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.

House 2. House 1 will stress you out and make you unhappy.

House prices have stagnated in most areas since from Q4 2022 to Q2 2022 so I agree that house 1 was overpriced with the original price it was listed at. Unless it was an unusual area where prices rose in that time.

However, by the time OP made an offer, the house had been reduced to a slightly more realistic (probably still overpriced) £1M. At that point they could have thought 900k was a reasonable offer, which is no more or less than the property had been purchased for 18 months earlier. Or, taking account of the fact that the current owners have spent some money on it (even if "not much had been done to it") and it is OPs "dream house", they could have offered a bit more to try to secure the house.

To offer below 900k was not very likely to get the result OP wanted, which was for their offer to be accepted. I would have gone in with 900k (& justified it on the basis of house price stagnation if that is correct for the particular area) with a view to going up to 950k if I really needed to in order to secure the house of my dreams.

It’s easy to say this but the reality is very different. In your position I would want your dream house but feel you should go for house No 2 as you feel house No 1 is overpriced.

Is 1 actually the top of your maximum budget or the top of what you are wanting to spend? If you can afford 1 and do it up over a period of time you are happy with I would go for it. We bought the dream house with little left for the renovation, two years on we have finished and sold it. The next house is similar in that we will be able to afford the build but nothing much inside!

Life is for enjoying and if you enjoy property it's less scary.

Neither seems right but 2 is the better bet. House 1 isn't your dream house - the idea of it is. A doer upper at the top end of your budget means many years of saving/renovation, all while living in a cold house with exorbitant running costs. I think the shine of it will very quickly wear off once day to day living frustrates you (lack of storage as clutter really builds up). And resentment at how much you paid for it will bug you too. House 1 is the beautiful sofa you fall for (or the beautiful partner), but after you've spent one evening in its uncomfortable bones, you begin to hate it. Don't stretch yourself so much financially for aesthetics.

House 2 isn't period but sounds a much more sensible option you will be both physically and financially comfortable in. And could always move further down the line (the extra £400k you're saving on it would easily facilitate the move). But if you're set on a period house, you will need to carry on the search.

Do the intellectual exercise of halving your budget and looking at what would be a dream house at £400k. Then look at your current options with fresh eyes. I might be cold but you don't make a million pound property purchase on the basis of emotion. Sounds like it's what the current owners did hence why they're selling so quickly.

Wow! I'm blown away by so many replies. Sorry for being slow to return. Just to answer a few of the questions...

Most people don't seem to be questioning our first offer on house 1, but since some are... It is definitely overpriced compared to other similar houses that have sold nearby recently, and compared to its own recent sale price. We'd had a conversation with the EA in which we were told they were keen to sell and encouraged to offer what we thought it was worth, even though that was lower than asking, so we did. Our offer was turned down and we walked away. A few weeks later, after the EA chased us, we raised our offer based on the fact that nothing else comparable had come onto the market since, it's the type of property we prefer, and we would rather move quickly than wait. @Twiglets1 is right, though. The vendors obviously believe in their asking price (actually, they still keep talking about their original asking price being the true value) and now probably don't trust us any more than we trust them.

The reason for selling that we've been given is perfectly plausible and nothing to do with structural problems or a divorce, but who knows? I think they're just as likely to mess us around because they really do think it's worth 1.1 million and suddenly decide they can't part with it for less.

House 2 actually does have other interested buyers, but they're not proceedable at the moment. I think there's more risk of us losing that one than house 1. The issue with it is mainly kerb appeal - something I think we can get past but DP isn't so sure. He's also not as concerned about the issues with house 1 as I am.

Lots of thought provoking stuff on this thread about older houses and how they are not always as perfect as you expect them to be. That's helping to put things in perspective.

Yeah but nothing beats buying the dream house op. We did it, Sure it’s turning into our life’s work. But we love it here and it’s a labour of love. I adore this place and I adore living here. We are a decade in and still doing stuff, we love thinking about it, planning it, seeing the changes,the end result. We are nearly done and I’m just now organising quotes for finak bathroom to be done. Nothing needs to be done immediately. We took our time over everything. One or two major things a year, and taking time to live in it first. And Storage is the easiest thing in thr world to resolve.

but don’t underestimate living somewhere you love. We all spend so much time at homes, many of us have family and friends round, doing it all in a place you love.

being house proud isn’t something you will ever experience until you move into a place you love. Yes it costs, time, money, effort. But is it worth it, absolutely.

Someone I know bought something like House 1.

It was a freezing money pit, and an absolute millstone around their neck. They no longer live there.

I was replying to @qwertyqwertyqwertyqwerty 's post in which she said the OP could always buy house two and sell on later, thus moving twice.

The assumptions about the house being worth more in 12 months time are based on my 35 years experience of developing properties......and I did only say the property 'could' be worth more in 12 months time. (this is a long term prospect for the OP so 12 months is immaterial anyway).

A little work, good presentation, always adds value and has 100% in my experience made for a quick sale, even in the difficult years of the early 90s and in the past 12 months. The last few houses I've bought have had problems (as House One does) that are easily resolvable with reasonably cheap, quick fixes (added storage, change of room layout). The last 5 sold to the first to view for the asking price or more.

If the OP loves the house and will live in it for a long time profit is unimportant. If the situation arises where the house is sold sometime in the future then profit is pretty much guaranteed based on all experience of the past century.

Flaky sellers, renovation costs, stretching to pay a mortgage are all, in the long term, risks worth taking especially when measured against the alternative option of renting.

