600k house. What to offer?

[yellowbricks1]

Beautiful house but needs a complete and full renovation of every room including the garden. Looks like it’s been empty for years derelict kitchen / bathrooms and old decor.

Neighbours house sold for £530k last year but it’s a 3 bed not a 4 like this property.

Is offering £550k as a starting point reasonable? Are sellers currently expecting lower offers because of the stamp duty increase?

Empty for years or on the market for years?

If the latter what was the original
asking price and is the current asking price already taking the damp and price drop into account?

@Sleepington It’s only recently come on the market. But in its current condition doesn’t look like anyone has actually lived in the property for years. Will ask all these questions as viewing in the morning.

What did it last sell for and when?

@Itisbetter There’s no information available for this particular property. The closest comparison would be another 4 bed at the other end of the street that sold for £390k in 2015

Online valuation. Not sure how accurate these are?

Personally I'd find 10% lower on a house insulting. We had some give low-ball offers (we got asking price) and even when they upped to asking price we didn't accept their offer. We felt messed around. But depends on situation/ market/ location. We did get our house cheaper than asking price, but had been on for nearly a year, elderly lady downsizing and keen to move. I think we were about 3-5% under asking price.

@Helpforthosethatneedit This is exactly my thinking. I don’t want to go too low and then not be taken seriously if I offer more.

However 550k is 8%. Maybe 560k would be a better starting point?

Is that level of reduction typical in your area? It sounds steep. Our location it wouldn't be accepted but that's irrelevant to another area.

I think if it's only recently come on the market they are unlikely to accept a low offer, whether it is justified or not.

550k offer sounds fine to me if you like the house after viewing it.

Depends on your objective really but I’d be thinking about how much the work would cost to do and trying to work out what it would be worth when done (then working in some slack / profit). Can you ask the EA what their view on the ‘done’ value is? Obviously you need to consider whether they might be inflating the ‘done’ value to sell it but depending on the individual you might also get a reasonable answer.

Two years ago t bought a 600k house for 592k. It was our ideal home and we pinpointed the exact road and exact side of the road we wanted, so were very excited when it came on the market. I think L offered 580k but I did really really want it.

It's impossible to say without knowing what 4 beds generally go for in your area.

£550k feels very low. Presumably they are aware it needs work doing and have priced it accordingly? Or do you feel it's been priced as if it's ready to go?

What kind of condition was the 3 bed on the same street in when it sold?

Whats the market like in your area? Here the EAs over value and reductions are very common. A house sold last week for £450k which had originally been priced at £700k!

It may help to compare the price per square metre with a few recently sold properties in the same state, as well as price per sqm of plot if it’s a larger plot. You also need a price per sqm for refurbishment.

Only then can you really figure out if it’s over priced or fairly / keenly priced. Don’t go in with a higher offer if it means you’re getting ripped off. The cost of works is mad now and I’m not sure sellers quite realise this - there are doer-uppers on the market here for too high a price that have been on for ages.

Weigh up how much it’s going to cost to renovate it, and the time it will take.
Sounds like an insulting initial asking price for a near derelict property. Take plenty of pictures.

I think £550k is fine as opening offer as you'll caveat that with all the work that needs doing. I wouldn't be insulted as the seller, I'd just keep on the marker for a bit.

You should estimate the cost of renovations. Everyone else will. There is no point in being unrealistic about how much you would need to spend on that

We offered 550 on a 600 and settled at 555. BUT the house had been on the market for a year. Was the 3 bed in reasonable condition?

I wouldn’t be offended either, would just be glad to get an offer. They might not want to accept it as the house has only recently been listed but it’s a good start. And if they don’t get any better offers, they may accept it in a few weeks if the offer is left on the table. Or their EA may encourage them to make a counter offer.

The gap between average listed price of properties and average sold price of properties was over 15% last year. I don’t think any serious seller would be surprised a potential buyer would initiate an offer 10% lower than listed price. The key for a buyer is not to overpay.

Also, In my recent experience, sellers of houses requiring work have grossly underestimated the significant recent (post Covid) inflation of building supplies and trades costs of renovation work, which you should definitely factor in to any offer.