Ask Paul: I paid too much for a house I don't even like
In early 2021, my partner and I bought a home for $850,000, despite the valuation coming in at $790,000. We needed a place as soon as possible, as we had moved interstate and had a baby in tow.
Sleep-deprived and overwhelmed by all of the change in our lives, we put in an offer well over the asking price.
We have come to find the home doesn't suit us and is somewhat of a money pit, with major work required in the garden, on the house layout and fencing. It's money we simply don't have and, even if we did, it would just never add value.
So, my question is, how many years must we stay here before we can sell and buy something that suits us better and enable us to make our money back (stamp duty plus agent fees plus a bit of profit to help with the next purchase), or are we stuck here for life? Yikes! - Penelope
Yikes indeed, Penelope! Getting a valuation below your purchase price is not terribly uncommon.
Valuations done by a bank are, quite sensibly, very conservative. But I am quite concerned about your comments that fixing the fence, garden and house layout would not add value - these are usually pretty effective at increasing a home's value.
But this is all very academic if these improvements would require money that you do not have.
Instead, let's look at our natural human instinct to "never sell at a loss".
You think, in a haze due to sleep deprivation and an interstate move, you have overpaid a bought a house that does not suit you. Let's say that this is true. Your current home obviously needs work, but this work is unlikely to improve its value. Maybe it isn't in the best location, either.
Anyway, if we assume, realistically, that over time any reasonably located property will go up in value, by the time your current home does this, surely we have to assume other "better" properties will increase in value more rapidly than yours?
My point, Penelope, is that this may be one of those times in life when you take a deep sigh and sell at the price the market is willing to pay, cut your losses and move to a more suitable property.
Painful, but we all make errors when it comes to money, homes and investment. It doesn't sound as if you are enjoying your current home, so maybe it is better to just move on.
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