Viewed Another House This Week

[_SUNDANCE]

My wife and i both loved it. However, can i ask some advice on the price.

The house came onto the market a few weeks ago for 170,000. Its rated 90,000 but that rateable value is totally wrong.

I think something between those two figures is more realistic. However, its difficult to get a comparable on similar houses sold in the area as this is quite a unique house in many aspects. Has some good points and some not so good.

Estate agent told me during the viwing that so far there has been a total of 9 viewings. Is this high for a house on the market just 3 weeks?

Initially when i went to view the house i was led to believe that the asking price was very negotiable. However, on the day when i said i really liked the house but thought the price was too high the estate agent told me he thought it was priced fairly. He said he would recommened acceptance of an offer of 165,000 but not anything below that.

He told me the seller had turned down an offer of 200,000 a year ago. However, i dont believe the house was ever on the open market before. Its presently vacant being an estate sale.

I pressed the estate agent more on the price and asked him straight if he was asked by a lender to value the property for mortgage purposes what would his valuation be. He said it would be 1225,000 for this purpose.

Now, am i missing something here. On the one hand the estate agent tells me 165,000 is a fair price but on the other hand he tells me he would personally value the property at 125,000 for mortgage purposes.

[Wig]

Don't believe anything the estate agent says would be my golden rule.

[_SUNDANCE]

Yes, thats very good advice.

The only certainty i had on the day was the certain knowledge that if the estate agent said the house had 9 viewings i could immediately rule out the fact it had 9 viewings.

I put in an offer on a house a few weeks ago witht he same estate agent. I offered 140,000 but pulled out when someone came straight in at 145,000. I was just not prepared to compete with such a strong first offer. The house went sale agreed last week just a month after coming on the market for 145,000.

Yesterday the estate agent told me someone had tried to gazzump that accpeted offer by putting down 150,000. I simply do not believe this. I do know there was another party interested in the house but they were not in a strong position in terms of requiring a mortgage. The offer agreed was from a cash buyer.

Now, maybe the other party did put in 150,000 but because they needed a mortgage above the estate agents own valuation they were not certain of getting it. But the way the estate agent put it someone had come in with a gazumping which was 100% reliable and it was turned down in order to be fair.

I think if the gazumper had come into the office with 150,000 in cash in a plastic bag the morals of the seller and estate agent would go out the wondow. It was only turned down in my opinion as it was an offer subject to a mortgage and acceptance would risked losing the original cash buyer.

Come on estate agents. Lets have some honesty.

[Stainless Sam]

If the estate agent tells you the sun will rise tomorrow morning, I'd recommend looking out of the window when you get out of bed, just to be certain.

The only fair valauation is what you are willing to pay for it, assuming that this is a figure you could re-sell the property for without making a loss. If a mortgage valuation would be £125k, it sounds like that is the most it is worth.

[Mr. Piddle]

Now, am i missing something here. On the one hand the estate agent tells me 165,000 is a fair price but on the other hand he tells me he would personally value the property at 125,000 for mortgage purposes.

What the agent means is its only worth £125k but he is prepared to fleece you for an extra £40k because thats what he's paid for.

[inflating]

Your first mistake was saying you really liked the house. Try poker face next time for you and wife and don't make an offer right away - get the agent to phone you back for feedback. Again don't be too keen. Because you had an offer already with this agent he knows you can afford 140K. He is taking you for a ride.

Learn to play hardball. The estate agent cannot help himself . You can .

+1

[Shotoflight]

My wife and i both loved it. However, can i ask some advice on the price.

The house came onto the market a few weeks ago for 170,000. Its rated 90,000 but that rateable value is totally wrong.

I think something between those two figures is more realistic. However, its difficult to get a comparable on similar houses sold in the area as this is quite a unique house in many aspects. Has some good points and some not so good.

Estate agent told me during the viwing that so far there has been a total of 9 viewings. Is this high for a house on the market just 3 weeks?

Initially when i went to view the house i was led to believe that the asking price was very negotiable. However, on the day when i said i really liked the house but thought the price was too high the estate agent told me he thought it was priced fairly. He said he would recommened acceptance of an offer of 165,000 but not anything below that.

He told me the seller had turned down an offer of 200,000 a year ago. However, i dont believe the house was ever on the open market before. Its presently vacant being an estate sale.

