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 understand , but she is in a position to buy her dream home and she does love it.

and if I’m brutally honest she says it’s decorated well, I think she’s looking for excuses to be low balling them.

I wouldn't overpay, I think it is foolish.

I'd buy house two and resell/buy in future if you feel you want to. What you save now on overpaying you can put towards moving costs in future!

I’d keep looking. You already dropped the price for house 1 significantly. Also with older properties, expensive repairs seem to crop up out of nowhere!

Over pay.. Save up.

If you've given them your best and final, just wait and see. There's more than just numbers involved in buying a house, it's emotion too, and buying somewhere that you love (even if draughty) is worth it in the end.

It could also be said it's a piss take to expect a gain of firstly 200k, then 100k on a house 18 months after you bought it, in the current market.

Why are they selling it after only 18mths?

Why is it foolish? In time the house will almost certainly be worth much more than OP pays for it.

Buying and reselling house two will involve two lots of solicitors fees, stamp duty, surveyors fees, removal costs and possibly another period of all the costs associated with renting for a period and the potential that house prices could increase during the time out of the market. Seems a big risk against paying another £50k now on a house that could be worth £100k more in 12 months with some work to remedy the problems.

I make a very small exception to my anti-woo position where house buying is concerned. The basic fact is you don't love either house. One's got draughts, weird layout, no storage. The other's too new or too small for your tastes.

So don't buy either. Keep looking - the right one for you will come up!

(I can explain this in non-woo terms, but it doesn't matter. You'll find your house, and it isn't either of these two.)

House one doesn't sound perfect to me if you can't afford to do the work needed to make it your dream home.

House two sounds much more sensible.

The vast majority of people don't live in their dream home. And often dreams turn out to be not as great as we first think. Houses should be bought with your head not your heart.

What makes a dream house for you? If house 1 truly is it and you plan on being there a long time then go for it. Be prepared to chuck money at it over the years, old houses cost more and come with compromises.
For me, part of a dream house is cost, it needs to not be a financial burden to the extent that when my husband dies (incurable cancer) I'll be able to still afford it and not be forced to move when newly bereaved. So my current house is in a lovely area with a fantastic community and I can afford it on my salary. The house itself is a bit boring, but we are injecting personality with the decor and small layout changes. So it is my dream house because it's everything I need.

Imagine whether you’d be happy to be stuck in either house if you did get into negative equity or couldn’t afford to do it up. How happy would you be in the dream house if you faced a financial squeeze and couldn’t afford holidays etc?

See, I would say that the sellers listing at nearly 25% than they bought it for 18 months ago when the market has fallen since late 2022 in most areas is the piss take (unless the OP's area is a more unusual one where the market has risen). It doesn't sound v likely from what she has written though does it.

I wouldn't touch house 1. You can guarantee it needs more work than you think it does and the seller is getting rid of it suspiciously quickly.

The OP hasn't said anything about moving twice though.
There are lots of assumptions in your post about the house being worth more in 12 months when she is clearly over paying for it at the offered price, never mind the asking price.
There are big risks with House 1- namely overpaying and struggling with the mortgage later, the unknown costs of renovation, which is generally higher than initial estimates (perhaps that's why they are selling!) and the potentially flakey sellers, who are selling after only 18 months also.

I don't think you should buy either. Buying a house at the top of your budget that needs a lot of work is a very bad idea- realistically how will you get the cash you need to maintain it and do it up? If you're spending all your money on the mortgage you can't save and you're unlikely to be able to release enough equity to be able to do it up anytime soon. Houses need maintenance not just expensive modernisation and maintenance itself can swallow up any extra cash you have.

Re the second house I just wouldn't buy a house I didn't love. Regardless of how sensible I thought it was.

House 1 for me and buy some jumpers and slippers!

Parking, proximity to shops and neighbours would probably swing it.

Maybe pop a floorplan up (crop a screenshot maybe) and people might be able to suggest a simple fix to the layout.

Ask yourself how would you feel if someone else suddenly put in an offer and snapped up house 1?

Would you be gutted, wish you'd paid the extra to secure it or relieved and telling yourselves it was fate?

Worth considering.

Also is there an option 3? There'll always be another house further down the line...

I’ve done the beautiful quirky Victorian house. It was a money pit - both in terms of general upkeep and getting it to look the way we wanted it too ( never got there in the end) We then moved to a new build which had bigger rooms than the Victorian villa, much more storage space and was easier to maintain and heat . I adored the old house but the new one is much easier and nicer to live in. And if you spend money on it you can actually see where it’s been spent.
It’s hard if you buy at the top of your budget and you then have to wait ages to get thing looking the way you want. It also causes a lot of worry if your circumstances change for any reason

I wouldn’t buy either. The first one will bleed you dry financially and sounds like it’s going to eat most of your budget leaving very little to work with any way.
The second one will just piss you off because it’s not the first one.
I say keep looking.

Look for house number 3.

I lived in an elegant Victorian stone built house. Lovely high ceilings, coving, forces. The works.

Freezing as fuck.

We couldn’t afford the heating bills so moved. Best thing we ever did. It was freezing all the time in winter.

Except she can't afford it, not in its entirety, that's the point. They can stretch to the asking price but

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)

How long do you muddle along in a house with high upkeep that doesn't meet your needs yet you can't afford to improve?

I don't agree she's low-balled either. There is no way the house has risen in value by that amount in 18 months the way the housing market is currently. They are triers.

Neither are right - you are renting, hang in to find a better option.

I would buy house 1, but only if they meet you at your current offer. Then at least you will have kept back a bit of money for the most urgent works.