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It's Worth X Cos The Owners Paid Y

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I've been struggling for years to get my head around how some people just won't accept that house prices are not a one-way bet. I used to think it was because they didn't know the other side of the argument, or haven't lived through previous crashes/recessions etc. However, a conversation last night with an old friend has left me speechless. I don't know whether to laugh or cry. In a nutshell:

Guy bought his house last year with a very large helping hand from the bank of mum & dad for just shy of £600k which set the ceiling price for the street (as well as being 100% of asking price). In my book it was a ridiculous price for what it is. However he's had both feet firmly planted in the "prices only go up in this area" camp for many years - despite my many attempts to open his mind to the possibility that this may be a fallacy.

So in September last year an identi-kit house a few doors down comes on the market for £550k which according to my mate is an effin bargain and will get snapped up before the day's out. The reason it's cheaper than his is because the laminate isn't as good quality and there's no twigs & vases (or something along those trivial lines).

Fast forward to today and it's down to £450k without a buyer in sight. On the phone last night he tells me it's not shifting because there's no conservatory and all the other houses have got one. My response these days is a simple hmm. However the bit that got me was "anyway mines worth £600k cos the previous owners paid £570k in 2007 so I couldn't offer them less cos they'd have no profit."

This guy, in most other situations haggles like his life depends on it. He'll quite happily argue the toss over a few quid in Comet. But it's just dawned on me that if this way of thinking is widespread amongst the sheeple then it really is just the banks closing the mortgage tap that's saving people from themselves - I didn't realise people buy houses at a premium because the seller "deserves" a profit.

Curious to hear if anyone else has encountered similar thinking or is my mate just an extreme case?

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The five stages of grief

1 Denial

2 Anger

3 Bargaining

4 depression

5 Acceptance..

Sounds like your mate is in stage one. He knows that he has just blown £150,000, and probably its Dad and Mum's money. As far as he is concerned, it hasn't happened.

All these pathetic reasons he puts forward are part of denial. He has watched as the rival house came on the market £50,000 lower than his, consoled himself with its lesser quality floor covering (£50, 000 worth?) and then watched in horrified disbelief as the price has slid down by another £100,000.

Perhaps when he first bought, he did not really understand what £50,000 really is, but now he is struggling along with mortgage etc, probably unable to save a penny and is finally starting to understand that even £10,000 is a lot of money and would make a big difference to many people's lives.

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The five stages of grief

1 Denial

2 Anger

3 Bargaining

4 depression

5 Acceptance..

Sounds like your mate is in stage one. He knows that he has just blown £150,000, and probably its Dad and Mum's money. As far as he is concerned, it hasn't happened.

All these pathetic reasons he puts forward are part of denial. He has watched as the rival house came on the market £50,000 lower than his, consoled himself with its lesser quality floor covering (£50, 000 worth?) and then watched in horrified disbelief as the price has slid down by another £100,000.

Perhaps when he first bought, he did not really understand what £50,000 really is, but now he is struggling along with mortgage etc, probably unable to save a penny and is finally starting to understand that even £10,000 is a lot of money and would make a big difference to many people's lives.

I prefer the SARAH stages of grief for people who paid too much for their houses :

- Shock

- Anger

- Rejection

- Acceptance

- Humiliation

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It'd be good fun finding what the "owner" paid for it 5 years ago and then offering £1 less. Just so they know you know what they paid.

Edited by exiges

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I've been struggling for years to get my head around how some people just won't accept that house prices are not a one-way bet. I used to think it was because they didn't know the other side of the argument, or haven't lived through previous crashes/recessions etc. However, a conversation last night with an old friend has left me speechless. I don't know whether to laugh or cry. In a nutshell:

Guy bought his house last year with a very large helping hand from the bank of mum & dad for just shy of £600k which set the ceiling price for the street (as well as being 100% of asking price). In my book it was a ridiculous price for what it is. However he's had both feet firmly planted in the "prices only go up in this area" camp for many years - despite my many attempts to open his mind to the possibility that this may be a fallacy.

So in September last year an identi-kit house a few doors down comes on the market for £550k which according to my mate is an effin bargain and will get snapped up before the day's out. The reason it's cheaper than his is because the laminate isn't as good quality and there's no twigs & vases (or something along those trivial lines).

Fast forward to today and it's down to £450k without a buyer in sight. On the phone last night he tells me it's not shifting because there's no conservatory and all the other houses have got one. My response these days is a simple hmm. However the bit that got me was "anyway mines worth £600k cos the previous owners paid £570k in 2007 so I couldn't offer them less cos they'd have no profit."

This guy, in most other situations haggles like his life depends on it. He'll quite happily argue the toss over a few quid in Comet. But it's just dawned on me that if this way of thinking is widespread amongst the sheeple then it really is just the banks closing the mortgage tap that's saving people from themselves - I didn't realise people buy houses at a premium because the seller "deserves" a profit.

Curious to hear if anyone else has encountered similar thinking or is my mate just an extreme case?

Have noticed something about people in debt :- they lie to themselves and others that they talk to they never fully add up how much they owe as they do not want to come to terms with their plight , if someone tells you they are £20k in cc debt you can bet your life they are more in debt than that , I have seen it many times.

This is the same thing the reality is to painfull.

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It is an interesting effect. I suspect it is along the same lines as why casinos use chips instead of coins, there is a disassociative effect between the value of the asset and its price. That or after a couple of zeros the brain simply can't cope with price/value and enters some sort of twilight zone.

I used to consider it a disorder of some sort, but with the widespread prevalence and fraud that's gone on in the last 30 years, maybe it's us that has a disorder.