I pressed the estate agent more on the price and asked him straight if he was asked by a lender to value the property for mortgage purposes what would his valuation be. He said it would be 1225,000 for this purpose.

Now, am i missing something here. On the one hand the estate agent tells me 165,000 is a fair price but on the other hand he tells me he would personally value the property at 125,000 for mortgage purposes.

How are you so sure about the Capital Value?

[_SUNDANCE]

I am very confident that the rateable value is totally wrong. By and large i tend to go a lot on rateable value but this one is very undervalued on rateable value.

Its in a very nice area with an exceptionally large garden but rated exactly the same as a similar sized square footage house with no garden in probably the least desired estate in the area.

I have seen one of these houses, rated 90,000 in a very undesired council estate, come on the market a few weeks ago also. It has a fixed asking price of 48,000.

I am very happy to offer well in excess of the rateable value for the house i have viewed. However, my question is more to do with the discrepancy between the estate agent telling me he would value it at 125,000 if asked to do so by a bank for mortgage purposes but at the same time he is telling me its good value at 165,000.

Is it normal for estate agent valuations for banks to be a lot lower than what is seen as a fair market price. I understand the banks want some protection against possible falls in capital value but surely this is what deposits are for.

[Shotoflight]

I am very confident that the rateable value is totally wrong. By and large i tend to go a lot on rateable value but this one is very undervalued on rateable value.

Its in a very nice area with an exceptionally large garden but rated exactly the same as a similar sized square footage house with no garden in probably the least desired estate in the area.

I have seen one of these houses, rated 90,000 in a very undesired council estate, come on the market a few weeks ago also. It has a fixed asking price of 48,000.

I am very happy to offer well in excess of the rateable value for the house i have viewed. However, my question is more to do with the discrepancy between the estate agent telling me he would value it at 125,000 if asked to do so by a bank for mortgage purposes but at the same time he is telling me its good value at 165,000.

Is it normal for estate agent valuations for banks to be a lot lower than what is seen as a fair market price. I understand the banks want some protection against possible falls in capital value but surely this is what deposits are for.

There's something fishy about this

So it appears the location and garden are commanding a £75k premium above CV - another similarly rated (and you say similar type) one is in an undesirable council estate and in fact is going for £48 and not the £90k CV (a whopping £117k differential for garden and location).

Now it may be that it's location has made it a strong winner since 2005 and that the kitchen and bathroom are very much above the standard for this type of house. It may be the rates have got it spectacularly wrong and that this is an outlier - not beyond possibility.

But the EA Mort valuation suggests that the CV is closer to it's true open market value. That's not to say it's worth more than that to you, or that someone won't go ahead and offer the £165k especially if you, or another, place a higher value on its location and garden than the original valuer in 05.

In the CV exercise, 700,000 houses were valued, 100,000 were visited. 28,000 queried their valuation. These were tackled by experienced, professional staff with further visits. On average, 93% of these were found to be within a quite tight + or - 10% of the original valuation (margin of error). So 7% of the 28k were outside 10% of the original valuation - about 1,900 or 0.4% of the original total. The one you have managed to find is off the scale.

However this is a very dry subject for an emotional purchase and by no means foolproof. If you are really happy and content within yourself, if you have the ability and won't be overstretched now or in the future, are happy with the service provided by the EA, and are content to buy in a falling market and importantly, the timing suits you, do what you think is right.

If I was you I would invest £250 on an independent survey or valuation, or £500 on the full monty if you are really keen. Look on it as an insurance policy.

My opinion, for what it's worth, is that the EA is yanking your chain.

Edited August 12, 2011 by Shotoflight

[_SUNDANCE]

Yes, the example i give of two houses rated exactly the same but with huge differences in terms of expected worth today seems extreme.

The houses are just a few miles apart. Also you might be surprised to know both houses would have the same standard interior. The house i viewed has no outstanding interior qualities. Infact the reverse. It appeals to my individual tastes because its a more period style house. Well, 1950's to be exact.

So how come the huge differences in terms of how they were rated in 2005 and their expected worth today.

The ex council house, in my opinion was rated in 2005 on the house being easily sold as a buy to let. Now, however, there are few investors in the market and anyone buying a house as a home would find the area of this house extremely unappealing.

The other house,in a very nice area seems to have been rated identical to this ex council house with no allowances for location. The reason this example is so extreme is because the locations could not be further apart in terms of desireability. Then there is a huge garden with one house and no garden with the other.

