To those selling in these difficult times

BettiePage

themaccas wrote: »

I often watch this thread and just wanted to say I wish you all well with your house sales. We sold and moved in May. We didn't have to buy another house straightaway as OH in the forces and could have had a married quarter with very cheap rent. We are now in a fabulous house that we got for as cheap as we could back then and finally bought for 380K with 75% mortgage. House had been empty for over a year but owners family had borrowed them the money in order for them to buy another house and therefore they were content to wait for as long as it took to get the price they wanted. Even now 6 months later and the financial climate looking even bleaker I doubt whether we could have got anymore money off. And this is the problem for people buying....they want bargains but most people don't have to sell their home for an insulting or 'give away' price.

We lived in quite a deprived area of the country and I was very glad to have sold and moved away, but we would have waited rather than sold for a silly price. With hindsight I would have still bought because life is for living and we were in a position to buy another family home. Bargains are all relative.

:rotfl:.............................

themaccas

geoffky wrote: »

maccas what if your hubby had lost his job or you..remember there are always forced sellers. so if the people you bought off had waited and waited they would of had to sell in the end and for less because the market dictates prices and not sellers..because 2007 prices will not be returning for a very very long time...

Yes you are right, i guess what I wrote did not come out very well!! However one of the issues of the current market is there are very few homes coming onto the market because people would rather not sell at the moment. Just as there are some that have to sell, there are plenty who have decided not to because they are not prepared to take the current drop in prices. Who knows whether this house we bought would have sold by now or whether they would have dropped the price...it's all speculation and there are many vultures on here that like to do that so i won't!!!

EagerLearner

pawpurrs wrote: »

Oi you two this is a support thread for vendors, dont make us feel worse

:rotfl: I know, I know... I have slapped my own wrist... I feel as bad as you guys do. I am desperate to have my own kitchen, be able to do it up all shabby chic (probably all shabby and no chic ) and it pains me the same as you that I can't do what I would love to. I had thought Spring but we talked about it and even though I don't want to think or say it, it does seem the situation is going to get worse before it gets better.

Gordon... Alastair... 2.5% drop in VAT won't get me my dream home or kitchen darn you :rolleyes: :rotfl:

Davesnave

greenwheels007 wrote: »

I was driving through Trowbridge, Wiltshire today and noticed that out of the 5 houses I saw for sale on one street a week ago, three had the sold sign up today!
Now, I am not the most complimentary of people towards EAs so mu suspicious mind thought maybe there is some local scam amongst them to make it look as though houses are selling.

Maybe I am just cynical...not sure what the sam could be

Maybe houses really are selling...

Maybe it was all a dream !

Trowbridge is commutable to Bath/Bristol & more reasonable than either, but in the area generally there has been good price movement, so it's possible. We're posh in Bath though....mostly no signs for you to notice!

TTMCMschine

themaccas wrote: »

... there are plenty who have decided not to because they are not prepared to take the current drop in prices.

The naivety of some people is just mind boggling.

Because you clearly haven't got it I feel obliged to explain:

The "current drop" as you put it is house prices reverting back towards where they ought to be. The prices before the drop were the aberration, not the falling prices.

That is to say that the incorrect prices were the high prices, not the other way around.

I also don't think that people get how bad a shape the economy is in. It isn't just that banks "won't lend money" as some simpletons (especially politicians) would have you believe, it's that they can't afford to lend you any money - and that is going to get much worse.

The banks in their ultimate wisdom entered into leveraged financial products based on mortgages. The leveraging means that for every £1 they had, they could buy say £50 of a financial securities - which means that they would make 50 times more money than they would have if they just invested the actual cash that they held.

It also means that you can lose 50 times more than you have - you don't just lose all of the money you put up, but your liability is 50 times what you have.

To offset this risk they took out insurance from AIG, where they guarantee that if the financial product goes belly up, the banks would get their money back. Only problem was AIG was in essence a big scam - they wrote out Trillions of dollars worth of insurance but didn't have the money to pay up, so they were downgraded from triple A, and subsequently bailed out by the Fed.

This mean't that suddenly all of the banks investments were downgraded from triple A as well, which under Basel regulations meant that they needed more money in reserve to back up their wild gambling - which they didn't have - hence the government loaning money to them in huge lumps (at that point every major bank in the World was technically bankrupt).

However, the real story is that now the banks don't have any insurance to cover any losses that might arise - and there are going to be BIG losses.

In recent auctions these securities are selling for 7c to 8c on the dollar - in other words they have lost 90% to 95% of their original value.

So what do the banks do? If they close out these positions they will have to pay up their losses - which may be 50 times more than all of their assets. So they can't do that. All that they can do is wait until the times up on the securities they hold and then they will have to pay what they owe - which is going to be astronomical.

The money that the government has lent them so far is nothing, thats just to keep the banks alive. When they need to start covering their liabilities its going to mean either bankruptcy for the banks, or the government lending money is such mind boggling values that it'll bankrupt the nation, and destroy the Pound (and the dollar, Euro, etc) - which is why the value of the pound is dropping like a brick.

