in 2021 and already moving out? I think it's cheeky they're trying to get 55k extra. Do I think 380k is cheeky. Not really. They probably overpaid for in back in 2021 anyway.

You have to work out if you really want it, what you think it's worth and what you think they'll accept.

I personally would be suspicious about them moving out so soon. I wouldn't believe a word the EA tells you.

It’s only worth what someone is willing to pay but as a vendor I wouldn’t entertain that offer unless I was absolutely desperate to sell. It sounds like they’ve spent quite a bit on it.

they'd have to prove that wouldn't they? if it's a quality kitchen, bathroom and flooring. there should be receipts. it was only in 2021. and if they spent a lot on it, why are they suddenly leaving

They’ve probably spent a minimum of 30k and could be a lot more, I personally wouldn’t offer below 400k. I would be interested to know why they have spent so much yet moving on so quick in case it’s tricky neighbours etc!

I think even with the market as it is now most houses are still up in value a fair bit compared to 2021.

Based on what you've said

• As a buyer, I wouldn't pay £435k
• As a vendor, I wouldn't accept £380k

On that basis this isn't the house for you.

Find a different similar house in the area and offer the £380k you think a house of that size is worth on a reno project.

The works you describe could cost quite a lot - even if the units themselves are of cheaper quality the labour costs the same. So say they spent 25-35k. Add the stamp duty and agent fees they are probably just breaking even or a small loss. Do you know why they are selling so quickly? Was it in need of updating before?
Offer what you like, but don't be surprised if they turn you down flat.
But to answer the question in your title, normally adding square footage adds the most value, but a new kitchen and bathroom should at least get the return of what they cost, as long as in keeping with the area (no point putting in a £50k kitchen in a house worth £300k), and a general renovation could certainly add value. My house was tenanted for years. I didn't add space, but improved everything inside. It's definitely worth more than what I paid plus spent renovating (I also bought in 2021).

Thanks everyone for the opinions.

Apparently the reason for moving is he'd just bought the house when entering a new relationship- both of them have their own houses and they are selling both and moving in together now. Obviously I've no way of knowing if this is true.

Tempted to just offer £380 and see what happens 😂

With inflation over the last couple of years, even if they had done nothing, £380,000 would be worth less and so the house would be worth more. Say inflation was 5% per year and they bought it around 2 yeara ago the £380,000 would cost £420,000 today.

It's not cheeky to offer 380k if you think that is what it is worth to you taking the market in your area into account (sounds as if prices near you haven't risen much since 2021). My understanding (from estate agents) is that new kitchens/ bathrooms don't really add that much value in general, because they may not be to a buyer's taste. If they went from 30 year old kitchen to top of the range, that would make a difference but it sounds as if that may not be the case.

That's not how it works. There is no rule that says that house prices must rise at the same rate as inflation. At present, real house prices have fallen very significantly in the last 18 months- 2 years, depending on the area.

Offer what you are comfortable offering with the prospect of losing the house if too low.
We are not in the same economic climate as 2021, things are very much reversing now, soon it will be worth less than 380 (they know that) so they may accept it.

The market is different in different parts of the country, and there are even things that create micro areas of difference, but, as a whole prices went up quite a lot in 21 and 22 (especially if bought in early 21) before stabilising recently. So, even if they had done nothing to it, I would expect it to sell for more than the 2021 price.
However, they have done the two most inconvenient things to have done (try living with either no bathroom or no kitchen for a while), neither of which are cheap in terms of fittings nor labour..

So, whereas in any property sale, a house is only "worth" what someone will pay for it, I think you are being naively optimistic to think £380 is a good starting point for clinching a deal.
Of course, if you have done lots of research for what similar properties are going for where you live, and think it is very overpriced compared with what else you could get for £430K or for £380K then you begin to have some credence.
On what you describe, you don't.

You could do that - offer 380k to see what happens. I would say it’s very unlikely they would accept as the offer seems very low compared to what they paid and the list of improvements they’ve made but you never know. Maybe it starts a conversation, only really worthwhile if you have some flexibility on price.

Kitchens & Bathrooms aren’t cheap even ones that don’t look particularly high end. They will probably be hoping to recoup their costs at least, which means you may not be able to reach an agreement with them. You seem a long way apart & may be better looking for a cheaper renovation project as @GreatGateauxsby suggests. I think then you will be shocked at the cost & inconvenience of new kitchens & bathrooms but at least you will end up with something you like.

It seems a shame to rip out a new kitchen & bathroom less than 3 years old just because it’s not to your personal taste. I think I would pass on this property and wait for another one to come along where you DO like the existing kitchen & bathroom or where the property is priced lower to reflect the fact they both need updating.

Any reasonable offer (to the vendors) would probably need to start with a 4, perhaps £400k, given the level of improvements.

I don't expect they'd take you seriously if your opening offer is £380k, so be prepared for them not to engage with you following, if you do.

It amazes me how the English house market works. You’d be chased down the street with even a suggestion of a cheeky offer like that in Scotland. Whatever the home report is is the starting price surely?
I just don’t get the sense of entitlement

It doesn't have a home report because we aren't in Scotland. In England you can advertise your house for sale at any price you choose.

I'd ask yourself how much do you actually want the house? I think if you were to offer £380k there's a good chance you'll write yourself out of the running as they won't want to sell to you.
Whilst I'm not necessarily saying their price is justified, for what it's worth we bought in 2021 and had to have the house valued for re-mortgage recently. We've made some cosmetic updates but not touched bathroom or kitchen yet and our house value has increased by £80k since we bought it.

If you're serious about the house I'd offer £400k. Offering what he paid for it is likely to be insulting to him.

How much do you want the house? I'm very much a cheeky offer type of buyer, however if he paid £380k he will have also incurred other expenses (stamp duty, legal costs) so that will feel like a loss to him. I'd probably work out what those costs were and offer that so he feels like he breaking even.

That's not what I meant. I agree that house prices are to a certain extent seperate from inflation. I meant that money is worth a diffent amount when inflation is high and so everything will be more expensive in terms of the pounds you are spending,even when the 'price' of it is staying the same. like paying more for frozen chips at the supermarket.

I just used the Nationwide house price calculator using my own postcode and it suggests properties in my postcode have increased by 9% from Quarter 1 in 2021 to Quarter 4 in 2023 (2024 not yet available).

Obviously this is a rough guide and will vary by region but you could use the calculator putting in the postcode of this property to see what has happened generally to prices in that area.

Assuming prices have increased, you can see it is unlikely they will accept the same price they paid for the property in 2021 having put in a new kitchen, bathroom, flooring etc.

Honestly - it's definitely not a dream house or the only option, we are of the mindset that something else will come up. So inclined to offer and if they say no, that's fine.

Thanks I'll have a look.