So to sum up the huge differences, i would say the ex council house has suffered a lot since 2005 due to location while the other house was simply well under rated in 2005 to begin with.

[_SUNDANCE]

Having said all that, i dont think the asking price is right. Its too high. But i am prepared to pay well in excess of rateable value.

Its hard to find a comparable though in terms of price so thats why i was asking how accurate the estate agents valuation of 125,000 would be against the asking price of 170,000.

I would have thought if the estate agent marketing the house values the property at 125,000 then that should be the starting point for any negotiations. Yet when i mentioned this the estate agent looked at me as if i was nuts and totally unrealistic.

[Stainless Sam]

Reading the thread and your comments so far, it looks like you are desperate for someone to advise you to pay more than you know in your gut the house is worth.

You've come to the wrong forum. Ring Krusty Allsop.

[lolacarrascal]

Reading the thread and your comments so far, it looks like you are desperate for someone to advise you to pay more than you know in your gut the house is worth.

You've come to the wrong forum. Ring Krusty Allsop.

Sundance, this is my sense as well and I say it only to be helpful. House buying is stressful, you never have perfect knowledge, it's all too easy to get emotionaly involved and for most of us (self included) we do it so infrequently that it's difficult to get good at it.

This forum is excellent for gaining a sound understanding at the strategic level regarding the economy and the housing market generally but it is not the place to get tactical level advice on the value of specific house or its worth compared to another from people who just can't have the detailed knowledge required to give you an informed opinion.

TBH I think you need an advocate - someone with more life experience that doesn't suffer fools gladly and calls a spade a great big bloody shovel. When I was younger, I wish I knew then what I know now about the housing market and house buying. I would have known that I needed someone with experience on my side to keep me right in such an importance decision.

Take this in the spirit that it is given - trying to be helpful. I'm fairly confident that in 20 years time, you will come to realise that this was good advice - I wish I had done it.

[_SUNDANCE]

Thanks a lot for the replies. All help i receive on this forum is always much appreciated.

I think things got a little side tracked with rateable value. I do appreciate though that the two examples i give seemed very polar opposites and a little hard to believe.

However, the question i most wanted help with is the valuation estate agents put on a house for mortgage purposes. In this instance the estate agent valued the property at 125,000 for mortgage purposes but maintains the house is worth a lot more than that.

The inference is that estate agents undervalue houses for mortgage purpposes. Is this normal?

On the one hand i can see why an undervaluation would suit a bank/lender as it provides them with more security. However, i thought a sensible deposit should do the same.

What i dont get though is why estate agents would be complicit in the undervaluing of houses for mortgage purposes. Surely, it makes it more difficult for people to get mortgages approved and houses are more difficult to sell. In the case i mentioned no one is going to get a mortgage approved for 165,000 when the estate agent values the property at 125,000. Unless they can come up with a very big deposit to give the bank the security on the loan.

[_SUNDANCE]

As a potential buyer with not a lot of experience in negotiating a house purchase i am happy to accept all help and advice.

If an estate agent says they value a house is x i expect to be able to put in an offer around that figure. Am i being simply naive and missing something.

[talksalot81]

As a potential buyer with not a lot of experience in negotiating a house purchase i am happy to accept all help and advice.

If an estate agent says they value a house is x i expect to be able to put in an offer around that figure. Am i being simply naive and missing something.

The 'around' is the critical word. The EAs are not all mugs, they know what the market is like and (now more than most times), people are going to want to pay as little as possible. It is likely that they will thus price a little on the high side in the knowledge that someone will then negotiate a bit lower than that. To that end, the valuation here is a high end guide. Take a look at the rateable value of the property. Look for others in the area and see whether this valuation seems to be in check. Then, take some percent off it and start there. I certainly would not start higher than 90% of asking price... worst case scenario, they refuse. You can always put in something higher, later. Bid too high too soon and you cannot easily go down in price...

[eek]

What i dont get though is why estate agents would be complicit in the undervaluing of houses for mortgage purposes. Surely, it makes it more difficult for people to get mortgages approved and houses are more difficult to sell. In the case i mentioned no one is going to get a mortgage approved for 165,000 when the estate agent values the property at 125,000. Unless they can come up with a very big deposit to give the bank the security on the loan.

They don't undervalue for mortgage purposes. They guess what a mortgage valuer will value the house at and price it at that level hoping that they've done enough to win the right to sell that house.

