Is this house over priced?

[Veebee89]

We’ve seen a house we love and want to make an offer but I’m worried it’s overpriced and if we overpay we’ll struggle to sell it.

It’s only been on the market for 3 weeks. On Rightmove we saw that it had been listed for sale last summer. We asked the EA about this and why they’d taken it off the market and were told they were on with another agent, didn’t get the necessary interest or suitable offers so decided to withdraw it and then came on with the new EA this year.

It’s on one of three parallel streets which all have similar houses in terms of age, size, layout. Looking at sold prices on those streets we can see:

• House 1 - sold £830k in August 2023 (similar in size and layout, but newly renovated with high end interiors)
• House 2 - sold £815k in August 2023
• House 3 - sold £875k in October 2022 (newly renovated with slightly larger extension which has created a utility room and office)
• House 4 - sold £715k in May 2024 (only house which hasn’t had a kitchen extension)
• House 5 - sold price reduced to £795 in March 2024 and then taken off the market. No drive. Newly renovated.

The house we want to buy is on for £850k.

Based on these prices it seems like the values are falling or some vendors just got lucky with the right buyer and/or right time to sell.

We don’t want to lose out but also don’t want to overpay and then struggle to sell on, especially because we’ll likely only live there for 5 years before moving again.

What do you think we should offer?

If you're only staying 5 years why would you do a new kitchen & bathroom? You'd definitely never see that money back. I'd be going for somewhere you don't have to do any work.

@Wineandcupcakes 5 yrs isn't enough time in today's market for the house to have increased in value. The op will most likely break even or lose money by not recouping money spent on stamp duty & associated costs.

Judging from local properties, those which have been on a long time and have changed EAs to appear new to the market are overpriced.

@Veebee89

Do you really need to move now?

what's stopping you skipping this interim move and moving to whatever you want to move to in 5 years?

Out of the houses you are comparing it to, which one is the most similar to the one you want to buy in terms of space/parking/garden orientation/condition? Once you figure that out you look at the price it sold for and then check the statistics for your area. So if house prices in the area have gone up by 5% since that house was sold you add 5% to their sold price and you can see roughly what it might be worth. It's a good time to buy now though as the market is extremely slow, so it would probably be worth trying to go a little bit under.

The fact they took it off the market last year with no suitable offers makes me think they have a price in mind and won't sell for less.

If you're about to sign contracts how important Ii s closing the deal to avoid extra costs? It could be worth 815 to you to avoid rent/storage its worth 820 if they close quick. And yet to them they may not sell for less than 830 like house 1 or consider 850 as a reduction from house 3 so completely reasonable.

You can only control what your offer is, not the rest.

Also, if you get house surveyed, they will tell you what they think the house is 'worth' based on condition and sold data for local area - if it comes back lower than your offer, you could renegotiate. House prices subject to many factors you can't control- for example, if govt offer a temp Stamp Duty reduction, it can push prices up (as people spend what they would have spent on stamp duty on the house instead)

House prices have not dropped everywhere. In some towns/areas they have remained buoyant and desirable houses in those areas will have held their price.

Does the garden face south?
… could easily be reason why one is more valuable than another…

Ouch, are you really willing to pay £42k in stamp duty for a 5 years house? Not to mention solicitors and estate agent fees?

You'll drive yourself crazy trying to figure out why a house is priced or sells for the price it does. The reasons could be personal, and all situations are different.
The only thing that matters is how much you are willing to pay for it, and how much they are willing to sell for.
The real question as asked above is why you'd bother spending 800k on a house that you only intend to keep for a few years. Might as well just save your 50k in fees and find the forever house.

Agree with the posters who are saying that, regardless of whether the market rises or falls over the next 5 years (I think it will fall in real terms), do you really want to waste 50k just on fees for a 5 year house? That's a lot of money unless you are really desperate to move.

You can't possibly know what a house will sell for in the future. All you can do is offer what you can reasonably afford now. From the vague details on this one, I wouldn't offer or pay asking price as it sounds like you'll be over-stretched. Possibly offer 820 and negotiate from there, with a cut-off you're comfortable with.

Is it extended/renovated like house 1 and 3? If so, that sounds like a reasonable price. If it's not, then it's perhaps overpriced. Honestly, it's hard to tell without seeing pics of the houses.

But if you're planning to live in it for many years to come, who cares if the market takes a bit of a dive? It'll pick back up again!

The same thing happened with my childhood home. Bought in 1991 at the top of the market, which then crashed. It took 10 years to get back up. But then the market soared and they sold it for over 100K more than they paid for it.

Honestly op. 2o grand isn’t going to stop you selling in 5 years, you can’t predict the market like that, it could have soared or dropped, offer to pay what you think it’s worth , they will either reject or accept. But this is bonkers.

No but with the nature of our jobs we are likely to need to relocate in 5 years so need to consider that.

Yes, but not for 20 odd grand op.

The value you pay becomes its value. The marker does the rest, 5 years is long time. It can wipe out and put you in negative equity or it can grow, or even remain stable. Just offer what you think it’s worth, if the vendor agrees they will accept, if they don’t they will decline. Predicting within 20 odd grand in five years time is pointless.

Not sure what you mean about 20 grand?

I guess that’s the point - trying to figure out what it’s worth! We’re moving from outside the area so only have these sold prices to go off!

If we knew we could stay 10 years I wouldn’t be bothered and would offer asking price so it’s worth that to us. I just worry about losing money if we’re staying a short time because of it being difficult to sell at this price point.

Everyone is trying to tell you it doesn't have an intrinsic value. It's worth what someone pays. You never know, in 5 years it could be the perfect home for a large family and go to a bidding war, or we could have a war and a recession and you'd be in negative equity.
You decide how much you want to pay, you offer, you buy if everyone can agree.

'I just worry about losing money if we’re staying a short time because of it being difficult to sell at this price point.'

If this is a major issue for you, do you really need to move, just for the short term? Could you rent temporarily in the area?

We are moving into the area, so the only alternative is renting which we did consider but the quality of rented accommodation is very low and we’d waste more money in rent than in stamp duty. We are likely to need to move in 5 years due to work reasons.

'We are moving into the area, so the only alternative is renting which we did consider but the quality of rented accommodation is very low and we’d waste more money in rent than in stamp duty. We are likely to need to move in 5 years due to work reasons.'

Yes but you also need to factor in the cost of upkeep on your own house and the interest you would be paying to the bank (unless you are cash buyers). Plus, if you decide to overpay now based on comparables and then prices fall more, you would lose more money than spent on renting.
You need to figure out what your priorities are. Is it to have your own, comfortable home and not have to worry about dodgy landlords? Then buy but be discerning if you don't want to possible lose £££. Or rent for a short time, get to know the market and area better and then buy. Do you have children? If not, renting for a short time is very manageable usually.