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    • rshakes90
    • By rshakes90 3rd Oct 17, 9:13 PM
    • 3Posts
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    rshakes90
    Tricky situation - being bought out of a mortgage
    • #1
    • 3rd Oct 17, 9:13 PM
    Tricky situation - being bought out of a mortgage 3rd Oct 17 at 9:13 PM
    Hi all,

    I've lurked for a while and am very grateful for how helpful everyone is here! Today I've registered as I've got a tough situation I'd love to talk through and get some opinions on. Would be ever so grateful for anything any one has to offer

    I'm being bought out of a flat I bought with a friend 2 years ago. We didn't have any formal deed or document detailing what would happen in this scenario, which is where the problems have started.

    I looked online - at this forum, and on legal websites, and other places - and proposed that we take some valuations of the flat on the date I stopped paying the mortgage, and he pay me half of those valuations minus half of the outstanding mortgage. I got these valuations, and they came out at £190,000.

    He declined this and said it was unfair, and that instead he should pay me half of whatever Halifax value the property, as he says the estate agent valuations would be speculative, and a hypothetical valuation. I accepted, with the caveat that this would have to be a proper valuation, so, a surveyor viewing the property and preparing a report. This is because the property is in much better condition than others in the area, and in the same block. Newer kitchen, new interior, really high quality finish etc.

    So we got a bit further down the line, and we get to the day where I stop paying the mortgage. He comes back and says Halifax have valued it at £170,000. This is obviously quite a bit lower than the estate agent valuations, so I query it. It turns out it's a drive-by valuation, and no one ever visited the property.

    At this point he's trying to say this is totally fair, and that I should just get over it. He's also raising the additional claims that 'if we'd sold, you'd only get this anyway, because there's estate agent and conveyancing fees to be paid if we sell'.

    I'm upset and not sure how to make my case to him. The way I see it, this isn't a fair valuation as we agreed, it's a computer approximation from a bank who hasn't seen the property. His arguments that I'd have got the same as this if we'd sold seem spurious too: he's essentially asking me to pay costs on a sale that didn't happen. If he now doesn't sell (for years, or ever), he actualises a big gain from me here. Also, it seems from all the advice I've read that's not how transfer of equity works. It's not a transfer of equity minus potential sale costs.

    Does anyone here have a similar experience or advice? How should I get back to him on this and make my case?

    Thanks so much! Sorry that was long!!
Page 1
    • SeduLOUs
    • By SeduLOUs 3rd Oct 17, 9:32 PM
    • 2,080 Posts
    • 2,468 Thanks
    SeduLOUs
    • #2
    • 3rd Oct 17, 9:32 PM
    • #2
    • 3rd Oct 17, 9:32 PM
    I suppose the simple answer is that if you're not happy with the price he's offering you, you don't sell it to him.
    • rshakes90
    • By rshakes90 3rd Oct 17, 9:35 PM
    • 3 Posts
    • 0 Thanks
    rshakes90
    • #3
    • 3rd Oct 17, 9:35 PM
    • #3
    • 3rd Oct 17, 9:35 PM
    I am kind of in a bind though as there is a friendship here, but also because I have moved out and have my own mortgage to pay! I'm reliant on this being over soon, and so to an extent he has me over a barrel if he keeps disagreeing.

    I guess it is up to me ultimately to decide whether or not to go for it - but I'm wondering what the standard protocol is here. Is it normal in transfers of equity to take market valuations and split it? Do drive-by valuations usually undervalue high quality properties? Does his argument that I'd get the same on sale hold any weight?

    Thanks!
    • Thrugelmir
    • By Thrugelmir 3rd Oct 17, 9:57 PM
    • 55,530 Posts
    • 48,880 Thanks
    Thrugelmir
    • #4
    • 3rd Oct 17, 9:57 PM
    • #4
    • 3rd Oct 17, 9:57 PM
    Appoint a RICS surveyor to undertake a formal valuation at xx date. Much as they would for a probate sale. Will cost a couple of hundred each. However will give you both the satisfaction of having a professional independent valuation. Then there's no disagreement.

