Overpay for dream house or settle for well priced second best?

[hotlycontested]

House 1 was put on the market at 1.1 million a few months ago, clearly overpriced for the local market (current owner paid 900k about 18 months ago, not done much to it, market not really moved). They dropped to 1 million a few weeks later. We viewed after the reduction. It is a beautiful house and could be our dream home with quite a lot of work (which would have to wait as there's no more money in the budget) but as it stands at the moment it's not perfect. Draughty old period house, decently decorated but a couple of weird room arrangements and no storage (and nowhere obvious to put storage without fairly significant work - lots of windows and fireplaces in the way!). We love the bones of the house but think it's still overpriced. We offered a slightly cheeky 875k a few weeks ago, which was rejected. Since then the agent has called us a couple of times to try and convince us to increase our offer, but the vendor isn't prepared to negotiate on price at all. We have now increased our offer to a best and final of 950k, which they are taking their time to think about. Our gut feeling is that they're flakey and even if we did reach agreement on price they might pull out at a later point. We can afford the extra 50k to go to the asking price, just don't really want to pay 10% more than we think it's worth.

House 2 started at 700k, now on at 650k. We don't love this house but it has a lot of advantages - great location, good size, more modern than house 1 so cheaper to run, etc. It's a nice house and we think that it is sensibly priced. We would want to extend it a bit and there is room in the budget to do that. The vendor seems easygoing and our hunch is that this would be a smoother transaction. We could be happy there but it probably won't ever be our dream home.

We're in rented so ready to go, no chain. Should be a good prospect.

What would you do? Just pay the asking price for house 1? Settle for house 2? Keep looking? We were hoping for a bit more of a spring rush but there's not a lot out there at all in our local area and we don't want to just wait and pay rent indefinitely.

I’d buy the dream home , or keep looking, I’d not settle for something I didn’t love.

This 100% this. If you are going to live in it forever then always pay 'extra' for it if you can afford it if its your dream house

Sounds a false economy to me to buy house 2, once you have paid for extensions and renovations it will bring you close to the price of house 1 plus you will never be content there so will probably incur another set of moving costs, personally I would pay the 50k for a dream house, it’s quite a small amount in relation to the value.

Also once you buy it the value becomes what you paid, if you’re not looking to move short term, you will ultimately get your money back

If you can't easily afford the upkeep on the dream house, then I would be wary of committing yourself. A do-er upper is not usually a top-of-budget house.

Do not underestimate the cost of heating a draughty house in winter.

I had this recently and we went for the "sensible" house that we both never loved.

It fell through recently (sellers not us) and we are so relieved and feel it's a sign! I would say definitely go for dream house if you can!

Wait and see if they accept your offer, if not go to full price. I agree that if you love this house buy it, although there will be another house you love if you are willing to wait. I wouldn't go with the 'it'll do for now' house.

I wouldn't buy house 1, renovations are expensive and if you're at the top of your budget already you will be looking at years of saving, gradual works and improvements before it actually turns into your "dream home".

Home 2 sounds like a perfectly lovely home where you could live comfortably, financially as well as practically. I think the notion of the "dream home" is overrated, you should make this decision with your head not heart.

I agree with @Leafalotta
The term 'dream house' is so overrated. It's a modern construct, driven by modern marketing that's really unhelpful in every way imo.

You would be crazy to overpay for house 1. As the market has fallen in the great majority of areas since 18 months ago, it is very likely to be worth less than the 900K that they paid, not more. Your first offer was probably very reasonable. The estate agent seems to think so too, or they would not have called you twice to try to persuade you to negotiate (presumably they have had no other interest or they would not have bothered). Apart from the fact that over paying in a falling market is extremely unwise, it's a house that requires significant work and a lot more expense anyway, so definitely not ideal as it stands. Thirdly, why are they selling so rapidly? Is this a divorcing couple? You say they seem flakey, your instinct may well be right.

House 2 sounds like a much more sensible choice with many advantages.

Of course, if you aren't convinced, you don't need to rush to buy either. You can wait and see if something more suitable comes up later in the year.

Seems crazy to buy a house that you don't love

How long til you can make house 1 the way you want it?

Keep looking or house 2.

Take a look at Comedowntothewoods on Instagram.

They bought their dream house (old Victorian pile) and it's basically a money pit and they were experienced renovators. Buyers regret still going strong 3 years later. The renovations they want are basically unaffordable now.

Or claudzgaff on Instagram again experienced renovators, recently bought a massive house that needs work and it is not going smoothly.

I feel like an offer of 875k on a house listed at a million that had recently fallen by 100k was more than slightly cheeky tbh. They were never going to accept it but by offering less than 900k initially you have probably got them worried about the possibility of you being the sort of people who will drastically reduce your offer close to Exchange. Going from 875 to 950k hardly helped rebuild the trust as it made you look flaky as your offers are all over the place.

