Why Are Second Hand Houses So Overpriced?

[sarahsbloke]

I've been looking at houses for sale over the past few weeks.

The developers are all offering nice 3 bedroom houses (master en-suite) with tiled floors at about the 2.3Million Bht range (within 10km of CM centre).

Now when I go and look at second hand homes

1) 1.9M 3 storey, 3 bed house 18 km out along 118, roof leaking badly on all levels, bathrooms dirty with old tiles and dated contents, rooms all damp.

2) 2.2M 3 bed house with big garden, totally neglected for what looks like years 18km out along 118 (new houses in same mooban for 2.3M with big gardens)

3) 2.5M 3 bed house with separate dining room (so advertised as 4 bed), dated bathrooms, no en-suite, 20km out in Doi Saket

The owners all seem to think they can sell their tired 2nd hand houses when competing against shiny brand new.

They are all surprised that their houses are left vacant for years, everyone thinks their house is worth 2mbht

Don't they ever compare new house prices?

[fcgprg]

They think they will lose face by reducing the price . Any economic thoughts do not come into it.

[thaicbr]

Easy answer... NO

[venturalaw]

Having purchased a new home some time ago, the cost to add a kitchen, perhaps another room, etc. may be calculated into the selling price. Its just a guess, but I was surprised when I realized that if I was to purchase a new home, it would be without a kitchen.

[sarahsbloke]

Having purchased a new home some time ago, the cost to add a kitchen, perhaps another room, etc. may be calculated into the selling price. Its just a guess, but I was surprised when I realized that if I was to purchase a new home, it would be without a kitchen.

Thais don't really do kitchens ........

a double burner gas stove with cylinder is about 2,000bht and is more than many have in their homes, they don't usually have built in wall units either.

Of course you will be paying extra to westernize your home. Most second hand homes don't have kitchens (as such) either, so you would still have to pay out.

[lannarebirth]

This is my take. In the west a rundown abandoned house continues to accrue expenses to the owner, either in the form of property tax, assessments, citations from local government authorities for not keeping up yard and fencing, safety issues, etc. . Consequently many owners are willing to offer significant discounts (depending on market conditions) to stop their bleeding out money every month. People buy these "fixer uppers" knowing that their sweat equity will get them into a home cheaper than they might have otherwise paid or some people even make a business out of selling them on.

Here a rundown house accrues almost no additional expenses and each year the empty plots around it get sold for ever higher prices. It is the land that holds the value here not the dwelling. Additionally, with labor being so comparitively cheap here the seller knows pretty much what it costs to clean up and repair the house. He knows the buyer knows too and the buyer knows the seller knows. Consequently the upgrading is dispensed with altogether as a precursor to sale.

[jayjay0]

Having purchased a new home some time ago, the cost to add a kitchen, perhaps another room, etc. may be calculated into the selling price. Its just a guess, but I was surprised when I realized that if I was to purchase a new home, it would be without a kitchen.

Thais don't really do kitchens ........

a double burner gas stove with cylinder is about 2,000bht and is more than many have in their homes, they don't usually have built in wall units either.

Of course you will be paying extra to westernize your home. Most second hand homes don't have kitchens (as such) either, so you would still have to pay out.

What you say only makes sense if the examples you used in your OP did not have kitchens.

You asked a question if you want a answer give us the details.

We are in Thailand. 3bedroom two bath ensuite can be 800 squre feet or it can be 1,600 squre feet. Run down yard or bare yard start from scratch.

There is just to many variables to form a opinion on why.

I agree with the poster on no cost to leave a house vacant.

Kinda like comparing apples to oranges.

[sarahsbloke]

What you say only makes sense if the examples you used in your OP did not have kitchens.

2 didn't, 1 did (the most expensive) ........ anyway I can't see a few kitchen units costing more that 25kbht

And like the bathrooms, the kitchen was very dated ... not something i would pay more for.

Now nice white tiles on every floor and gleaming toilets and washbasins in the new houses .... that's worth extra.

I was pretty much looking at similar floor areas on the houses.

