Low offer but first time buyer

[Snoozing5]

DH and I bought an investment property back in 2017 and rented it out to a young family until the end of 2022. We decided to put the house up for sale in March 2023 and the estate agents valued it at £185,000.

Initially we had some interest and accepted an offer 5% under asking price in August last year, but unfortunately, the sale fell through in November due to the bottom of the chain collapsing. We re-listed the house and then reduced the price in January to £175,000. We've had a couple of viewings since but no offers so reduced again last month to £170,000.

We've had an offer from a first time buyer who came to view the house on Friday. They offered £155,000 which we rejected straight away. They came back yesterday with £158,000 and said that was their best and final. Their reasons are that 2 bigger houses on the same street, one with a garage and conservatory, have recently sold for less. That’s true but our house has more land/a bigger back garden with potential to extend/build a garage if required.

I told the agent we’d be in touch early next week with a decision, but we have no idea what to do. I’m so disappointed by the offer compared to the valuation, it’s a huge drop. We’re not in a rush to sell but are paying council tax for the property which isn’t ideal as we have our own home to pay for and part of me just wants to get rid now but I’m gutted that’s the best we can do. I’m also worried that if we reject, we might not get another offer, if any, for months. Also I know first time buyers are hard to come by these days.

Please can I ask what others would do in this situation? Any advice would be greatly appreciated as we are struggling to decide what to do for the best. We are trying to keep emotions out of this but it’s difficult.

What did you buy it for in 2017?

I’d take it, it will likely be worth less then when you first listed it in 2023 as generally house prices have been dropping. You might be able to get a bit more but no guarantees it will be quick or an easy chain. I’d take the first time buyer offer.

@L2435 we paid £115,000. I forgot to mention that we also installed a new bathroom/kitchen after our tenants left.

That's hardly a huge drop, it's only 12k under asking and it's more than you paid for it. Some people have extremely unrealistic expectations.

I suppose in your position it would depend why you have decided to sell rather than keep renting it out?

Their reasons are that 2 bigger houses on the same street, one with a garage and conservatory, have recently sold for less. That’s true but our house has more land/a bigger back garden with potential to extend/build a garage if required.

Do you know how much it costs to build an extension or garage? Your garden with potential is worth a lot less to a buyer than an actual garage.

you bought for £115 7 years ago and have an offer for £158. Yes you invested some money in it but also you rented it out so you made money that way - your mortgage capital if you have one has reduced over that 7 year period which more than offsets the money you invested.

Trying to sell in a slow market will always lead to reducing price. I realise you wanted to get more. But £43k value increase isn't bad and may be what you can get right now. Valuations don't mean much really.

I would accept it because other buyers will have done the same homework re the relative values of those other sold properties. Why are you do wedded to the ‘valuation’? The value is what a buyer will pay. They may not want the expense and hassle of building a garage, do the ‘potential’ isn’t really.

This. The opportunity to spend more money to make something bigger is not the same to a first time buyer as something bigger and easy to use now.

I wouldn't touch their offer tbh. They're being cheeky offer £13K less on a property worth less than £180K and I would bet my bank balance that they'll find some reason (real or not) to try and get the price back down to £155K or less when you get closer to completion/exchange.

If you can afford to wait, I would.

@L2435 we just wanted to offload. There's so many regulations now and we felt it was time to move on. We wanted to use some of the money towards work in our own home and possibly some travelling.

@Pliyo by huge drop, I mean from the original valuation back in 2023 to what we've been offered now

All this! Sell!

It clearly wasn't selling at the £175 plus.

It's been on the market for six months with nothing. You've made a token reduction to £170 which in reality will have little impact.

Your next step will probably be to reduce to £160 anyway in the next few months. Plus by that time you'll have paid x months in Council Tax, insurance etc.

I'd jump at the offer personally. If you reject there's every chance you'll be sitting here in October, with agents advising you to drop to £160, kicking yourself.

If you want to sell now then accept it. Just because the valuation was £180k doesn’t mean it’s worth that. It’s only worth what someone is willing to pay and currently someone is only willing to pay £158k.

If you're not in a rush, decline it. Some very self entitled cheeky buyers out there atm. It's irrelevant what you paid for it - other posters implying that you should accept, just because you're making a profit. I reckon if you hadnt said it was previously rented out, you would get s diffrrent response from posters. MN doesn't like land Lords.

