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.

What is it you love about house 1, style, outlook, space, location that makes it so much better than house 2 or anywhere else?

How long since you put an offer in? If more than 48 hours, go back and say you'd like a response within next 24 hours so you can consider your options - they won't know what they are! If it's a 'no' go back for a second viewing on house 2 and and decide. Just bear in.mond that if house 1 is older, there could be more to do in the short term that you don't realise.

This. House one isn't going to fulfil your dreams because of the impact on the quality of your life.

I guess I just don't really see how House 1 is that dreamy when you then have some pretty fundamental issues with it - but I will admit I am a bit of a purist about old houses so am internally wincing at the idea that features like fireplaces and windows are 'in the way'.

House 1 sounds like the sort of house that will inevitably always need things doing to it - and the boring sort of things that make no appreciable difference even after you've spent thousands of pounds on them, not the fun aesthetic stuff. And I agree that draughty older houses are likely to be colder - so it's worth considering what your tolerance for that is. I struggle to get my house much above 16° in winter (certainly to do so affordably, but to an extent at all) which is fine for me but would horrify many people. If you really really love it then actually those things may not bother you any more than they do me, but go into it with your eyes open.

No, my most gave no indication that I thought another move was likely. I just listed the financial implications of a potential move.

The OP asked for opinions and I gave mine. This is MN. Posters aren't governed by an authority and policed by an ombudsman....it's an opinion forum. If the OP had wanted professional advice I'm sure her first port of call wouldn't have been a raft of unknowns on an opinion site.

I am indeed projecting my own experience of property developing over the past 35 years, but I'm also taking into account the upcoming market of the next 35 years which seems likely to be on the rise for some foreseeable time due to -
shortage of new housing
an aging population
more people living alone
a lack of social housing

The current market reflects this in that despite Covid, high interest rates and recession the market isn't in free fall, it's holding hard. Good, well maintained property always sells at a premium in any market. The early 90s crash left many people in negative equity but, as they do, the markets rallied.

Your comments on profit/overpaying do not take into account the costs of continuing to rent or the pleasure of living in a house and making a life in a home that touches your heart. Some things are worth a stretch for. In my experience, if you can afford it - and the OP says she can - stretching is never a mistake. If you love the house enough to stretch, and then improve it to make it better (even cleaning works!) then someone else will love it enough to pay a premium.

It's possible to know the cost of everything and the value of nothing.

We're obviously never going to agree on this but different strokes eh.

We bought a house 1 in your scenario (though we had no house 2). We had to overpay to get it and then had to spend 5 years living in it in the state it was in (ok but 1970s kitchen and horrendous carpets etc) before we'd got enough money together to refurbish it.

Now we're trying to sell it (after 9 years in it) and no one wants it! Put it on bang in the middle of the range agents had suggested. Dropped price, still no takers. We won't make any money on it.

House 2. We live in a modern house. So warm in winter and there's still upkeep (leaky roof a few years ago) but nothing major. I have friend in grade 2 listed house, nightmare.

@Twiglets1 of course people can give their opinions, as requested and opinions vary.
They should not, however, be giving financial advice to others because they don't understand the situation and are not qualified to do so. That is irresponsible and potentially dangerous. Anyone who was genuinely qualified would certainly not be doing so on an internet forum.

@Churchview see comment to @Twiglets1
Again, your experience is in a mainly rapidly rising market. I disagree about the trends of the next few years/ decades being all upwards.

'It's possible to know the cost of everything and the value of nothing.'
I don't think this is quite the right quote to use in the circumstances being discussed!

You yourself are giving "financial advice" when you tell people that house prices are falling so be wary of buying, or when you suggest as you nearly always do that houses are overpriced without knowing the postcode or other details.

Financial "advice" is really just personal opinions on forums like Mumsnet because it's unlikely any of us are genuinely qualified as you say.

The OP literally says 'shall I overpay..' Twigs. Take a look!

I've never told anyone not to buy but to weigh up the options carefully. That's not financial advice.

I'm not just referring to this thread, I'm saying that you give "financial advice" aka your opinion all the time on Mumsnet and you have definitely strongly implied in the past that people shouldn't buy properties you think are overpriced. And you seem to think they are all overpriced.

If it's ok for you to give financial advice/your opinion then it's ok for others to also.

I think it pays to be over cautious during these times. It's all very well romanticising the idea of buying the "dream house" but when OP is at the top of their budget, almost certainly overpaying and the house needs a lot of work to actually be their dream, it's quite frankly poor advice.