Personally I think you've let your heart rule your head. Take a step back and think about how long it takes you to earn £20,000. Now double that to reflect the interest you would buy on that borrowed money and then think about how much you want to pay. An overpriced house is a millstone around your neck until the mortgage is fully paid off and every £1,000 off the price now is a nice holiday down the line.

Granted you want the house but unless there are other people in a position to buy the house you don't need to panic, rush and pay over the odds.

[lolacarrascal]

Thanks a lot for the replies. All help i receive on this forum is always much appreciated.

I think things got a little side tracked with rateable value. I do appreciate though that the two examples i give seemed very polar opposites and a little hard to believe.

However, the question i most wanted help with is the valuation estate agents put on a house for mortgage purposes. In this instance the estate agent valued the property at 125,000 for mortgage purposes but maintains the house is worth a lot more than that.

The inference is that estate agents undervalue houses for mortgage purpposes. Is this normal?

On the one hand i can see why an undervaluation would suit a bank/lender as it provides them with more security. However, i thought a sensible deposit should do the same.

What i dont get though is why estate agents would be complicit in the undervaluing of houses for mortgage purposes. Surely, it makes it more difficult for people to get mortgages approved and houses are more difficult to sell. In the case i mentioned no one is going to get a mortgage approved for 165,000 when the estate agent values the property at 125,000. Unless they can come up with a very big deposit to give the bank the security on the loan.

Stop trying to make rational sense of what EAs tell you - ignore what they tell you for gawd's sake! It's all mind games and you keep getting sucked in by all their bloody claptrap.

[exiges]

The only certainty i had on the day was the certain knowledge that if the estate agent said the house had 9 viewings i could immediately rule out the fact it had 9 viewings.

Actually, I wouldn't doubt it had 9 viewings, there has been a drought of good properties coming on the market since ZIRP that as soon as a house comes on the Market plenty of would-be buyers are ready to view it.. Of course, theyre not willing to pay the asking price, or anywhere near it which is why it doesn't sell.. But an initial flurry of low bidders isn't unreasonable.

[OptimusSubPrime]

This is Northern Ireland where mostly low end houses and repos are selling. Property is 50% down and falling and FTBs are leaving the market not joining it. The more houses drop the less desire there is for them

id kinda disagree with that statement. the desire to make the first purchase is always there, but it hasnt been affordable/realistic to do so. A lot of people have been saving for 4/5 years to buy their first house. As house prices trickle lower this becomes more reasonable. Which is why any FTBer type houses that are correctly priced are selling very quickly.

Unfortunately, there is just not enough priced properly as yet. But to say as prices come into more affordable ranges there is even less desire to purchase i dont think is true.

[Shotoflight]

To make clear what I was saying (badly) -- when prices are dropping I think more people hold back because they think prices will continue to drop and they can get an even bigger bargain. The opposite to a sellers market in fact where everyone is desperate to buy no matter how high the price goes.

????????????????

[ravedave]

I'd be wary of the following:

I offered 140,000 but pulled out when someone came straight in at 145,000.

One of the big issues with property buying I have is that you never see who you are bidding against.

Is there any means by which you (or your solicitor) can gain access to the EA's books in order to validate the existance of the oppossing bidders?

[eek]

Given that the new buyer may be a figment of the agents imagination the answer is no. Even if it wasn't there is no way that the agent will give you access to the information.

[BelfastVI]

I'd be wary of the following:

One of the big issues with property buying I have is that you never see who you are bidding against.

Is there any means by which you (or your solicitor) can gain access to the EA's books in order to validate the existance of the oppossing bidders?

No. Nor would you want any other bidder to see who you are.

[BelfastVI]

Given that the new buyer may be a figment of the agents imagination the answer is no. Even if it wasn't there is no way that the agent will give you access to the information.

Some of the time you are probably right, although a very risky game at the moment.

The other fact is people get confidence from the fact other people have bid on a house. If you are shown four houses and are told there is currently a bid on the third one, and the seller is considering it. All things being equal. if you were going to put a bid on you will likely go for the house the other bidder went for. I know on sites we may not sell anything for 3 or four weeks then we get three bookings in one week. Its the only way to explain it. It works best if the people viewing the properties see the other people, sometimes know them and then see that they have committed.

It sometimes explains how another booking follows yours after the property has been sitting idle for a long time. However, in the resale market you need to view it with caution.