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House Prices - Am I Being Inrealistic?

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I read that in today's market you should put down an offer 10-15% lower. 10-15% lower of what exactly? the asking price?

It appears that there is a massive difference between what I think a house is worth and the asking price. For example, there is a house that I am interested in, which was bought for 51000 in January 2001 for 64,300. Based on the HPI change since then; I value the property at approximately 121,000. It is being marketed for 150,000 and the vendor wants an offer close to the asking price. I asked what work was done to the property since the vendor moved in and it has had a damp proof course only. It needs a new kitchen; bathroom and central heating, plus replastering the lounge and general redecoration.

The estate agent argues that the property is in a good location and this commands the extra, but then it was in a good location when the vendor bought it for 51000 in January 2001 (uphill Lincoln).

Am I being unrealistic? Is there a formula that valuers use when calculating an asking price e.g. figure out how much the house is worth now based on HPI increase and add 30% to this figure?

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I read that in today's market you should put down an offer 10-15% lower. 10-15% lower of what exactly? the asking price?

It appears that there is a massive difference between what I think a house is worth and the asking price. For example, there is a house that I am interested in, which was bought for 51000 in January 2001 for 64,300. Based on the HPI change since then; I value the property at approximately 121,000. It is being marketed for 150,000 and the vendor wants an offer close to the asking price. I asked what work was done to the property since the vendor moved in and it has had a damp proof course only. It needs a new kitchen; bathroom and central heating, plus replastering the lounge and general redecoration.

The estate agent argues that the property is in a good location and this commands the extra, but then it was in a good location when the vendor bought it for 51000 in January 2001 (uphill Lincoln).

Am I being unrealistic? Is there a formula that valuers use when calculating an asking price e.g. figure out how much the house is worth now based on HPI increase and add 30% to this figure?

I forgot to add that this property has been on the market for one month. There is a typo on line four i.e. line four should read: "bought in January 2001 for 64,300". Is there a way to edit/delete posts?

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It is most likely the person selling it knows it needs work doing but can't afford to get the work done so they plan on selling it to a mug then buying a house that needs no work doing + pocketing some cash in the process.

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Is there a formula that valuers use when calculating an asking price e.g. figure out how much the house is worth now based on HPI increase and add 30% to this figure?

I think No.

You would get a bigger response to your question on the main forum.

Edited by HouseDog

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It is most likely the person selling it knows it needs work doing but can't afford to get the work done so they plan on selling it to a mug then buying a house that needs no work doing + pocketing some cash in the process.

I agree with the original poster although I have a few points to colour your argument.

When the vendor bought his property interest rates and bank credit underwriting were completely different. You couldn't get a mortgage until you had a 20% deposit and more often than not your bank manager assumed your wife's income would disappear as you had a family so it would not be counted in the income multiple calculations

House prices have almost entirely been a function of bank credit for the last 30 years more than supply and demand. As debt is good for banks i.e an Asset on their balance sheets, they are incentivised to create more of it. Then add to that the fact that more debt practically eliminates paying corporation tax and debt creation goes into overdrive to ensure handsome profits and lower underwriting scrutiny on mortgage applications. Remember corporation tax in take has been falling steadily for 30 years whilst income taxes and indirect taxes on the individual have been rising.

Houses are no longer judged on "per sq ft" measures or 10/15% off asking as the "going rate". There is an intergenerational gap between those who have houses and those for whom houses will never be built - this has created a squeeze in the market. If the government simply allowed building on say 15% of greenbelt on the edges of London prices would fall before they were even built. We cannot get off the debt train unless everyone does it at once - and who wants to be the first? There is no longer a scientific, inflation escalated way of measuring house prices. You either want one or you don't - if you want one you pay as they know you can borrow. Why would an older person sell their house to pay for care when they are the largest voting block and the government will bend over backwards to get their votes to be in power? You'll have started to notice these conversations in the press to reassure pensioners that the government will always be there for them e.g a max amount to pay for care until you die, or free bus passes etc.

House prices will increase for much of the next two years thanks to the Government using its historically cheap borrowing to subsidise the banking sector. They are doing this to win over middle England and win the election. From Jan 2014 anyone will be able to buy a house with a 5% deposit up to a house value of 600K. Watch as average prices start to trend upwards and there becomes an increasing number of properties around the 600K mark as second time buyers all scrabble to move up the housing ladder. As always, short term policies create unintended consequences and we will no doubt see a return to the same issues we experienced in 2008 - you can only kick the can down the road so much. Unfortunately, websites like this one cannot predict when that will happen as it is really only a loss of control that shows these issues to the main stream media. As long as we can keep promising the unpromisable (pensions with no saving, "zero risk", higher standards of living with no wealth creation, unlimited consumerism) and it is palatable for no one to "rock the boat" (i.e assets will take a haircut) then it will continue indefinitely until a war starts.

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I agree with the original poster although I have a few points to colour your argument.

When the vendor bought his property interest rates and bank credit underwriting were completely different. You couldn't get a mortgage until you had a 20% deposit and more often than not your bank manager assumed your wife's income would disappear as you had a family so it would not be counted in the income multiple calculations

House prices have almost entirely been a function of bank credit for the last 30 years more than supply and demand. As debt is good for banks i.e an Asset on their balance sheets, they are incentivised to create more of it. Then add to that the fact that more debt practically eliminates paying corporation tax and debt creation goes into overdrive to ensure handsome profits and lower underwriting scrutiny on mortgage applications. Remember corporation tax in take has been falling steadily for 30 years whilst income taxes and indirect taxes on the individual have been rising.

Houses are no longer judged on "per sq ft" measures or 10/15% off asking as the "going rate". There is an intergenerational gap between those who have houses and those for whom houses will never be built - this has created a squeeze in the market. If the government simply allowed building on say 15% of greenbelt on the edges of London prices would fall before they were even built. We cannot get off the debt train unless everyone does it at once - and who wants to be the first? There is no longer a scientific, inflation escalated way of measuring house prices. You either want one or you don't - if you want one you pay as they know you can borrow. Why would an older person sell their house to pay for care when they are the largest voting block and the government will bend over backwards to get their votes to be in power? You'll have started to notice these conversations in the press to reassure pensioners that the government will always be there for them e.g a max amount to pay for care until you die, or free bus passes etc.

House prices will increase for much of the next two years thanks to the Government using its historically cheap borrowing to subsidise the banking sector. They are doing this to win over middle England and win the election. From Jan 2014 anyone will be able to buy a house with a 5% deposit up to a house value of 600K. Watch as average prices start to trend upwards and there becomes an increasing number of properties around the 600K mark as second time buyers all scrabble to move up the housing ladder. As always, short term policies create unintended consequences and we will no doubt see a return to the same issues we experienced in 2008 - you can only kick the can down the road so much. Unfortunately, websites like this one cannot predict when that will happen as it is really only a loss of control that shows these issues to the main stream media. As long as we can keep promising the unpromisable (pensions with no saving, "zero risk", higher standards of living with no wealth creation, unlimited consumerism) and it is palatable for no one to "rock the boat" (i.e assets will take a haircut) then it will continue indefinitely until a war starts.

Thanks. I am interested in these apartments: http://www.lindenhomes.co.uk/developments/lincolnshire/oasis-lincoln and this house: http://www.rightmove.co.uk/property-for-sale/property-42301568.html. They both seem overpriced. Do you agree?

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