Do buyers have less available cash post-purchase?

[kcat]

Myself and Mrs kcat are currently bidding on a house in an area where demand for family homes outstrips supply. Most houses are selling for the exact asking prices or slightly above. The house we're bidding on is on the market one month with an asking price of €390k. There was one offer of 310k and we've increased it to 320k. The house needs work but is in perfectly good livable condition immediately. We're really suprised at the lack of Internet and it's definitely not the location or estate so we're wondering if buyers have less cash available for renovations? Has anyone had similar experiences?

 

[mollyblue]

People are different....some want a house ready to walk into with no obvious renovation needed,others don't mind a bit of renovation as they can put their stamp on it. Budget plays a part obviously.
We bought in a location too where demand is higher than supply and we were one of two bidders on another house which was ready to move into but needed cosmetic work. I was surprised that there wasn't more bidders as there were a few different parties viewing but maybe the just didn't like the house. (In the end the vendor decided not to move) Everyone's taste/criteria is different. If you like it and want it, go for it!

 

[Butter]

So would you prefer to be in competition with lots of other bidders? Is the fact that there aren't loads of other bidders making you doubt the desirability of the house?

Every potential house hunter is different. We bought a house that needs work because that's what we want to do. We sold our house to a couple who wanted a house that was already done & requires no work.

The thing about a do-er upper is that people also need the cash to do the work & most people don't have lots of cash left over after purchasing - or at least most first time buyers don't. It's more likely that people who are selling to buy & walking away with some equity/cash are in a better position to buy a house that needs work. That rules out quite a number of potential buyers - first-timers, those in negative equity, those with low levels of savings beyond the deposit.

If you can see the potential & think the work needed is manageable - be grateful that not everyone can or can afford to do it.

 

[gnf_ireland]

from my experience back in 2010/11, the banks were making it much harder to give money for renovations than purchase. They would only release the cost to buy the house initially, and then pay extra for renovations incrementally based on an architect report every x months as progress was being made. This obviously would cause cash-flow issues for people
Another downside of renovations is the fact that some people will need to continue renting while the renovations are happening, which is another extra cost. Can also be delays here if planning is required etc

But as others say, its more down to peoples preferences !

If you any concerns on the house (or not) just ensure you have a top quality structural survey done !