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House Prices - Am I Being Inrealistic?

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I am a First Time Buyer and I am struggling to form what I think is a fair offer for properties. It seems like all the houses/apartments I look at have very high asking prices e.g. say a house was bought in 1996 for £30,000. Lets say the HPI has increased 3.5 since then, then this would value the property at £105,000. The property has an asking price of £155,000, plus it is in poor condition. This seems ridiculous.

I am interested in two properties and I would be grateful for feedback on the asking prices:

1) Apartment: http://www.lindenhomes.co.uk/developments/lincolnshire/oasis-lincoln/availability-prices

2) House: http://www.rightmove.co.uk/property-for-sale/property-42301568.html

I did originally post this question in the East Midlands sub forum, but someone suggested posting it in the main forum.

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The first link doesn't seem to be working, but anyway only people with a detailed knowledge of the Lincolnshire market could tell whether those particular prices seem right or not.

I do think that you're unrealistic in your valuation approach. Just applying some standard uplift since the mid-nineties is not going to get you to the correct price.

I think there are two separate valuations that you have to do. First of all what is the true market value? To make a guess at this you need to know what similar houses are selling for. This needs a bit of research on your part, but the information is on the internet. Notice we're talking about what they're selling for, not what the asking price is. However, if places are generally shifting fairly quickly then you could assume that they're going for not too much below asking price. If they're sticking around for months, then you need to be more careful and check prices on the various websites that provide sold prices for completed transactions.

Then the second question is what is it worth to you. This is partly an objective matter. You can calculate your current housing costs and compare them with the cost of the new place: the interest element of the mortgage, the maintenance costs, and any change in the value which you anticipate. There might also be a subjective element: for example if you're currently renting what value do you place on owning your own home.

If the value to you is less than the market value then don't buy it! In fact more generally if this equation invariably comes out showing that market values are above what you'd want to pay then stop wasting time looking and making offers, because you have decided (like most people on here) that the home ownership at current prices does not make sense for you.

To use an analogy, I don't have a car. Step one: I can see what the market prices is for cars, it's all pretty transparent. Step two: the value to me of owning a car is fairly low, and certainly below the market price, because I live in central London next to a tube station, I'd rarely use the thing, and I can easily rent a car locally when I need one. I could analyse this arithmetically, but I won't bore you with the details. Conclusion: I'm not averse to the idea of having a car, it could be useful sometimes, but unless the price of cars collapses (which I'm not really expecting) I'm quite happy (and better off financially) as I am.

Edited by 65243

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+1

Spend more time researching sold prices and view a few every couple of months (RM Sold Prices, Zoopla Sold Prices).

Throw out a few choice low offers that you are prepared to stand behind. Expect a 'no' (offer declined or unacceptable) before you get a 'yes', so always start low. If I get my first offer accepted then I've probably made a mistake (position dependent, unless I was also a seller in a long chain and needed to keep the deal attractive for a potentially longer time frame). It amazes me in my local area how many sellers refuse to drop even 10% off asking, so leave them alone for a greater fool.

Then if you are a chain starter (FTB) try to make being chain free pay. Also assess the seller's position, commitment to move and to not wasting your time and money playing games.

Oh and make sure you have your financial numbers correct plus the cost of moving plus fees (it's normally more than you think). Try a couple of Financial Advisers to gauge the costs required at the various process check points. Helps to manage your cash flow which may become over stretched, who needs paying and when. Valuations, surveys, searches, arrangement fees, buildings insurance, removal costs. Rental overlap with mortgage payments, solicitors + VAT, deposits, transfers and Stamp Duty etc. Quite a lot going on and every maggot will be giving you a good suck!

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Good luck, OP. Plenty of good advice already.

Unfortunately any rationale way of valuing a house with relation to income disappeared sometime around the year 2000. My advice is to find as many houses as possible that you'd be happy with - rather than the "one". Offer on a bunch of them - especially those you don't give a damn about actually getting. Practice is key.

With a bit of luck you many find a desperate seller within them. Look for signs like plenty of reductions on asking price via PropertyBee and someone who has plenty of equity ie has owned for years via mouseprice. Anyone who bought from 2005 onwards has probably lost cash and will want to reduce their losses as much as possible (not true in all areas of the country).

Edited by StainlessSteelCat

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The value of a property is only worth what you think its worth. Someone may see a £120k home and think its worth £200k to them and someone else will think they could never live in it even if it was £0k . Look at properties in the range you can afford

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The value of a property is only worth what you think its worth. Someone may see a £120k home and think its worth £200k to them and someone else will think they could never live in it even if it was £0k . Look at properties in the range you can afford

I would say look at properties in the range you are prepared to pay.

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Look at some properties that you can't afford, that will stop you falling in love with properties that you can afford.

Falling in love with any property is a big mistake, so it's best to inoculate yourself against it as soon as possible.

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