@Churchview
I realise that you were replying to @qwertyqwertyqwertyqwerty's comment. You did say could but the suggestion from your post is definitely that you thought this likely.

With respect, I think you are projecting your own experience of property developing at a very unusual time of immense growth in house prices compared to historical data (house prices have risen hugely in the past approx 30 years compared to the period prior to this). Just because something has happened in the last 30 years, it does not follow that the same thing is guaranteed to happen in the next 10, 20 or 30 years. In fact, it seems very unlikely to be the same going forwards.
It's true that long term profit is much lower down in terms of importance to the OP compared to the affordability of the debt she might take on, bearing in mind that we live in volatile times, the high costs of whatever work she thinks is necessary, the consideration that these might be far higher than planned, etc. In my opinion, as stated, it would be very foolish to overpay now and take on more debt, with the justification being that she 'could' make money on it in future.

I’m sorry I don’t agree your position either.

@JJathome it doesn't really matter whether you agree or disagree with me if you are basing your decisions on this eg over paying for a house by 100K because it's your 'dream house' or you think you are bound to make a profit in the future.
What matters is when people on here assure other buyers, people they don't know at all, whose finances and personal circumstances they have no information about, in situations where they only have the bare bones of the story, that it's absolutely fine to over pay because it's your dream or whatever. That's not okay at all.

being house proud isn’t something you will ever experience until you move into a place you love. Yes it costs, time, money, effort. But is it worth it, absolutely.

What rubbish, of course you can be house proud of a house you don’t ‘love,’ many people don’t romanticise their homes, doesn’t mean they aren’t happy living in them and don’t look after them, I’m pretty sure the majority of people don’t live in their dream or ideal home it doesn’t mean they aren’t proud of it and their achievement of buying a house in the first place and decorating it to their taste.

Goodness that reads like a bitter little statement.

We bought a 'house 2' which was a really great option BUT we knew it wasn't a forever home. We also knew that if/ when we had to sell it then it would sell quickly - which is exactly what happened. We lived there 5 happy years until we relocated due to my DH's job.

We then moved in to 'house 1' - quite a bit more expensive but knew we would be there for probably the next 15 years or more. It was overpriced and needed tonnes of work due to reconfiguration and it being a probate property. It was really hard work but I really love it now. So glad we took the plunge.

Is this going to be your home for the next 15 years? Does it have good bones? What state are the windows and roof in?
Do you know why the vendors are selling it so quickly?

It is okay for people to give their opinions on here because that is literally what the OP @hotlycontested asked people to do with their opening post by posing the question, "what would you do?"

At the end of the day, all any of us can do on here is give our opinion from the information the OP chooses to include and from our own personal experience. If I was asking for opinions on Mumsnet I would be grateful for any received as they may help me to think the issue through and @hotlycontested has indicated that they are finding the range of responses useful.

However, I wouldn't base any life decisions on what a bunch of random people think on the internet so I really don't think it's necessary for you to try to police what opinions others share on here just because you don't happen to agree with them. The opinions of @JJathome are just as valid as yours and it is up to the OP to decide which they take on board and which they choose to disregard.

House 1 sounds like a nightmare. Hence the current owners selling so quick. That would be my red flag. Maybe it was the 2 winters? Maybe it was the shit layout? Maybe they can’t afford to, or want the disruption, of doing the necessary?
I’d come up with a reasonable excuse as well if I needed to offload it.
The vendors may have overpaid initially (as OP says, nothing comparable has sold for that money) and are looking to recoup their costs and make 100k (at the initial 1.1m), so even 875 was toppy. I think the OP was a bit foolish to budge on the price as she’s the only game in town for the deluded seller.

If it really is a house 1 or 2 decision, it would be house 2.

@hotlycontested you know your local market better than anyone (unless you are willing to share), so only you can comment on whether it is overpriced compared to similar properties.

My personal view is that at the price point you are looking at, moving often can be expensive, but more importantly, when parting with such sums it's important to love what you have purchased. If not, what's the point? You may as well relocate to a cheaper not as nice area and enjoy the financial savings.

My view is that if you plan to stay in the house long term, can afford both the initial cost and the upkeep, then I'd go for house 1.

It really doesn't 🤷

I'd keep looking but indicate to the estate agent of number 1 house that you like it but feel it needs too much work for the price the buyer wants. They might come back to you

Remember the value of houses is only what you are willing to pay, nobody else wants to pay the full price of the dream house either. Do not over stretch yourself

BTW our 'house 1' was seriously overpriced. We actually got a 22% discount from the original listed price (12% off the reduced price). That house was on the market for over a year for the vendors to realise they weren't going to get what they thought it was worth.

In fact they had rejected a higher offer over a year before us. By the time we came along in a proceedable position they were being realistic.

You need to decide how long you want to wait. It sounds like house 1 vendors are entrenched to thinking what their house is worth.

Location, location, location.

Buy House 2.

House 1 sounds like an overpriced money pit with flakey sellers - all of which will be a nightmare.

Or just keep looking.

We bought the house 2 - we renovated and grew to love it - still live there 18 years later - it was great for schools and family life etc. Don't really believe in a forever home for us - different houses required for different stages of life - very hard for one house to carry a lifetime of requirements. Our next move the focus will be on accessibility proximity to pubs, restaurants, coffee shops, theatre etc - and then we'll move into a retirement home - so we don't have to rely on the dcs and they can get on with their lives as can we.