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Curious to hear if anyone else has encountered similar thinking or is my mate just an extreme case?

About a year ago my mate bought a place, asking was £194500, they offered £194500 :blink: , when the survey came back it needed damp proofing which they were told would cost £3.5k, so they dropped the offer to £191k. It was as if they were in the corner shop and mars bars ar 50p, thats the price and there is not wiggle room. As it went the damp proofing cost them £4.5k and it's also needing work doing on the chimney and the roof need retiling :lol:

His rational on the price was "it's a sought after location and will go quick if we don't pay what they want" :blink: His only smart move was to fix for 5 years at 6%, but he's on a 90% LTV and thinks there's going to be wage inflation to bail him out.

Edited by zebbedee

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You're mate needs a punch in the face...

Then again, sounds like he's getting one everytime he sees the house down the road knock £50k off it's price :D

Edited by Pent Up

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When discussing what we would consider offering on a particular house (about previous selling price minus 20%), the GF told me off because it's "so much less than they paid for it" and we would be leaving them in all sorts of financial troubles...

!@&!#%!!!!

Where does this idea come from...? They took a gamble, why should I pick up the pieces?

...

Glad I got that off my chest.

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Guy bought his house last year with a very large helping hand from the bank of mum & dad for just shy of £600k which set the ceiling price for the street (as well as being 100% of asking price).

Fast forward to today and it's down to £450k without a buyer in sight. On the phone last night he tells me it's not shifting because there's no conservatory and all the other houses have got one.

So his opinion is that a conservatory and some good laminate adds £150K to the value of a house.

hummmm ..... :rolleyes:

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He will probably have a breakdown at some point in the future, I'd be slightly worried.

No sane person would (knowingly) give money to the previous owner of a house on top of what the house was worth unless they were perhaps money laundering, or involved in some sort of long scam. Does chap intend to pay £20k for a second hand car if the previous owner bought it for £15k?

Either deluded, or a crime syndicate member.

Edit: Come to think of it, perhaps he's been brainwashed? Was the previous owner in the magic circle?

Edited by jammo

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the bit that got me was "anyway mines worth £600k cos the previous owners paid £570k in 2007 so I couldn't offer them less cos they'd have no profit."

Until there is a trigger there will be no reason for people to sell cheap

I think there's your answer. Mate wants the house. Thinks they won't accept less than £600k. Offers £600k. Logical - in his mind. The correct decision is just choose not to buy.

No sane person would (knowingly) give money to the previous owner of a house on top of what the house was worth unless they were perhaps money laundering, or involved in some sort of long scam.

I think he genuinely thought it was "worth" 600k - he just was wrong.

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So conservatories now cost £150k? Damn - I so missed the boat on that one :blink:

I like it when estate agents point out that a dishwasher is included, so that somehow makes it a great deal! I make a point of telling them I'm not paying for an secondhand appliance over 25 years.

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Guy bought his house last year with a very large helping hand from the bank of mum & dad for just shy of £600k which set the ceiling price for the street (as well as being 100% of asking price). In my book it was a ridiculous price for what it is. However he's had both feet firmly planted in the "prices only go up in this area" camp for many years - despite my many attempts to open his mind to the possibility that this may be a fallacy.

Curious to hear if anyone else has encountered similar thinking or is my mate just an extreme case?

Unfortunately your mate bought a house he couldn't afford to buy without the help of his parents. It's rather comical that anyone is greedy enough to take a helping hand when you're approaching such an astronomic figure!

He's delusional and not unique and that is why the reality is going to hurt far more than the last crash. I know more people who have had help with purchases than those that do it on their own. I've heard of parents paying 50% deposits! It makes you sick really. I just hope the parent weren't expecting to get the money back anytime soon! :lol:

600k is like a lottery win. It really does seem absurd to have all that locked up in some bricks.

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Theyve been brainwashed by years of Property porn to believe that the hordes of speculating zombies will snap it up if they dont. The estate agents, sorry, property experts will confirm this to them, and, afterall the estate agent is on the buyers side, right?!

I guess this might be true in London, still wouldnt make me want to buy though. But then ive always been very risk adverse. I wouldnt enter any pyramid scheme unless I categorically knew i was investing at the beginning or early stage.

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Unfortunately your mate bought a house he couldn't afford to buy without the help of his parents. It's rather comical that anyone is greedy enough to take a helping hand when you're approaching such an astronomic figure!

He's delusional and not unique and that is why the reality is going to hurt far more than the last crash. I know more people who have had help with purchases than those that do it on their own. I've heard of parents paying 50% deposits! It makes you sick really. I just hope the parent weren't expecting to get the money back anytime soon! :lol:

600k is like a lottery win. It really does seem absurd to have all that locked up in some bricks.

Perhaps the money has become more worthless, or worth less...... The labour to earn it has....

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A very telling story, your mate does not regard the £600K as his money, so he does not care for haggling with it.

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The ultimate torture in one of the sequels to the Hitchhikers Guide to the Galalxy was a machine that showed you just how utterly insignificant you were in the whole universe and it drives you insane. We are all most comfortable in our cmfort zones with our many delusions, without them we would go mad. Though at least mine haven't cost me £150k.

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It's Worth X Cos The Owners Paid Y

House I like the owners paid £67k in 1999. Now I don't begrudge them a bit of a profit so I'm willing to pay £75k :)

Shame they are asking £185k!! :(

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There are tons of threads on MSE where people end up stating "but I need to sell it for ...."

Just cos they need do, doesn't mean they will.

Buyers are NOT responsible for clearing the seller's debt.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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