Overpriced property- What to offer?

[WayTooBigForYourBoots]

Hoping for some advice on how to gauge the value of a property in the current market. We have seen a house we like but it seems very overpriced compared to others we have seen in the same area.
There hasn’t been any recent sales on the same street to compare, but we do know the property price when it was last sold which was 6-7 years ago. There has been no changes made to the property since the last sale so any increase in value would be purely due to the change in the market.
What % extra should we look to add to the last sale price to come up with a reasonable offer? Or what is the maximum % increase they should expect to get from what they paid?

We saw another house in the same area that was also last sold 6-7 years ago, and has an asking price of 10% more than the last sold price which we thought could be a helpful guide, but that is a new build (so has probably lost some value?) and has had a lot of improvements done including landscaping the garden (which has increased the value) so we’re not sure if the price increase is comparable as the house we are looking at isn’t a new build or had any improvements done.

I don't think anyone cam answer this for you. You will need to do your research kn the local market and go from there. What it sold for 7 years ago is immaterial.

I think the question is how much do you like it and how much are you willing to pay if first offer is refused?

You can offer what you want. The owners don’t have to accept it despite the well-researched evidence of your arguments. If they are not in a rush to sell then they can sit back and wait for the best price.

(This is what happened to a family member who wanted a house, on balance, more than the owners wanted to sell it. The house was overpriced for the area and the owners rejected all offers under the asking price, which was their prerogative. My relative really wanted the house so ended up offering the asking price to get it)

Presumably their house will have been valued by the local estate agents who know the current market.
you can offer what you want, but they can either accept or laugh you out of the door.

Nobody can say. The owner has put it on the market for what they think it's worth. Even if it's unrealistic, they may not be willing to reduce by much.

Can you share a link to the property? It might be easier to comment.

I was talking to an estate agent the other day who admitted that they're finding it hard to value properties at the moment as the market is so unpredictable.

I posted on here recently about a house I thought was overpriced - was new build 5 years old, asking price was up about 20%. It actually went to sealed bids after an open day. 🤷‍♀️

If someone put a low offer on my house saying that it is over priced compared to a house nearby then I would say ‘but my house is the one you want to buy and buy the other house then’ !!
Everyone’s circumstances are different. Similar Lower priced houses may want a very quick sale cos they have found their dream house or that they bought cheaply and have made lots of money on it.

I wouldn't bother. If a house is very overpriced then the sellers are likely being unrealistic.

The only way they will get more realistic is by the market ignoring their silly price and letting the place languish until they come to their senses.

Or maybe they were right after all and someone will come along who is interested.

This.

Don’t focus on what happened 7 years ago. Focus on what houses are doing now in your surroundings streets & local area.

You can’t base your offer on what it sold for 7 years ago and definitely what a completely different house sold for 7 years ago. Our house sold last year and in the 7 years we’d had it, the value went up by 44% and it was still a work in progress. It’s all market, area and house dependent.

You have seen other houses in the area so you have an idea of ballpark figures. You need to be objective - does this house have a better layout, a driveway big enough for 2 or 3 cars, a bigger garden or south facing garden, is it in a better state of repair than the other houses, is the location better? If it genuinely isn’t better than other houses on the market, then you offer around that mark. If it is, you work out what those better things are worth to you. Set a figure that is your top amount, the amount you’d feel uncomfortable going over. If that number is significantly lower than the asking price (more than 20%), offer that and if they refuse, then that’s it. If it’s slightly under offer, pick a number slightly lower than your max so you have room to negotiate up but stop at your maximum and walk away.

They don’t have to sell it to you for lower than they want but equally you don’t have to pay more than you think it’s worth. You just need to be prepared to walk away. If you aren’t prepared to walk away, it’s not overpriced.

A gous eis only really worth what you're willing to pay. You may think it its overpriced relative to others in the area but there's reason why you're looking at his one and not the others. Location more desirable? Larger garden?

You are well within your rights to pit in a lower offer but be prepared for it to be rejected.

Often vendors who price above the market value either are just floating the idea of selling for interest or need a higher price to move on etc.

In these situations its often only asking price that will shift the house.

We were in that position, loved the house, offered lower and ended up paying asking price because at the end of the day we didn't want to miss out on our forever house over £20k.

Good luck!

