A friend of mine is thinking of moving (after this is all over), and recently had a estate agent in to do a valuation. The kitchen and bathroom are both tired, as is the general state of decoration, but the agent advised doing and putting it on the market as is. This seems to fly in the face of all the advice that kitchens and bathrooms sell houses. The cynic in me says that he has a builder mate looking for do-er uppers. Am I wrong?
I'd get a couple more valuations done and see what the other agents say. If agent 1 has a developer in mind looking for houses to do up, and your mate is happy with the price he should take it. Nothing wrong with a chain free quick sale to a builder.
All agents will have builder/developers asking them for a heads-up on any potential projects - again nothing wrong with that, it's the agents job to link buyers with sellers and vice versa.
Most agents would rather sell it "now" at £X than in 6 months at £X + 5%. Similarly a lot of times these days if you spend £50k on a house your house is only going to be worth £50k more, not £60k or £70k so why bother? Half will want it done up and half will want it as is.
To a lot of people a place that they can put their stamp on is more appealing, your mate might pay X to replace bathroom/kitchen, but he may not see the return on his spend, also what he chooses may not suit everyone's taste
We are going through this with my 91yo Dad, whose house is 27 years old, we've said what is the point of the expense and upheaval in changing the kitchen and bathroom, let someone else have the hassle
This just highlights what I hate about estate agents, All they want is quick turn over of property’s so they can look busy. The problem is they get paid on commission and it’s a fine line.
Let’s say they get 3% for the sale.
House on market at £ 300,000 they make £ 9,000
Builder says bathroom needs doing so knocks £ 10,000 off, you lose £10,000 estate agent loses £ 300.
If they think the house will sell fast and easy, they’ll market it now and make a quick buck, but you can get a kitchen, bathroom and house painted in 3-4 weeks, that might make the house worth £ 310,000. Now do think the estate agent would rather make £9,000 now quickly or £ 9,300 in a months time.
Difference to estate agent £ 8,700 or 9,300
Difference to you, £ 290,000 or 310,000 (less decorating costs)
Hope my maths makes sense.
Slightly different in Scotland where (unless in a dead market) - 'offers over' is the predominant method of selling.
In that case - if someone thinks "I'll offer less because it needs the bathroom and kitchen updating". But - they have to realise that there will be others who look at the bathroom and kitchen and think "Needs doing, but we can do that over the next 3yrs as finances allow"
I would say - Sell 'as is'.
If a decent sale isn't forthcoming - do up the rooms basically.
It’s swings and roundabouts I’d say. Sometimes you might freshen up a house for say 5k and make an extra 20k so it’s worth it. Another time you could spend 30k and only make back an extra 30k if you’re lucky, sometimes less.
Some people definitely have an eye for making a property more presentable, others don’t. You can spend just a couple of thousand and make it look a lot more. Lick of paint (neutral colours) alone can make a huge difference.
I'm not an expert but if the kitchen and bathroom are fundamentally fine and you can imagine someone using them for a year or two before deciding what they want to replace them with then I probably wouldn't bother. If only the paint/decor is a bit tired then it might be worth redecorating things in neutral colours as this is quicker and cheaper than replacing whole bathrooms etc and also easier to be done during lockdown when you can't do other things!
I'm not actively looking for a new house now but keep an eye on the market. What strikes me as odd is that in many cases, a house for "renovation" costs only slightly less than a newly renevated one (to what looks like a good standard) and I can't see how you could do all that work, never mind the time and inconvenience for the same cost! I assume therefore that there is either a market for houses to renovate to the buyers taste, which would be my preference and that drives that segment of the market, those houses don't sell at asking price or close to it or the people that renovated their house don't get their money back.
A flat near me which was all painted purple (!) and needed a new bathroom and kitchen sold in early 2016 for £481k. Was renovated to a reasonable standard with average kitchen and bathroom and repainted etc. Sold in early 2018 for £490k. Are you telling me that it only cost £9k to do the renovation, never mind the £15k in legal fees and stamp duty etc?
Sell as is, neighbor of my MIL fitted a wet room appx 6 months before he passed away. House sold by relatives and all rooms gutted. As stated above people want to stamp their own impression on a property.
Worked in estate agency in the 80's & early 90's before getting a real job, however the fundamentals haven't changed.