Anyway, all the other buyers seem to agree with me as the new builds are selling and the 2nd hand houses aren't.

Edited December 20, 2010 by sarahsbloke

[uptheos]

What you say only makes sense if the examples you used in your OP did not have kitchens.

2 didn't, 1 did (the most expensive) ........ anyway I can't see a few kitchen units costing more that 25kbht

And like the bathrooms, the kitchen was very dated ... not something i would pay more for.

Now nice white tiles on every floor and gleaming toilets and washbasins in the new houses .... that's worth extra.

I was pretty much looking at similar floor areas on the houses.

Anyway, all the other buyers seem to agree with me as the new builds are selling and the 2nd hand houses aren't.

Aah, they don't make them like they used to.

[sarahsbloke]

Here a rundown house accrues almost no additional expenses and each year the empty plots around it get sold for ever higher prices.

You are correct empty plots get sold for higher prices every year ......... but a 1Mbht plot with a derelict house doesn't sell for 2mbht

(you can get very nice plots for between 500k and 1mbht)

Here are the new ones I liked

Edited December 20, 2010 by sarahsbloke

[Artamus]

We've been looking around CM for a house, and indeed noted the same thing as the OP. I discussed this with my Thai other half who reckons it's that owners simply expect the house prices to rise over time and are generally not prepared to offer a realistic prioe - hence they simply go unsold, and stay on the market as a new place costs less.

There are exceptions when the owner really wants, or needs, to sell, and then 2nd hand can be very attractive. However, this doesn't appear to be the norm, so we keep looking at new places.

[jdinasia]

Land does seem to be the issue. Older houses often have more of it.

[ignis]

If the house is empty maybe you need to know the history..

In my Village there are 2 detached 3 bedroom houses empty, 1x empty for 6 years, was only 1 year old when repossessed by the Bank, the other has been empty for 4 years this is on going Court case if they could find the builder or the Insurance would pay, extension 2 story back and side, bad work and unsafe to live in... [do not understand the Insurance Company are paying the owner to rent a 3 bedroom house 2 Villages down so far 4 years... it would have been cheaper to have paid another builder to come and build/fix problem I would have thought]

The repossessed by the Bank house is over priced for the condition, now even more so as bird have set up home in it about 2 years ago and have made a lot of damage...... The Bank is only interested in getting there money back, not selling the house, that I know of there has been 2 different people put in a offer, but the Bank want the full asking price. We the owners of the other 61 houses in the Village pay 2x yr for workmen to come and clean the garden and cut the trees, NO the Bank will NOT pay 2 workmen 2 days work 2x per year.

So believe many empty houses may be Bank owned 'repossessed'

[venturalaw]

What you say only makes sense if the examples you used in your OP did not have kitchens.

2 didn't, 1 did (the most expensive) ........ anyway I can't see a few kitchen units costing more that 25kbht

And like the bathrooms, the kitchen was very dated ... not something i would pay more for.

Now nice white tiles on every floor and gleaming toilets and washbasins in the new houses .... that's worth extra.

I was pretty much looking at similar floor areas on the houses.

Anyway, all the other buyers seem to agree with me as the new builds are selling and the 2nd hand houses aren't.

A properly built western style kitchen cost no less than 100,000 BHT. Ours cost closer to 150,000 BHT. I rented a place with a Thai kitchen (so-to-speak). Couldn't wait to get out of there - not solely because of the kitchen.

Some western comforts I'm not yet welling to sacrifice.

[clinique]

The question is abit general. Property prices normally reflect location - yes even in Thailand. And agreed the land price is most important here in Thailand from a Thai point of view. New homes more often than not are not "finished" in the sense we westerners would expect, ie: no kitchen, incomplete bathrooms, no aircon, etc. so there is the extra expense of adding those finishings as well as the developers price. ANd 25k will not do it.more like 250k+.

Your home is about where you want to live, and why you want to live there.

If you want to live in an out of the city Moo baan where all the houses look the same and you have no idea who your neighbors are and how well they will maintain their property (if at all) thats one choice.

If you want tolive say in the city, do some renovation and have a better value on your home thats another choice.

