I have already said that when we were house hunting we found the perfect house…and then bought the house two doors down.
“Why?” you may well wonder. Well, here is how that happened…
We approached house hunting in a very haphazard manner! This is not recommended by any of the “First Time Buyer” guides and there are plenty of reasons why it is not a good idea. However, we think that it actually helped us out.
We looked at anything and everything within our budget (and a lot that wasn’t!). The downside of this was that I spent many evenings crying and stamping my feet about the fact that I couldn’t have the huge house that was £50k over budget that I had just fallen in love with! The upside of this was that we were able to make informed decisions about what we definitely DID want, and what we definitely DID NOT want. We cut it down to a very short list of what we definitely wanted:
1. At least 2 bedrooms.
2. A house (and not a flat – we spent 4 years living in flats in London and hearing people stomping about upstairs at all hours of the day was not part of our home owning dream!)
3. A period property. New houses have their advantages, and for first time buyers on a tight budget, and for those who have no interest in DIY they are perfect. Just not for us! We wanted solid walls, odd shaped rooms and bags of character.
4. Somewhere within commuting distance of work (anywhere within a 10 mile radius of York for us).
4. Something we could add value to.
This last one was the most important for us. First time buyers should always look for something they can add value to. There are lots of great schemes out there to get first time buyers into homes (see HelptoBuy). However, a 5% deposit (whilst great when you are buying) can turn out to be a nightmare when you are selling. You only need the value of the house to drop by around 5% and suddenly you have a huge gaping hole between what you sell the house for, and what you have to pay back to the bank! You could end up having to find a hefty chunk of money to pay off the mortgage.
Buying a house you can add value to also gives you that bump up the ladder into your second home when you have a hefty chunk left over from selling the house!
Anyway, after what felt like a lifetime of searching the perfect house popped up on Rightmove. It was just around the corner from where we were living with my parents, 2 bedrooms, Victorian terrace, within budget and beautifully decorated (the sellers obviously had impeccable taste). It needed very little work – a new kitchen would have finished it off.
“Great! Let’s go and look at it!”
Then Rightmove has this great little option of seeing what else is for sale on the same street or nearby. We discovered that the house two doors down had been up for sale for a couple of months. I had actually looked at it a few times and thought it was too small. BUT, when we compared the floorplans, I discovered that the two houses were exactly the same size and layout (but mirror image of each other). Being able to compare “house two doors down” to “perfect house” meant that we could see the potential in “house 2 doors down”.
We arranged to go and see both on the same day.
“Perfect house” was, as we expected, beautiful. And as it was still fully furnished we could judge how big the rooms were and what would fit in. We learned that the sellers were in a rush to move so had listed it for the same price as “house 2 doors down”.
“House 2 doors down” was unfurnished and this made it feel tiny! But we knew that it was exactly the same size as “perfect house”. We made a list of all the work that would need doing to get it to “perfect house” standard. And then we spent hours working out how much that would cost. After some scientific calculations (dad and Craig going through DIY webites and guestimating how much things will cost – dad already has a good idea from previous work he has done) we got to a figure of around £7k to do the work. (We plan on doing most of the work ourselves with the help of skilled friends and family- obviously if you plan on getting professionals in to do the work expect to pay a lot more.)
When we took out the work that would still need to be done on “perfect house” (new kitchen, new carpets etc) we realised that, doing the majority of the work ourselves, it wouldn’t cost us a great deal extra to sort out “house two doors down”. Structurally, the house was in good condition, and decoration wise we could have just moved our stuff in.
So then came the hard part…negotiating with the seller! And we had a great tool in our “negotiating toolbox”- the fact that “perfect house” was on the market for the same price but needed very little work doing! Here’s a cut down version of how the conversation went:
Me: “We would like to put an offer in…but there is just NO WAY we are going to get near the asking price. You see, we are already negotiating on a different property that has just gone up for sale on the same row of houses…and it’s the same price…and it needs nothing doing to it…(long pause) and we feel that this property needs A LOT of work doing…so our offer is going to reflect what we realistically think it will cost us to do the work”
Estate Agent: (Asks lots of questions about the other house – I make a big deal about just how similar they are minus the amount of work that needs to be done in “house two doors down”)
Me: “So our offer is (makes offer £20k less than the asking price)…
That offer was obviously rejected…£20k off the asking price would have made the price ridiculously low for the area we are in – you would struggle to buy a flat for that price here. BUT the seller came back with an offer of £5k off the asking price.
Me: “oooh I just don’t think we could do the work for that kind of price…new electrics, new guttering, new plumbing, replastering, new staircase…its all going to add up. (Some of this work doesn’t actually need doing.) (Makes another offer £15K off the asking price).
We fully expected that offer to be turned down flat. The seller came back with an offer of £13.5k off the asking price…we obviously bit her hand off!!! WHAT A BARGAIN! (You will learn throughout this process that I am an avid bargain hunter…if I don’t think it’s a bargain, we ain’t ‘avin’ it!)
So there we were…we got “house two doors down” for £13.5k less than the asking price…and £13.5k less than “perfect house” whose sellers had already made clear they WERE NOT going to budge on the price!
The Moral of the Story
The moral of the story is this, fellow first time buyers…
Look around at everything that is on offer in your chosen area.
Look at properties you aren’t sure about…you might find something you unexpectedly like and if not, at least you can be sure that that type of property is definitely not for you.
Look at what else is for sale in the area! This will give you a good guide as to the going rate for houses in the area and what sort of property you will get for your money. It may also throw you a golden negotiating tool. Use any similar houses as examples of what else you can get for your money and why the one you want should be cheaper.
Don’t be afraid to put in a cheeky offer…you might just be surprised at the response!