Yes, always get at least 2 valuations. Use comparisons from the various online resources available, something we never had, remember that most roads have a ceiling, price wise, and whilst a new kitchen and bathroom will add to the saleability, they won't push the price over what the typical like property would cost.
Chances are, in this scenario, the fact the work is required would have been factored into their valuation.
For it to be of interest to developers, the house would need to be offered way below market value, as they'd need to get in, do the work and get out, whilst still making a profit.
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Six months before we sold our last house our next door neighbour in the attached semi spent about 15k and months of upheaval and hard work on new bathroom, kitchen, outside render replacement etc. Ours was pretty tired inside and out, and needed all the same work as his. All we did was have budget double glazing fitted for 1.5k, a lick of paint here and there and sold ours as is for 3k less than his. This was 20 years ago but the principal remains the same.
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I suspect that the whole genre of "doing up houses" TV programmes has led a lot of buyers to believe that they can add value to a house, so they are willing to pay as much for a project as they would for a house that's been renovated. In many/most cases, they'll never see back what they put into doing up the house.Originally Posted by mmgg1988
Plus, of course, they'll be able to customise the house to their needs/tastes. We looked at one house where they had spent a lot of money turning the garage into a bedroom - had we bought the house (we didn't), the first thing we would have done is to turn it back into a garage. Another example - the house next door to us was completely renovated to a high standard by the people who bought it; when they sold it 3 or 4 years later, the new owners immediately started a major renovation.
When we sold my mothers place we had some wall cracking due to previous (fixed and guaranteed) subsidence and other deferred maintenance. Initial valuations put what we felt was a high to reasonable price on the place. Unfortunately Brexit uncertainty, incompetent estate agents (describing a professionally built summer house as a 'lean to') and it's generally poor cosmetics led to few offers.
We got some quotes for decorating and decided that spending the average 10-20k being quoted was foolhardy. In the end we took it off the market, repaired the walls and gave the place a lick of cheap paint ourselves- probably cost us a few hundred pounds and 3 or 4 weekends in all.
We were about to put it on the market and had got some valuations from other estate agents which were now quoting LESS than originally after the work (brexit, summer lull, etc.), luckily an acquaintance, expressed an interest in the place after his divorce so we decided to sell to him for slightly under valuation without the use of an estate agent. Easiest house sale ever and we actually made more as we didn't have extortionate EA fees to pay.
The upshot of this is that in the OP's case I would spend a few hundred on paint, new handles / doors for the kitchen cabinets and regrouting everything and leave it at that.
Giving a house a good clean, a thorough declutter and a fresh lick of paint where necessary can work wonders...we sold our first house here in Spain, 2 years ago for only a fraction less than the asking price. AT a certain level new kitchens and bathrooms can help move a property along especially in a very crowded marketplace but I think it's an overstatement that it's a necessity.
As with all things it depends, there are many situations;
a) some folks want a house modernised and done to a reasonable standard i.e. move in and pop the kettle on. They either have the money to pay the premium, or are not diy inclined, or do not want the hassle of tradesman and living in a renovation zone.
b) some folk who want a fixer upper and do the work themselves or get someone in, these will be looking for bargain prices - either to live in or make a quick buck on.
c) some folk who can just about afford a mortgage and will look to move in and renovate if and when funds allow, these will also be looking for the best deal.
its also important to note that mortgage affordability and SDLT play an important role. The Lower the mortgage the easier it is to get (and also better LTV) will lead to lower debt which no one is going to say no to.
on a side note what absolutely cheeses me off is people who renovate a house, potentially modernise it to an average standard and then ask ridiculous prices, absolutely deluded, and for some reason the EA market the property at this price and it remains unsold. I just don't understand why the EA would market at this price knowing it wont sell, they don't make money and still invest time and effort into marketing it.
I recently saw a house for sale that was just shy of half a million gbp, it was a 4 bed detached, with a single story extension and knocked out wall to make an open plan living room and kitchen, all sounds good but the kitchen had no where near enough cabinets to which there was space available for more, the cables for sky, virgin etc were drilled through the wall and then dragged across to the tv, the carpet had been clearly folded (not rolled) at somepoint, the front living room had a side window that looks directly into the garage, the upstairs bathroom only has a shower cubicle and no bath considering its supposed to be a 4 bed family house and the drive way is half baked and needs completely redoing. They've really done a half job on it but asking premium money. if it was finished to such standard ok, still slightly overpriced but they've probably put some fat in for negotiation, but they way they have left it they are dreaming. Its a house I could see myself moving into but not at that money.