The poster above has a different view and it's one that's I've seen on here time and time again. People biting off more than they can chew and ending up resenting the house they thought they could make perfect.

I think you are conflating things here Twigs.
I have said that properties are likely over priced when people are discussing a property that has been on the market for many months without selling or is priced higher than the comparables in the area (these can be seen on RM when the OP links to the relevant house).
Suggesting that people carefully weigh up their options on other threads is not the same thing as saying don't buy.
Saying things like property always goes up or it will be a great investment is different and inappropriate.

I will take it as a real compliment that you read my posts in such detail and remember them all. Anyway, I'll leave it here as this is irrelevant to the OP and I have other things to do.

Exactly. We don't live in a pretty instagram account. This is real people's lives.

Take it as a compliment if you want. I think most regular users on here know what sort of advice you normally give and I don't pay much attention to it apart from when you start trying to silence others or promote the YouTuber who predicted a 35% collapse in house prices between 2022-25.

@hotlycontested what are the works you want to do on property 1? I'm interested and it might be telling in terms of what you should do.

Ok so now you're going to think I'm crazy. DP does. It's fairly newly done up hence decor good but I'm pretty sure they haven't done the invisible modernisation - wall insulation etc, which we would want to do. Which makes the recent paint job pointless. Windows recently painted too but we noticed that one of them doesn't close properly, which again suggests papering over the cracks. And then for example we have three pre/teens and house 2 has four fairly equivalent bedrooms all with walk in wardrobes, which is absolutely perfect for us. House 1 has more bedrooms but some bigger than others, some ensuite, some not, so either children don't all get treated equally or you have to even it out by moving things around - which we wouldn't be able to do immediately so we'd end up probably just living with it. No wardrobes built in anywhere and being (mostly) nice square rooms with a fireplace on one wall and a window on another, it's not easy to do without unbalancing the space. I have no idea where the current occupants keep their clothes! Main family bathroom recently refitted but no proper shower, just attachment on bath taps. So you have to deconstruct what they've done to put a shower in, or everyone traipses through someone's bedroom to use one of the ensuites instead. Kitchen is fairly new and perfectly nice (so difficult to justify completely redoing) but very open plan to two other rooms and no pantry/utility so everything on show. We cook a lot and having kitchen mess on display to the whole house really doesn't suit us. They are all the kind of niggles we could just live with, and it's a perfectly pretty house without doing anything to it, but for me it would only be the dream home if it really worked well for us as well as being pretty. As I write it all down I realise how picky I am and how much work it actually is without being anything major at all. And house 2 does almost everything right but isn't pretty.

I’m fairly sure if you got everything you wanted op it would be much further out of your budget than this one is.

@hotlycontested I guess it boils down to what you want the next few years of your life to look like because it's pretty long term, lots of saving, compromise and disruption. But you get the perfect house at the end of it. I'm an easy-life kind of person and I'd always choose less hassle and more money for fun stuff especially with young kids, even if it meant settling for a house I didn't love. But I get that not everyone would. What does your partner think?

Maybe. None of the layout things are significantly more expensive or difficult to get right at the beginning, though, just difficult to change later. It doesn't really matter, I think we've realised that house 1 isn't the one.

He's more attached to house 1 than I am. We both love the bones but I can see the issues and he can't.

With what you have now said @hotlycontested it doesn't sound like house 1 is a dream house for you at all. Maybe someone else, but not you?

How old is the property? Insulating internal walls could cause damp - old houses need to breathe.

I don't follow about wardrobes and unbalancing rooms tbh.

Haha the original offer however cheeky etc it may have sounded was what it was really worth to us and we would have been over the moon with it at that price with all the flaws. The latest offer was based on the beautiful bones and the potential and the fact it's a slow market and we want to not be in limbo. But the more the price crept up the more I could see the flaws. It definitely could be our dream home but it will take work and time to get there, by which time maybe what we want and need will have changed anyway.

I wonder how you would feel if the owners of house 1 did accept your current offer of 950k - excited or anxious?

If the thought of securing it at 950k gives you anxiety then it may be this house is not right for you, however beautiful it is.

But if house 2 doesn't excite you, is it not possible to keep renting a little longer in the hope that something comes up that is beautiful like house 1 but a bit cheaper/better suited to your family? I have stretched myself financially in the past but only for something I love. A house that we were buying purely on practical terms we ended up pulling out of shortly before exchange as the closer it got the colder we felt about it.