    Further to this. Speak to a solicitor regarding a forced sale. A solicitors letter might focus your friends attention more seriously to the matter.
    "Wide diversification is only required when investors do not understand what they are doing." - Warren Buffett
    • getmore4less
    • By getmore4less 4th Oct 17, 4:03 AM
    • 29,996 Posts
    • 17,927 Thanks
    getmore4less
    • #5
    • 4th Oct 17, 4:03 AM
    • #5
    • 4th Oct 17, 4:03 AM
    If you do it on proper equitable shares your share continues to grow after you stop paying the mortgage.

    assuming you are in 50:50.

    your share at the date you stop is ((value - mortgage)/2 )/value

    eg if the place was worth £100k with a £75k mortgage you own 12.5%
    that means you are due 12.5% of the current value.
    • amnblog
    • By amnblog 4th Oct 17, 7:05 AM
    • 9,858 Posts
    • 3,821 Thanks
    amnblog
    • #6
    • 4th Oct 17, 7:05 AM
    • #6
    • 4th Oct 17, 7:05 AM
    All valuations are estimations no matter how they are done.

    The only true figure would be what you are paid on sale which may be less, more, or similar - irrelevant if your friend is not selling.

    Take the money and put it down to experience.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • rshakes90
    • By rshakes90 4th Oct 17, 7:32 AM
    • 3 Posts
    • 0 Thanks
    rshakes90
    • #7
    • 4th Oct 17, 7:32 AM
    • #7
    • 4th Oct 17, 7:32 AM
    Thanks all. I suggested a RICS surveyor and he's started saying he'll only be happy with that if he can then subtract the potential costs of sale from what they say. So he wants to charge me half of a three percent estate agent sales fee, and conveyancing costs, because "that's what you'd have to pay if you forced a sale". This sounds really unfair - is it at all standard practice?!
    • Time2go
    • By Time2go 4th Oct 17, 7:53 AM
    • 149 Posts
    • 28 Thanks
    Time2go
    • #8
    • 4th Oct 17, 7:53 AM
    • #8
    • 4th Oct 17, 7:53 AM
    Ea fees for property £1200 easy round my way you can get them as low as £700. Solicitor fees £800 ish therefor your share roughly £1k I really wouldn't quibble over 1k: and for all you know next year could be a property crash and flat will be worth half you paid for it???
    • mrginge
    • By mrginge 4th Oct 17, 7:56 AM
    • 4,200 Posts
    • 7,464 Thanks
    mrginge
    • #9
    • 4th Oct 17, 7:56 AM
    • #9
    • 4th Oct 17, 7:56 AM
    Thanks all. I suggested a RICS surveyor and he's started saying he'll only be happy with that if he can then subtract the potential costs of sale from what they say. So he wants to charge me half of a three percent estate agent sales fee, and conveyancing costs, because "that's what you'd have to pay if you forced a sale". This sounds really unfair - is it at all standard practice?!
    Originally posted by rshakes90
    There is no standard practice. It’s a negotiation.

    if you’re not happy with the £170k, then as advised - you appoint your own surveyor and see what they say. You don’t need his permission to do that, you just have to suck up the cost yourself.

    When you have *your* valuation then you can decide whether you want to accept £170 or not.
    • davidmcn
    • By davidmcn 4th Oct 17, 8:22 AM
    • 5,930 Posts
    • 5,687 Thanks
    davidmcn
    You'll have conveyancing costs anyway, so not sure why they ought to be brought into the calculation.

    However, any fees are going to be within the parameters of what you'd negotiate with a buyer (or a surveyor's margin of error) so not sure there's a "right" answer. I would concentrate on getting a valuation you're comfortable with first. In an arm's length-sale, a buyer and/or their lender will almost certainly get a surveyor to go into the property rather than rely on a drive-by valuation.
    • TrickyDicky101
    • By TrickyDicky101 4th Oct 17, 8:29 AM
    • 2,733 Posts
    • 1,768 Thanks
    TrickyDicky101
    Have you already stopped paying any amounts towards the current mortgage over the flat?
    • getmore4less
    • By getmore4less 4th Oct 17, 10:51 AM
    • 29,996 Posts
    • 17,927 Thanks
    getmore4less
    Thanks all. I suggested a RICS surveyor and he's started saying he'll only be happy with that if he can then subtract the potential costs of sale from what they say. So he wants to charge me half of a three percent estate agent sales fee, and conveyancing costs, because "that's what you'd have to pay if you forced a sale". This sounds really unfair - is it at all standard practice?!
    Originally posted by rshakes90
    MAX EA are 1.5% plenty down to 1% and under if negotiate hard.

    There will be conveyancing fees anyway they will be similar.

    Max your extra share would be is £1k

    (Although not easy for you as you have another one now)
    The counter offer is to buy them out on the same terms for more money and keep the profit when you sell it.
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