FTB cold feet

[Monkeyface]

I'm in the process of buying my first property on the Surrey/London border and am due to exchange shortly but am getting cold feet at the last minute.

The property was originally advertised for a higher amount and reduced several times... it actually sold, then came back on the market due to a "problem with financing" then when I looked around there were other buyers also viewing. It was at the bottom end of the price for a house of the size in the area (below stamp duty threshold), so I got the impression it was a good buy and went in at just below the asking price for fear of getting trumped.

However, after having the survey done I found out there's about 10k-20k worth of refurbishment/repair work needed. I struggled with the estate agents and they wouldn't reduce further as this was already reflected in the price in their view.

I decided to press on anyway. However, I've recently found out the house next door sold for 10k less just 1 year ago, and the area has also fallen 2% too. There were other properties the same type that sold in the 90s for prices which Zoopla etc. will convert into similar prices as I'm paying but at face value they still drag down the average for the road and mine is the highest price ever paid :S

We're now talking a total of maybe 10%-12% price difference in real terms between my "finished" house and what the house next door sold for last year.
That, together with the predictions of a flat or declining market in the next few years and i'm really getting scared of negative equity if I go with it at that price and there doesn't seem to be scope with the agent to change the price now.

I've already paid out for mortgage arrangement, survey, solicitors etc. so will lose maybe 3k-4k or so if I pull out now, not to mention completely ruin the plans of the vendors who are lovely people and really need to sell, but fear I may lose more if I stay in.
I don't want to be stuck in the house for more than about 5 years max.

Should I pull out, or will a good refurbishment add enough value and a house near the bottom of the 3-bed-inside-london-belt bracket also hold up in the dips?

[Jeannie D]

If you count up the pros and cons set out in your post, the pros are definitely ahead but the truth is, Monkeyface, that there is no "right" answer, certainly in these uncertain economic times. It really depends on whether you are buying a home (albeit one that you are only planning to live in for about five years) or whether you see this house as purely an investment. I think that is the key question. And, I think, only you can decide. In fact, I am guessing that deep down, you already know the answer.

[drhouse]

Jeannie is correct. Only you can decide, but if you go into it feeling it is 'not right' then it will never 'feel right'

[New Homes Expert]

Do what you feel is right and dont be greedy!

[Dan S]

Hi Monkeyface

Whatever you do, make sure you're not buying in order to make money out of this home by renovating. You have to buy it because you love it, not because you think you'll add value to it (even though you may well do). A common mistake is to buy a home for 100k, spend 10k on it (with much sweat) and feel confused as to why it's now worth 110k and not the 130k programs like homes under the hammer convince us.

I wish you the best of luck, but as long as you're excited to redo the home into the way you'd like it rather than make money, you've made a good choice.

Buying your first home is a very daunting business.

Good luck!