So you are now at a point where you don't trust them and they don't trust you.

They are probably talking it over and telling the EA they don't know if they can trust you. The EA will be encouraging them to accept 950k as that it a decent offer on a house listed at 1£M. I expect in the end, they will accept your offer as long as they don't get offered the same by someone else who hasn't first gone in with an unrealistically low offer.

Personally, I would prefer to stretch myself for a house I love than settle for a cheaper one I don't. But it sounds like you shouldn't offer any more than 950k on this particular house so if it isn't accepted, I would keep looking.

Except that house 1 also needs extensive work to get it to OP's 'dream house' status. It sounds like house 2 will still be cheaper overall before you then begin to account for the additional upkeep costs of house 1.

I would go for house 2. Plenty of money left over to get it how I wanted it and lower ongoing costs. I would be worried about overstretching with house 1 in case my circumstances changed, which would very quickly tarnish any feelings of 'dream house'.

Thing is if she doesn’t love it now, she’s likely never to love it and the work will just be a ballache. Sure it’s the practical choice but practicality is not the only factor when buying a home for most people; your heart needs to be in it too. Plus she can take her time over renovations.

i feel like an offer of 875k on a house listed at a million that had recently fallen by 100k was more than slightly cheeky tbh

I agree, that’s a piss take.

House 1 doesn't sound like your dream home if there's no storage and the layout is wrong. That's my idea of a compromise house. But if you love it and can afford it, why buy the other one and spend all the money and disruption trying to get it a bit more like what you truly want?

But it’s not her idea of a compromise house. It’s yours.

Do not underestimate the work involved with old and draughty houses. Things like slugs in downstairs rooms due to gaps in walls and floorboards. Mice... these houses are generally money pits and it seems a hellava lot to spend. I'd be tempted to keep looking. Are you very restricted as to area?

House 1! You'll regret it otherwise.

huh? I bought an old and draughty house, no slugs,,,😂

Thanks all for your replies. There are definitely two sides and we’re going round in all the same circles that are being discussed here!

House 1 - as long as you have budget left to do it up. A draughty old house with no storage will get old very quickly.

Otherwise keep looking for a practical house you do love

I bought a house because I loved its bones and honestly I never had the time or money to fix it so sold a few years later and bought modern and mostly done home and it’s so much easier!!

It doesn't sound as though you can afford house 1 or at least that it will be stretch. Living without what you want in a money pit is, I imagine, miserable. It would also be hard to sell on if you can't afford the renovation and it's looking tatty. Why are they selling?

House 2 sounds far more sensible.

No house is worth more to the buyer than they are prepared to pay for it.

I'll never buy a house I don't love again. It's always a regret and, like a pp said, if it falls through the relief clearly shows how your heart wasn't in it.

Re house one, if they're still thinking about your offer then they haven't said no. Could you up the anti by booking viewings for other houses through the same agent? Word will get back you're moving on and the vendor might snatch your hand off.

Alternatively, if you don't up your budget, given that you're not seeing other stuff that you fancy flying to the market, could you end up losing your dream house only to spend the amount you've saved on rent over the course of the next 12 months?

In the past I've paid a bit over the odds for houses I've really wanted in order to secure them. It's never been a mistake financially. If you stay anywhere a few years and make improvements it will almost certainly sell for more than you paid for it .

Perhaps. I think our approaches and expectations are different though, as I'm unlikely to ever be able to afford my dream home and don't feel the need to be in love with my home. There is a huge range between 'love' and 'hate', and OP wouldn't have shortlisted it if she didn't like it a lot. You need a sensible balance between head and heart IMO, and an overpriced house that will stretch your budget and then need work on top will never fit that compromise.

We chose our house based on the best we could find combining affordability, location, and certain 'must haves' (no of bedrooms, driveway etc). I like it a lot and it was the frontrunner by a long way, it fits our needs well and we've been very happy here, but I was never in love. We have done extensive work to it, which was indeed a ball ache (not least because we did most of it ourselves with a newborn in tow), but the pain was only in the moment and that has in no way diminished our liking for the house long term.
We could have stretched ourselves more financially, but we made the decision not to risk it and I'm very glad we didn't. In the 14yrs we've been here, we've had job losses, large unexpected bills, I've been PT whilst DCs are younger, I had to take a period of time off after a bereavement, there are the recent rate rises, and of course there was Covid when I couldn't work for months on end (a combo of schools shut/no childcare and restrictions not allowing me to work) - we would have been knackered with all of these if we'd spent the top of what was available to us. In the better times, we've had spare for holidays, bought (second hand) cars outright, been able to save etc. I would take all this for a house I like a lot vs constantly worrying about money whilst eating beans on toast everyday in one I love. It's a bit like work really, where I think it is better to do a job you like well enough which also pays decently and works around your family over something that is your passion but pays NMW and sees you struggling with bills every month.