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Bruce Banner

Affordability

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There seems to be an argument that a house is worth what you can afford to pay for it, particularly when you can't afford it and have to borrow the money.

It doesn't matter how much you can borrow, you should only pay what you think a house is worth.

If you make an offer on a house and the estate agent asks if you can afford to offer more, just answer "I can afford to, but am unwilling to".

You could, no doubt, afford to pay £10 for a packet of crisps, but would you do so?

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Yup == I'd willingly and gladly be a complete numpty sucker and take out a LIAR LOAN to do this! :P

Taking out a Liar loan would have been a good decision what with zero interest rates and SMI support. Maybe immoral but not stupid.

Edited by northwestsmith2

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There seems to be an argument that a house is worth what you can afford to pay for it, particularly when you can't afford it and have to borrow the money.

It doesn't matter how much you can borrow, you should only pay what you think a house is worth.

If you make an offer on a house and the estate agent asks if you can afford to offer more, just answer "I can afford to, but am unwilling to".

You could, no doubt, afford to pay £10 for a packet of crisps, but would you do so?

Yeah but how do you determine what a house is "worth" to you ?

So you see a house. It's on at £400K. However to you it ticks all the boxes, keeps the wife very happy, you could live there forever, in short it's your dream gaff and you'd happily pay 500K for the privilige to live there and what's more you would have no problem raising this amount of money. If I should pay what a house is worth then should I go to the owner and offer £500K rather than £400k to make sure I secure the deal ?

What something is worth to you is more often than not constrained by affordability. I agree with your earlier comment that affordability should be the first constraint on whether you purchase. Affordibility is the only objective measure. For many people what a place is worth is not an issue. They have made the decision they want a house. They have looked at prices of houses that coincide with their affordability levels. They have selected from these houses the ones that they want. And then they offer to pay asking minus a little bit to get it. For me its a bit different. The decision to buy is woolly. I'd like a house, but not that much. Thus I'm quite happy to go in with low ball offers and I don't really give a damn about whether I get it or not - if not I'll just wait for somewhere else. For other people this strategy isn't always an option. It's hard to find a place that puts their kids in a good school, keeps the wife happy etc etc etc, by the time you've resolved all this it's worth paying asking just to make the whole problem of moving go away.

If crisps were £10 a pack I'd probably eat them as often as I drink champagne and stick to peanuts.

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So you see a house. It's on at £400K. However to you it ticks all the boxes, keeps the wife very happy, you could live there forever, in short it's your dream gaff and you'd happily pay 500K for the privilige to live there and what's more you would have no problem raising this amount of money. If I should pay what a house is worth then should I go to the owner and offer £500K rather than £400k to make sure I secure the deal ?

You could do that, if you were stupid :rolleyes:.

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There seems to be an argument that a house is worth what you can afford to pay for it, particularly when you can't afford it and have to borrow the money.

It doesn't matter how much you can borrow, you should only pay what you think a house is worth.

If you make an offer on a house and the estate agent asks if you can afford to offer more, just answer "I can afford to, but am unwilling to".

You could, no doubt, afford to pay £10 for a packet of crisps, but would you do so?

....well yes in an ideal world when property was not the money making machine it became......credit was labeled as free money so buying with credit was buying something for nothing to make something more with little or no effort/work.

When the cost of owing and maintaining becomes a liability rather than an asset....sentiment will change. ;)

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There seems to be an argument that a house is worth what you can afford to pay for it, particularly when you can't afford it and have to borrow the money.

It doesn't matter how much you can borrow, you should only pay what you think a house is worth.

If you make an offer on a house and the estate agent asks if you can afford to offer more, just answer "I can afford to, but am unwilling to".

(...)

This makes perfect sense, so long as you are not concerned that someone else will offer more.

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If you make an offer on a house and the estate agent asks if you can afford to offer more, just answer "I can afford to, but am unwilling to".

Ah the bad estate agent trying to find a handhole to drag the price of the sale up. The sad thing is that some idiots must fall for it otherwise the EAs wouldn't bother.

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This makes perfect sense, so long as you are not concerned that someone else will offer more.

....because they can borrow more......so led to believe can make more. ;)

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I believe of the fundamental problems we have with the housing market relates to the difficulty in establishing a true value for something. Most people just seem to follow the process of 1) we are ready to settle down now so its time to buy 2) whatever the price is today is fine because its time to buy.

I have a friend who sold a house last year through divorce and has a decent deposit and is looking for something else now. He simply will not have any talk of the market falling and counters any comments with 'yeah but it could start rising again tomorrow'. So despite the actual falls we are experiencing he still doesnt see that it may be wise to hold off and will simply proceed the moment he founds something he likes with no regard for price whatsover.

The funny thing is if his train ticket increases by 3% he seems to notice.

If people were given an education in how to accurately price property this may help prevent people paying too much.

Edited by W1zard

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I believe of the fundamental problems we have with the housing market relates to the difficulty in establishing a true value for something. Most people just seem to follow the process of 1) we are ready to settle down now so its time to buy 2) whatever the price is today is fine because its time to buy.