So, my point is that you should't expect house prices to go up any time soon, in fact you should expect to see huge inflation of imported goods like fuel & food, and a serious drop in house prices & other unnecessary transactions - despite the governments claims to the contrary.

dander

Hello just wanted to pop in and say hello to everyone in this thread. I'm not selling, but I feel your pain! I last sold in 2005 when there was a bit of a mini-slump going on and it was hard-going and I took an offer quite a bit under asking price in the end, but I bought my current house for quite a bit under the asking price too, so it all evened out. It took about 7 months and one fallen-through sale, to get the offer that finally got me moving.

The two things I did that made the process easier, although it was still incredibly stressful, were first of all, after the first sale fell through and I lost the house I wanted to buy, I decided not to even look at houses until I'd exchanged. I still looked on the net, so I knew what was around and how long things were hanging on the market, but I planned to put all my furniture in storage and just stay with friends between properties. Storage wasn't cheap, but it was worth every penny in reducing my stress, because I didn't have to worry about where to move to, I just had to get my flat sold.

Secondly, I gave a set of keys to the estate agent and said they could take viewers round any time, just as long as they let me know first, in case I was in and in the shower :eek:. It meant I had to keep the place tidy at all times, just in case, but it made it easier for them to hustle viewers in because they could take people round within a few minutes of them expressing interest, and most viewings seemed to happen while I was at work, and I only needed to worry about them if they came to anything.

Good luck, all, you WILL get there in the end!

Davesnave

TTMCMschine wrote: »

The money that the government has lent (them) so far is nothing, thats just to keep the banks alive. When they need to start covering their liabilities its going to mean either bankruptcy for the banks, or the government lending money is such mind boggling values that it'll bankrupt the nation, and destroy the Pound (and the dollar, Euro, etc) - which is why the value of the pound is dropping like a brick.

So, my point is that you should't expect house prices to go up any time soon, in fact you should expect to see huge inflation of imported goods like fuel & food, and a serious drop in house prices & other unnecessary transactions - despite the governments claims to the contrary.

You gave an explanation of the credit crunch much more clearly than I could, but I'm still not clear why houses are going to be such a bad deal. After all, if the pound is going to fall through the floor, people may come to trust tangible assets, like bricks & mortar, more than paper promises. Granted, a house is not a liquid asset, but it is still worth 'a house' regardless of the level of the pound. Indeed, high inflation helps people pay down debts, like mortgages, quicker.

In the scenario you envisage, I think I'd rather have a 'flexible' property, part of which is capable of generating income, rather than cash in the bank. It also seems that my plan to buy a smallholding with its own fuel supply and water, isn't quite so 'crazy' after all!

greenwheels007

TTM
Thanks for the complete and ultimate disaster scenario!
I think we all need to understand that the cause of this situation was human nature (greed). The factors at play now are largely academic, as is TTM's explanation.
You do not factor in the fact that financial perspective will change in the coming months, you simply can not predict the process by mamthematic rules. The maths is driven by the people. debts will not be paid by the banks, it will be stacked and re-pacakged. The weight of British banks is still huge as they are not only finacially underwritten but also and, perhaps more significantly, politically protected by the government.
There are many more factors at play than those seen from one academic perspective. Far far more.
Keep it simple.
The facts:
House prices are dropping.
Debt (including a mortgage) should be minimised.
Only buy of you can afford the mortgage at 15% interest.
Spread your savings.

Not a fact but probably fair to say...
Don't buy shares unless you are a gambler....gambling rules apply!

TTMCMschine

Davesnave wrote: »

You gave an explanation of the credit crunch much more clearly than I could, but I'm still not clear why houses are going to be such a bad deal. After all, if the pound is going to fall through the floor, people may come to trust tangible assets, like bricks & mortar, more than paper promises. Granted, a house is not a liquid asset, but it is still worth 'a house' regardless of the level of the pound. Indeed, high inflation helps people pay down debts, like mortgages, quicker.

In the scenario you envisage, I think I'd rather have a 'flexible' property, part of which is capable of generating income, rather than cash in the bank. It also seems that my plan to buy a smallholding with its own fuel supply and water, isn't quite so 'crazy' after all!

It's not a good investment because most people need to borrow money to buy, and they can't borrow, which removes a massive percentage of the market, so demand has dropped very low.

Secondly, with regards to rental income, rents are dropping generally anyway (excess supply) & people are going to start losing their jobs in large numbers, so people won't be able to afford to pay high rents, if any at all.

High wage inflation helps people to pay down debts quicker, price inflation has the opposite effect since people have to spend more on the necessities & have less to use to pay against debts.

All in all what it boils down to is that there was a lot of money in circulation (the money supply), and now there isn't - there's less money per person if you like, which will push asset prices lower.

The weakening of the pound will push cost of imported goods higher - in my opinion that is - Alistair Darling & Gordon Brown disagree, but going by their record to date...

Davesnave

TTMCMschine wrote: »

It's not a good investment because most people need to borrow money to buy, and they can't borrow, which removes a massive percentage of the market, so demand has dropped very low.

All in all what it boils down to is that there was a lot of money in circulation (the money supply), and now there isn't - there's less money per person if you like, which will push asset prices lower.

Sorry, we are misunderstanding each other. In your original post, near the end, you were describing a bit of a doomsday scenario money-wise, and my response was in relation to that. The key words in my post were 'going to be.'

I don't think this thread is the appropriate place for detailed economic discussion. I wouldn't disagree with the general thrust of what you're saying.