We bought a large house and land in the city 6 months ago for 4.8million baht renovated it for 1.5m and the bank now value sit at 12m+... mainly bcoz of its location close to the city and the size of the house.

Horses for courses - and in my travels around the world it is the same in most places unless there is a boom going on and renovating can bring a good price.

[Mapguy]

Always hard to make unit to unit comparisons, but some solid reasoning provided above, especially re modernization, increasing property values and maintenance/improvement costs.

When I mention to Thais the reticence of Thai buyers to purchase an older house, I often get two casual explanations. The first is the superstitious nature of a lot of people. Has someone died here? Grumpy spirits in residence? The second is people like to start "new."

To speculate a bit more, might there also be a tendency to "show off" a bit by going "new?" Perhaps similar to favoring new cars over used cars.

Finally, a (Thai) friend of mine recently bemoaned the tendency of developers and individuals who continue to fill in rice paddies and build new when there are so many older houses available.

[jayjay0]

Land does seem to be the issue. Older houses often have more of it.

Also as has been said where is it located. I am not familar with the pricing f homes but I am familiar with the importance f location.

In some areas 2,000,000 baht for a older home may seem high. But to get one with comparable values might be 5,000,000 baht in another location.

Personally not interested in all the responsibility that goes with owning. But if I was I would be looking at all the different parts involved. To me location would be high on the list.

[Ta22]

That is becos there is a healthy Market of Blind Buyer . and expat who spend money without thinking and then complaint after there were overprice

This is Thailand . Supply and demand .

[Thaifan2]

There are bargains out there .I bOught this one 2 months ago in San sai ,6 years old and 10 klm from the city ,It was B1.45M ,

[nikster]

The simple explanation is that these overpriced 2nd hand houses' owners don't need to sell. They're perfectly happy to sit on their prooerty for the next 20 years. Just keep the land,, basically.

Maybe its because the owner is a bank, or because the owner doesn't need the money. I blame a lot of it on the banks actually, they seem to be uninterested in finding out the real value. Just a guess but maybe its because they rather keep a 2.5M baht house on the books than sell and have to admit its actually worth just 1.5M?

[nikster]

Always hard to make unit to unit comparisons, but some solid reasoning provided above, especially re modernization, increasing property values and maintenance/improvement costs.

When I mention to Thais the reticence of Thai buyers to purchase an older house, I often get two casual explanations. The first is the superstitious nature of a lot of people. Has someone died here? Grumpy spirits in residence? The second is people like to start "new."

To speculate a bit more, might there also be a tendency to "show off" a bit by going "new?" Perhaps similar to favoring new cars over used cars.

Finally, a (Thai) friend of mine recently bemoaned the tendency of developers and individuals who continue to fill in rice paddies and build new when there are so many older houses available.

Well it's a bit of a chicken and egg problem. Back home where I am from you can buy an apartment thats 100 years old. In thailand any building starts looking very old after 5 years, and is pretty much finished after 10. No wonder people like to buy new! These things have a limited lifespan.

[Cnxforever]

Land does seem to be the issue. Older houses often have more of it.

you are correct - when I bought my first house here 10 years ago the land price was 5900 Baht / w2 - now land in the area is priced 11.000 - 13.500 w2 - I was lucky enough and the Moo Baan sold me two plots and allowed me to built only one house - most Moo Baans will not do that and the plots are tiny usually your neighbor is only about 2 meters away - so if you buy a home outside the city or outside a Moo Baan you mostly get a larger plot which has its advantages.

In a new Moo Baan - you usually don't know yet who your neighbors will be- like my friend who was one of the first in an upmarket Moo Baan - he is trying to sell now because he has neighbors from hell.

If you buy a new house you have to consider a considerable amount for garden, furnishings , water pumps / storage tanks , air conditioners , curtains, kitchen and countless other things which can easily end up costing you several hundred thousand baht. (been there done that!)

I am just selling my old house - three prospective buyers - nice big garden it is very well maintained and they do not have to spent a dime extra - you just have to look around for good deals.