I would accept if they have the right finance, etc
The initial valuation was clearly far too ambitious, in common with many valuations at present. The potential buyer's reasoning for their offer price sounds fair too.

@Livelovebehappy 'Some very self entitled cheeky buyers out there atm'
I'm not sure what you mean by this remark. Do you mean that buyers who don't rush to offer an inflated asking price are very self entitled and cheeky? Do you also think that sellers who list their property at way above market rate (the price a property actually sells for) are also very self entitled and cheeky or are they perfectly reasonable?

Nobody, other than a developer will care about "potential". Other properties which already have garages etc, are selling for less than yours which tells you the market has fallen.

I don't think this is a "cheeky offer", I think you have got purchasers who've done their homework and fully understand your local market.

If you are looking for a profit, hang on and keep your fingers crossed that you can get a better offer. If you want to get shot of a property that's now a burden - sell,

Having space to potentially extend isn't worth as much as the extending already being done. It certainly isn't worth more!

You're looking at £30k+ for a small extension. No way is someone going to pay more for "house I'll need to spend £30k+ on to make it big enough" compared to "house that's big enough already".

And doubly not at the FTB level/a house as cheap as the one in question.

Id accept the offer but it would be staying on the market until after exchange.

I wouldn't let them beat you down further because of the survey either

That 'valuation' was meaningless. You might have sold for that much in 2023, but you might not. But it's not 2023, so you need to let that imaginary figure go. Your house was never actually 'worth' that much.

'Entitled' and 'cheeky' Jesus I've heard it all now. It's not entitled to offer what you'd be willing to pay and no more. It's not cheeky to offer what is affordable under current conditions taking into account cost of living and interest rates. What is entitled is expecting to have the exact figure you want for your property despite the market not being able to provide that figure.

You're in profit then. If you no longer want to rent it our then I'd accept the offer and be glad I could help someone e get their own home.

I know you wanted x for the property, but valuations from EAs mean nothing in this market. It was really just to get you to sign with them. You might have to accept at some point that It's a buyer's market. Your buyers are offering 158, take it or leave it.

Buyers have more choice than sellers and they want more for their money considering the high interest rates and now increasing unemployment rate. They are being careful, rightly so. Of course they want a home that has all the things they need, and they have put a garage on that list of needs for themselves. If you don't have what they need, it's common sense for them to offer a reduced price.

Your land and "potential" doesn't mean anything in this market, to most buyers. "Potential" is non-existent. The fact is, buyers want more for their money, not to pay more for non-existent stuff. It's costing a lot to do up anything these days anyways, so that negates the "potential". Potential only makes sense if you FTB is paying 1-2% interest rate, not 5%. If your property doesn't have what they need, they will reduce the price to build what they need - it's common sense. Help me understand: Why would they pay you more (e.g. the 170 price you want), and then pay more for building in a garage?

As a FTB, I'd also be put off an ex-rental property. Renters don't look after it as well as owners, plus as a renter, I know that landlords do things cheaply too, and often don't look after the property either.

Like others have said, take it or leave it. Yours buyers certainly will. They know they can hold out for something they actually want. This market is not going to change for a few years, imo. The wars and fuel crises and political issues around the world aren't going to fix themselves anytime soon. You can also blame Brexit.

If it helps, This is what the FTB sees:
Ex-Rental for years (off-putting),
Basic bathroom and kitchen for a rental standard (meh)
Vendor bought it at 115 (they got a deal at 1-2% interest rate)
Doesn't have everything i need (will cost me more to get what i need)
Potential (meh!) - it's non-existent

Offer: 158 tops.

I think it's a good offer in this market.

If I've read that right it's been on at 175k since january. 160k in the bank would have earned you 3-4k since then and you're sitting on an empty property which will incur double council tax soon enough? Why are you chasing the market down?

And when you factor in the CGT you'll pay, there's like 9.5k difference between what you're asking and what you're getting. Surely if you'd have priced at 158k in January you'd be in a similar position as if you got a 170k offer now but without all the hassle? Do you want to still be holding out in December when your pipes might freeze over? Do houses not need maintaining or something?