That house was bought for £195k in 2003, and now they want just shy of half a million.
A friend moved into a property on the adjacent road, 4 beds, 2 ensuites, main bathroom and toilet downstairs, no garage and smaller drive but it didn't come with a brick built outbuilding used as an entertaining area and home office and similar sized garden, he paid about £365k not long ago (think 2016). it didn't need any work but they wanted to and probably shelled out approx. £30k.
Last edited by Estoril-5; 1st May 2020 at 11:54. Reason: spelling
Holy Moly, what part of the country is that? I've sold around 5 properties in the last decade or so ranging from £120k to £1.85m and every single agent has charged me 1% plus VAT (after negotiation).
I paid £900 for a painter to do a "Magnolia" job on a BTL that I sold a few years ago. I then paid another £800 to have some cheap pale brown carpets laid. It made the house look hell of a lot better. Whether I got the money back will never be known. It did sell fairly quick in a sluggish market.
I can see how that works, a neat clean "blank canvas". Great for someone who just wants to move in and slowly change it room by room as time and money allows, which is probably the biggest section of potential buyers.
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3% is very high. Only Foxtons charge that and that's inside London and on multiple agency, otherwise it's 2.5% in London and 2% in Surrey. No one else comes close in terms of outrageous fees. Highest I've heard of was 2% in PCL for a top agent, otherwise it's 1-1.75% max.
I sold in Oct for 0.75% plus VAT.
I’ve had different views expressed by different agents, but they are trying to speak on behalf of an unknown purchaser in most cases.
I think that unless you put in some really loved design features that lots of people are willing to pay more than your costs, then you are better of just making a place clean and tidy - maybe sort out things like small cracks in plaster, grubby /old paint, handles, walls, doors, floors etc. But any big work is unlikely to reap big rewards, unless you are particularly skilled and able to do it all yourself at a minimal cost.
As a buyer I’m in two minds - part of me would like to buy cheaper and spend the money on making it my own, and the way I want everything, but I recently choose between two houses and one was considerably cheaper needing nothing structural but needed new everything, kitchen, bathrooms etc. and as I wouldn’t be doing most of the work myself I just didn’t want the hassle of choosing and dealing with assorted workmen - so I decided on the other property which the owners had redone rooms, including the main bathroom, removed internal walls and redecorated - It does look great and I actually like their taste, so all good.
New owners will no doubt want to put their own stamp on a property, so making something the way you want/like it might not be a money spinner.
I’ll be painting, tidying and reflooring my place in the next few months, and may change some light switches and built in ceiling lights. I’ll possibly reseal the bathroom and kitchen - but nothing too crazy (hopefully at little cost), and only to make the place look nice and presentable
It's just a matter of time...
When we were in London we negotiated the fee with the agent and built in a cash bonus for the individual who sold the property on a scale linked to price achieved.
I usually find the percentage model doesn't really work for house sales commission. Is there really double the work / cost for an agent selling a house for £1m vs £2m or £100k vs £200k...I think not.
Last house I sold the usual 1% was the best I could initially get them to...I then proposed a simple fixed fee...after apparently 'Director approval' they agreed.
Of course there is a danger with this, they will have zero incentive to get your that extra £10k (or whatever it may be) - they will just want it sold so you need to be a little savvy about that when considering offers.
At work, we sold a commercial premises once and I negotiated in an additional percentage if the selling price was above £x...that also works nicely (market dependent of course)!
If you are getting 1% - you are not being taken advantage of, that seems to be going rate (Central London excepted). Not to say you cannot haggle in the current climate. Online agents are also good value but different ball game (have used them too in the past!)
We tried e-moov as my wife's friend worked there and gave us his discount. It was so bad we had to get a refund. "we don't do refunds" yet 3 days after an email complaint where I threatened to report to them to the TPO for submitting a wreckless offer we got a call from the "refunds dept". No wonder they closed down.
I'd always go with a local well respected independent and haggle.
