I was watching Selling Houses Abroad last night whilst waiting for the Life on Mars finale (immense series by the way). The main focus of the show was a couple who had bought a 3 bed village house in south west France several years ago. After having their second child they decided that they wanted to upgrade and take on a renovation project so they put their house on the market and took out a bridging loan to buy a run down cottage and outbuildings in the surrounding countryside. Two years later they still havenâ€™t sold their village house.
Part of this programme is usually a house doctor type section where the presenter comes in and tells them how poorly their house is presented. In this case the criticisms were well justified because the 18th century house had all of its rustic charm covered up in not very good quality modern materials. They agreed to spend Â£2000 to do up the place a bit. This was basically spent on repainting, putting in more kitchen units and changing the bathroom. The couple selling the house seemed perfectly reasonable during this part of the show and it is easy to live with â€œfeaturesâ€ that are hard to sell.
The other reason that their house hadnâ€™t sold was the price. It was being marketed at about â‚¬220,000. In nearby villages, there were larger houses in excellent decorative condition with sought after period features on the market at between â‚¬165,000 and â‚¬175,000. I appreciate that it can sometimes be difficult to gain comparables as the houses in this region are very individual, but still, not much research was required to find this out in the space of two years. In any case, the house was being marketed by 11 estate agents and each of them valued the property at between â‚¬165,000 and â‚¬175,000 despite listing it at â‚¬220,000.
When it was suggested that they drop the price, the couple were not happy. They had a reason for justifying their asking price. Another house a few doors away was also being marketed at a similar price. Funnily enough, it also hadnâ€™t sold. It was rightly pointed out to them that if they actually wanted to sell, perhaps they should compare their house to other houses that had sold, not other houses that hadnâ€™t.
In the end they agreed to drop the price. They worked out how much they needed to get for the house, and decided to list it at that price. Which was about â‚¬200,000. And herein lies the problem. Just because they need a certain sum of money doesnâ€™t mean that anyone will pay that amount for the house. They need to forget what they originally hoped to get for the property and either take what someone will pay them for it, or sell their renovation project or they face losing both homes through bankruptcy.
- property prices and growth
- an investment property should ‘wash its face’
- house prices, bubbles, and investment returns