*a house

Nationwide have a site you can put the postcode and previous sale price in and it will be give you a guide for current value based in local trends

Search for nationwide house price index

The value is what you are prepared to pay for it. There isn't a formula that will give you a lower figure than the second price that you can then wave in front of the vendor and they then capitulate and give it to you for 20% leas than the current sale price.

If they want to hold out for more they will and they aren't obliged to do anything else.

If you want to offer 20% under or 30% under or 50% under for that matter then go ahead. They might accept it, they might just refuse it or, most likely, they'll open up a negotiation

Thanks bookgirl for probably the only helpful response!

To the other unhelpful comments- Houses obviously have a value range they are worth and to people saying it’s worth is only based on what a person is willing to pay that’s only part of it otherwise there would not be surveyors etc. I am sure they don’t value houses by asking potential buyers what they would pay for it. I am obviously not asking for advice on that aspect which we will consider separately to the market rate I am asking advice on how best to ascertain market value. The particular estate agent is known for their over inflated prices. and Yes an offer can be refused but it can also be accepted and nobody wants to pay for solicitors and surveyors to find the mortgage is refused because you agreed a price way over what it’s actually worth.

Get subject to survey

i or feted on a house and it was accepted, but when the survey came back - paid for survey by me, no mortgage survey - it was worth £15 k less than I’d offered with a few major flaws. I offered to lower price they refused and agents wanted survey - I said I’d sell it to them.. they didn’t want to pay so I walked away

nobody wants to pay for solicitors and surveyors to find the mortgage is refused because you agreed a price way over what it’s actually worth.
I've only ever known that happen once. It was by <5% which they just negotiated off again at that stage.

But how do you know a house is overpriced if you haven't any idea what it's worth?

I would never say that to the seller, we will put whatever offer we decide to make and it will be a good offer, which we plan to do slightly above the actual market value because we want the house. Just because I say it’s overpriced to other houses doesn’t mean those other houses are cheaper so your reply wouldn’t be logical.
If it’s listed at the same price as another house which is much bigger and better spec overall then that makes it overpriced by comparison, so saying go buy the other house isn’t relevant. It also doesn’t mean that the comparable houses are all for sale, if you compare against houses that have recently sold.

Because it’s priced in the same region as other bigger much nicer houses in nicer streets and with better spec? And it needs work doing which the others don’t.

You can't necessarily tell if any changes have been made to the property, without asking the sellers. It could be they bought the house below market value because it needed a lot of repairs which aren't apparent just from photos. General repairs don't add value, but major ones can if the house originally sold for less because of the need for them.

Aside from that, no one can advise you. It doesn't really work the way you're saying (adding a percent to the last sold price) because every local market is different. Base your offer on the asking price, how long it's been on the market and your knowledge of the local area.

You ascertain market value by looking at similar houses in the area, noting that certain features will add value and certain features will detract from the value. You then observe the market in your area over the last year (not the last 7). If houses are moving quickly or this type of house rarely comes up, then you’re unlikely to get away with a low offer. If houses are moving slowly, you are more likely to get away with a low offer. However, it also depends on if the vendor needs to sell and how quickly they need to sell. If they need to sell, you’re again more likely to get away with a low offer. So with all that taken into consideration, you work out what your maximum for that house is and go from there.

Just because the estate agent typically overvalues, doesn’t mean this house actually is. Vendors use the guide from the estate agents and can go higher or lower. A vendor should have done their own research into the area and determined if that figure is realistic. A market valuation tool is an overly simplistic method to gauge house value.

OP

You are criticising unhelpful replies, but you haven't really given enough information to get specifically helpful ones.

Appreciate you don't want to provide a link but something like "we are in the South East, looking to offer on a house priced at £700k, it last sold six years ago for £400k and there hasn't been any improvements made, it needs a new kitchen really, a larger house on a slightly nicer street street that doesn't need any work has gone from £600k to £800k in the same time so a much lower % - what should I offer?" is easier to consider.

In your shoes, I would call the agent and ask why the asking price has been set at X given the local percentage rises you have seen as comparators. Obviously their answer will be "salesy" but you might get more clarity on seller circumstances etc.

So why do you want this particular house then?

Offer what it’s worth to you. There’s no hard and fast rule of what a particular house is worth. There are too many variables.