When we sold in Devon I had four agents around to value our house. I had them turn up five minutes before the previous one left. This was to create a sense of competition.
I was told by all that if multiple agents listed the take percentage would be higher... 2~3%. If I were to use only one then their rate would be 1%.
When I called them back the following day after much deliberation and thinking... I suggested they could have two weeks, no contract... find a buyer and I’d give them 0.85% plus a nice cash bonus.
My idea was that I would attract everyone they already had on their books who were actively looking. My plan was that we would also attract only those who were genuinely interested as the agent would be working hard to ensure their bonus so might cut out the time wasters and chancers. Additionally, I had hoped that I would also get every agent working towards a sale and not have to pay the extra 1-2 percent. Also built in was an additional bonus if price achieved was above X amount.
It worked very well. For a week we had a flurry of visits and at two weeks a buyer lined up. We never signed a contract with anyone, we paid upon closing the 0.85% and the selling agent came around immediately after closing for their cash.
At the time I was confused why I was the one agreeing to terms that I didn’t like for the privilege of letting someone sell my house and in my opinion, given a hot market, for someone to make significant coin for little work. I figured the negotiations should be the other way around. It helped that my wife was also a property lawyer so her firm dealt with the work.
I would try it again if selling.
I attempted to sell my late parents house a couple of years ago and failed. Whilst it's liveable, the house needed (still does) a lot of work done to modernise it. The advice was consistently not to do it up as the nature of the property was such that the range of buyers would be huge and they would likely make big changes so any work would likely just get ripped out. I have had the same conundrum as the OP and it has taught me a little about how it all works.
Anyway, as others have mentioned, with typically a 1% commission, a significant difference in price to the seller doesn't make a big difference to the agent. They would rather get you on the books and sell a house for £200,000 and make £2,000 now, than suggest you do some renovations that'll take in indeterminate time and perhaps then sell the house for £250,000 and make £2,500. And of course when you've done the renovations there's no guarantee that you'll use that agent, so recommending that you renovate might earn them an extra £500 but may also lose them £2,000.
Similarly, if you want £200,000 and there's an offer of £180,000, they'll be keen for you to accept as they'd rather get £1,800 now, rather than have to keep advertising it and showing people around in the hope that they might make a further £200.
I involved 3 agents when I sorted out the value for probate. Interestingly when I then engaged with them again thinking of selling, apparently the "market had softened" a little.
One agent then called me. He knew I'd not put the property on the market, but he had a cash buyer that was looking for a property just like mine. Apparently he was an architect looking for a property that he could really put his mark on, and the location, size of the plot and the awesome views meant it was perfect. We agreed what I wanted for it; the amount he'd previously valued it at, I handed him the keys.
The architect never appeared but his builder mates did. He told them what I wanted for the property - about £65,000 less than we'd discussed - and his builder mates talked about putting in offers about £75,000 lower than that so they could turn a healthy profit. Quite why they had these discussions right next to the indoor CCTV - which the agent pointed out to them - will always be a mystery.
I collected the keys and contacted agent 2.
Agent 2 actually signed me up and prepared to market the house, again at the price discussed with agent 1. After viewing the property the agent contacted and said that if I didn't put it on the market, he wanted to offer £15k below asking as his wife liked it and wanted to move to the area.
As the value hadn't been market tested, I suggested that I put it on with agent 3 instead and that way I could discover if the offer was a good one or not. Agent 2 didn't like that idea, partly it seems because he was still expecting his 1%. The agent withdrew their offer and agreed to market it instead, but said if it didn't sell and I wanted to go back to them they might still be interested. I wanted to have a discussion about conflict of interest but decided to hold off as I didn't want to head to the third agent just yet.
Unsurprisingly, there were few viewings, most of whom said there was too much work and only one made offers, the highest of which unsurprisingly was £30k below asking.
When I went to collect the keys, the I asked the lady that was given the job of selling it what people had thought about the solar installation, as it produced free hot water, reduced electricity costs and was going to bring in about £40,000 in index linked tax free payments over the next few years. But they didn't know much about it so they'd not bothered to tell potential buyers.
I don't think they tried very hard to better their own offer.
I collected the keys.
I'm currently living in it. For now, I can live with an avocado bathroom suite.
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