[jimmym40]

I totally agree with above poster, CNXFOREVER. In the newer moo baans, the plot sizes are so small and you get 2 meters in back of the house, 2 maybe 3 meters on each side, and if you are lucky, 2-3 in the front yard. Land prices are high and getting even higher.

In these new moo baans, what do yo get for their advertised price - very basic home. Absolutely no upgrades - maybe they throw in one a/c unit.

Like CNX said, all the extra essentials, modern kitchen, water tank, water pump, curtains, cabinets, closets, extra built-ons, i.e. covered back patio, front/side coverage (for shade), etc. These items add up considerably and could run up to 4-600,000 baht.

One probably needs to look at used houses strictly built/owned by farangs. I believe they are kept cleaner, have proper maintenance dones, and would be overall a better deal and probably get more for your money.

Check Home Pro or Index and see what a fully functional western style kitchen cost - you will definately be surprised.

[Beetlejuice]

The facts:

When someone purchases a property they expect it`s value will rise or fall the same as any new construction, according to current land and building market values. The buildings are actually valued on they`re condition and location not by age different as in the pricing of a second hand car or furniture.

Many buyers will first purchase the land then have a home built on to their own specifications, but this doesn`t always apply to in town where mostly there is no open land but already a built up area.

If for example you have a house built in a location well outside of town, say in a village community, I would consider that purely as somewhere to live and not as an investment because the odds are that no one in the future will want to buy it unless put on sale at a giveaway price or extremely lucky, no matter what mods and cons it is fitting out with, as most in those areas where there is an abundance of cheap spare land, they will have a new home built on it.

Edited December 20, 2010 by Beetlejuice

[sarahsbloke]

We bought a large house and land in the city 6 months ago for 4.8million baht renovated it for 1.5m and the bank now value sit at 12m+... mainly bcoz of its location close to the city and the size of the house.

Valuations mean little ....

Doesn't mean you can ever sell it!

And my wife is Thai, so doesn't need a western kitchen, all I need to make a sandwich is a table and a knife!

(I really do wonder why a western man with a Thai wife wants a western kitchen ..... mine won't let me do her job)

Edited December 20, 2010 by sarahsbloke

[uptheos]

We bought a large house and land in the city 6 months ago for 4.8million baht renovated it for 1.5m and the bank now value sit at 12m+... mainly bcoz of its location close to the city and the size of the house.

Valuations mean little ....

Doesn't mean you can ever sell it!

And my wife is Thai, so doesn't need a western kitchen, all I need to make a sandwich is a table and a knife!

(I really do wonder why a western man with a Thai wife wants a western kitchen ..... mine won't let me do her job)

And try getting the bank to lend you 5 Mil against it.

SB - You must have noticed all the gourmet chef's on here.

[sarahsbloke]

We bought a large house and land in the city 6 months ago

If I may ask .... did you do a lease or Ursafuct or partners name or wifes name?

[uptheos]

We bought a large house and land in the city 6 months ago

If I may ask .... did you do a lease or Ursafuct or partners name or wifes name?

An usufruct gives a guarantee that you can live there for life and as a usufructary you can lease it to your children etc (in theory).

If the person is married, a usufruct isn't very helpful if the relationship goes very sour. I know of one such instance where the person with usufruct felt quite smug after spending big money, but the smugness soon wore off when a whole tribe moved in. Of course if they divorced he could have asked her to leave as he was the leaseholder....but while still married she had him by the balls.

The old saying holds true; don't invest more than you can afford to walk away from.

[Thaifan2]

>>(I really do wonder why a western man with a Thai wife wants a western kitchen ..... mine won't let me do her job) M<<

Because i like to cook now and then .Provide a Thai woman with a Western kitchen and she will love it .The house i showed above has a seperate basic kitchen ,but i intend to make a full Western one ,in its place .It has a store room beside the kitchen so i can extend it easily .

[cloudhopper]

Just a guess but maybe its because they rather keep a 2.5M baht house on the books than sell and have to admit its actually worth just 1.5M?

Yep. Same with private equity owners. A deflationary global economy will sooner or later take all these players out as hands are called.