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.

I would take the offer. Things are going to get much more uncertain after July, interest rates will probably rise in the New Year .( unless the magic money tree materialises😹)

A bird in the hand….

Hardly anything new, people seem to think of a property as some kind of magic money tree and not a potential major liability that can have things go wrong with it. The risk to reward calculations are based on la la land 10% yoy eternal house price rises.

Take it or wait until the other better houses who are also cheaper have been sold and hope no one else in the area lists their house at a reasonable price in the meantime. Then you can dream on again at selling it for 150k as the market will have moved on.

A garage/conservatory is worth far more than a bit of extra land.

This!

but our house has more land/a bigger back garden with potential to extend/build a garage if required.

Do you have any idea how much it costs to build a garage these days? Or a conservatory?

It’s not just the cost of mortgages. Building works are absolutely extortionate.

They have offered lower because your house IS worth less. It does not have those amenities thus is less valuable to people.

You would be very naive to believe that someone with a 158k budget would be able to afford to build a garage. It could take them a decade to save up for that. What they are doing is conceding for a cheaper house. But that means you need to budge.

I have seen a lot of houses with big gardens sit on the market over the last year where the owners think their houses are worth far more than those around them because of the size of the garden. And that would have been a correct assumption in 2019. But, in 2024, it’s all about the floor space you are offering and what potential buyers do not have to build.

@KievLoverTwo
bang on point!

As a FTB, I am looking at floor space.
If it's not there and i have to "build" it, I expect the house price to be lowered.
I won't budge because it's me facing the 5% interest rates.

Also FTB. I have mostly refused to look at properties with no garage.

Or, if I have to put a manky shed in the back garden to store my £600 BBQ and thousands of pounds worth of tools and gardening equipment, they had better be offering spectacular value for money.

Thank you for all the responses so far, we certainly have a lot to think about over the next day.

You said that it was an investment but you also said you were struggling to keep the emotion out of it. Those two things don’t work well together. If you don’t act quickly you will lose even more of your investment.

Why don’t you call around a bunch of builders and conservatory places on Monday to find out what the cheapest, most basic version of those two things would cost? They will want to come out and quote, just put your foot down and say “what is the cheapest quote you have given out over the last year please.”?

Then add those sums to my future FTB mortgage: in Spring 2022 I was offered 2.77% and this spring I am being offered 5.3%. What do those quotes at these rates add to the lifetime of the mortgage? What will your house plus those works cost over the lifetime of the mortgage on both 2022 and 2024 lending rates?

Those 15 years of cheap mortgages are never, ever coming back.

Hopefully you will be able to reduce it back to a pen and paper calculation, get rid of the emotion and make a level headed decision on what you find out.

Do not let EAs and their bluster confuse matters.

Good luck.

I'd bite their hand off.
Sounds like a good offer to me

What would you accept?
counter offer with your lowest number.

Still not a huge drop. We bought our flat for 345k in 2016 and sold it for 315k in 2021. Still more than you paid for it so be happy with that.