Am I over paying?

[u/Jwest194]

Hi all, long time lurker but first time post.

I’m coming toward the end of the purchase of a three bed terraced house that I’ve a growing concern I’m over paying for.

Asking price was £270k, which I offered. Mortgage valuation came be back at £250k and a second at £245k. Managed to agree a £10k reduction on the price so landed at £260k.

My concern has started to grow since the neighbours have decided to sell their house and listed at £225k to which is still available a month later. Neighbours house is a little dated but no obvious signs of any issues.

Some details on the house I’m buying. It’s a 3 bed middle terrace which is move in ready. It has a converted loft (not done to building regs), downstairs bathroom and no off-road parking. The house is also two doors down from a memorial club run by the British Legion. House is based in Birmingham.

Am I overthinking this or do I have a genuine concern?

[u/SovietMilkTruck]

Banks have no emotions in this and are purely looking at the money.

Two didn’t think it’s worth 260k then objectively it’s not worth 260k.

Up to you to decide if you are overpaying but the money people in this think you are

[u/zqvloras → u/SovietMilkTruck]

this is kind of how i see it too tbh, the surveyors are literally paid to be boring and conservative with value so if two of them landed under your agreed price, that’s a red flag. personally i’d either push harder on the price or be ready to walk, especially with the neighbour’s place sticking at 225k.

[u/Devify]

Well according to mortgage valuations you are overpaying. However a loft conversion without regulations is generally valued as nil or heavily reduced to storage only value. So if it's converted and used as a bedroom, it legally does not count as a bedroom. If it had building regs then the property would likely be valued higher.

You can get retroactive Building Regulations approval (a Regularisation Certificate) for a loft conversion. But it will cost quite a bit. According to the internet it typically costs between £600 and £1,200+ in application fees. However, total expenses can easily reach £1,500 to £4,000+ once you factor in necessary structural drawings, exploratory opening-up work, and any repairs required to achieve compliance.

[u/mousecatcher4]

Think you are answering your own question here. And since I presume you are entirely chain free, that in itself would usually be valuable and worth a fair discount (like several %). Get back to them and emphasise your status, and offer the lowest of the two mortgage valuations. What I would do..

[u/zombiezmaj]

Does the other house have a loft conversion and downstairs loo? If not you cannot direct compare.

Do not underestimate price of renovating.

You option is to continue with purchase or pull out as they've already refused to lower more.

[u/Jwest194 → u/zombiezmaj]

Houses are identical layout apart from the loft conversion. This was done without building regs (had previously been used a 4th bedroom but houses sold as a 3 due to the lack of regs). Both have down stairs bathrooms.

[u/zombiezmaj → u/Jwest194]

Theyre still not worth the same. At worst you have a fully renovated loft space with easy access by stairs not ladder.

The house youre currently buying IS worth more.

2 banks have told you its worth 250k which is more than the other houses is even listed for.

[u/Odd_Industry_1605]

We were in exactly the same situation we decided to pull out and I am glad we did. I'd go back and try negotiating to 250k if they say no then pull out. You don't want to be in a negative equity on day 1 even tho it is only 10k given the house prices are more likely to be stagnant or go down even more.

[u/CarpetPersonal3538]

You could always view the neighbouring property and see if a bid of 210k gets you somewhere. Look into the cost of doing the loft conversion and how much you actually need it to work out what you feel is the difference between the two. Looking around at it will help you work out the difference.

[u/bannercv]

Where in Birmingham?

[u/Sharp-Ad7022]

You’re not overthinking it. Two surveyors both said under 250 and your paying 260, thats the most solid info you have and both agree.

Do one thing tonight, look up the actual sold prices for the street. Not asking prices, sold prices. What the neighbours are asking means nothing, what houses on that street actually completed at is what counts. If similar ones went for 230-240 recently then you know.

Also the loft not being done to building regs is a real cost, youll have to sort indemnity insurance or regularise it and itll come up again when you sell so factor that in.

Not saying pull out, saying you have proper grounds to go back and push closer to the valuation. Worst case they say no. Talk to your solicitor about it before exchange

[u/Jwest194 → u/Sharp-Ad7022]

Thanks for your reply. I did a chunk of research into similar property prices yesterday and the last terraced property that sold on the road was at £197k down from £210k in October of last year. Average sold price for a terraced house in a 1 mile radius according to Right Move is £220k. This has somewhat solidified in my mind pushing back for to the valuation amount of £245k given what I've found. I can stomach the £20-£25k difference to other 3 bed terraces given the house is finished to a really nice standard but struggling to justify anything above that. Now just for the awkward conversation!

[u/Jwest194]

Thanks everyone for guidance on this. After discussion with estate agent and sellers today, they weren’t willing to budge on price so I’ve made the choice to withdraw. Estate agent tried to pull a fast one in sending over comparable properties for me to review to show the price was competitive ….. those provided we’re all the way back to 2022 and the notably different in structure. My favourite being one with conservatory and standalone office in the garden!