I have a friend who sold a house last year through divorce and has a decent deposit and is looking for something else now. He simply will not have any talk of the market falling and counters any comments with 'yeah but it could start rising again tomorrow'. So despite the actual falls we are experiencing he still doesnt see that it may be wise to hold off and will simply proceed the moment he founds something he likes with no regard for price whatsover.

The funny thing is if his train ticket increases by 3% he seems to notice.

If people were given an education in how to accurately price property this may help prevent people paying too much.

And one of the best ways of at least having a starting point would be on price per square foot (or square metrre, I'm not fussy). The fact that agents habitually dont include the square footage is one of the biggest irritations I have... (yes, technically you can work it out from the floorplan but it's a pain)

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And one of the best ways of at least having a starting point would be on price per square foot (or square metrre, I'm not fussy). The fact that agents habitually dont include the square footage is one of the biggest irritations I have... (yes, technically you can work it out from the floorplan but it's a pain)

Then you have the issues in comparing a square metre of something in Islington with another suqare metre in Lewisham..?

Maybe historical averages is the way to go and risky lending values. If person knew that the historical average for like for like props in a particular area was xx amount then any listing with an inflated price from that histotical average would seem expensive. Then the mindset could be something like 'Well the historical average for the road is 230k so that one advertised is overpriced by 70k and on the basis its risky to borrow anymore than xx amount its not for me'.

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You'll love this.

We viewed a property today, would like an extra bedroom, have the cash so we wouldn't need to extend our mortgage although selling ours might be another matter. Anyway we look around a house in a very busy street, unable to park anywhere but the driveway (the owners are inside tidying up and parked on the driveway) so the agent and my other half have to park 2 streets away.

The house has belonged to the "boomers" mother, she has left it to them in her will I pressume.

2 years it's been on the market, the place needs gutting throughout, it is a job for a builder, no kitchen, blocked up fireplaces etc.

The last house that sold on that road was in 2004 (the peak locally) for £250k.

They want £365k and we were told they won't take a penny less than £350k as it is priced to reflect the market and has been reduced already.

I was asked if I would make an offer and told the EA, who was great if I did it would start with a 2 but actually it wasn't worth that much to me and I'd struggle to think who would pay £365k tbh. Apparently we aren't the first to say that :blink:

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You'll love this.

We viewed a property today, would like an extra bedroom, have the cash so we wouldn't need to extend our mortgage although selling ours might be another matter. Anyway we look around a house in a very busy street, unable to park anywhere but the driveway (the owners are inside tidying up and parked on the driveway) so the agent and my other half have to park 2 streets away.

The house has belonged to the "boomers" mother, she has left it to them in her will I pressume.

2 years it's been on the market, the place needs gutting throughout, it is a job for a builder, no kitchen, blocked up fireplaces etc.

The last house that sold on that road was in 2004 (the peak locally) for £250k.

They want £365k and we were told they won't take a penny less than £350k as it is priced to reflect the market and has been reduced already.

I was asked if I would make an offer and told the EA, who was great if I did it would start with a 2 but actually it wasn't worth that much to me and I'd struggle to think who would pay £365k tbh. Apparently we aren't the first to say that :blink:

We are in a similar situation - our figures are lower, and property does need a few bits doing to it as well, and property was left to current owner after a death; - and we have made an offer commensurate with purchase price in 2006/7 yet we have been told they want more than we are offering. This property is sat empty and continues to cost owner to leave it empty. This stupid owner had an offer last year which they declined, and now they seem to think that 9 months later anyone else viewing will offer the same.

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Well that's what you were suggesting :

It doesn't matter how much you can borrow, you should only pay what you think a house is worth.

Is the asking price of a house always less than it's worth ?

Not quite.

You may well be willing to pay a price X for a house.

Remember though, the market for each item is little more than an auction, whilst you are prepared to pay X, and no more, you would rather pay nothing if you could. What you have to pay with this strategy is a token more than the next highest bidders maximum price, which may be a long way short of your figure X.

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You'll love this.

We viewed a property today, would like an extra bedroom, have the cash so we wouldn't need to extend our mortgage although selling ours might be another matter. Anyway we look around a house in a very busy street, unable to park anywhere but the driveway (the owners are inside tidying up and parked on the driveway) so the agent and my other half have to park 2 streets away.

The house has belonged to the "boomers" mother, she has left it to them in her will I pressume.

2 years it's been on the market, the place needs gutting throughout, it is a job for a builder, no kitchen, blocked up fireplaces etc.

The last house that sold on that road was in 2004 (the peak locally) for £250k.

They want £365k and we were told they won't take a penny less than £350k as it is priced to reflect the market and has been reduced already.

I was asked if I would make an offer and told the EA, who was great if I did it would start with a 2 but actually it wasn't worth that much to me and I'd struggle to think who would pay £365k tbh. Apparently we aren't the first to say that :blink:

So if the price is so far out of kilter, why did you bother viewing it?

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So if the price is so far out of kilter, why did you bother viewing it?

Because I actually thought we would pay £310-320 but seeing it in the flesh it was clear this was a bigger job than it appeared in the photographs. They didn't show the cracks in the ceiling and walls online funnily enough.

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They want £365k and we were told they won't take a penny less than £350k

I hope they end up leaving it in their will to the next generation then.

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  • 312 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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