Negative equity

Father_Karras

Hi everyone, I'm in the middle of buying a property, and I wonder if anybody could help me with a problem I've come accross.

The thing is that the vendor's EA called me this am, and told me that there's a problem with the property, namely a "negative equity".

She's explained to me that the house cost them more than they're selling it for ( :rolleyes: ), and their lender needs to approve the sale, so the bank has to send a surveyor and say whether it's sold at an appropriate price.

As I thought all this was a bit funny, I checked the actual price the property was bought for in https://www.nethouseprices.com, and it didn't cost more, actually it cost about 50k less than the price we've agreed.

A wild guess would be that the vendors took secured loans or remortgaged on it. Any thoughts anybody? Do you know if this will affect the sale process? Should I be wary?

Doozergirl

Your wild guess is the same as mine - they've loaned as much as they can against the house. As long as the bank's surveyor gives the okay for the sale price, you won't have a problem, if they think it's on the low side then they're going to be asking for more money from you. You have the choice to up your offer to match the bank's valuation or walk away.

Have you had your own valuation, carried out surveys, paid for searches etc? I'd avoid doing so or, if you have, avoid spending any more money on the sale until their bank gives the okay for the sale price.

Fingers crossed the valuation comes in okay for you. If it is, you should have no further issues.

Jorgan_2

If they are in negative equity due to mortgage & secured loans secure upon it, the property will have a number of charges against it. Your solicitor will have to ensure that each charge is removed from the property before you take possession. In simple terms, they may not be able to sell the property. Had a client in a simialr position last year, sadly rather than try & come to an agreement with one of the lenders she did a great impression of an ostrich & ended up being repossessed.

Father_Karras

The EA told me everything should be fine, but now I'm starting to worry :mad: , because I've paid the mortgage application fee (£75), plus the search fees (£190). Anyway, I suppose there isn´t anything I can do now, is there?

whatamess_2

We are selling our house and am in negative equity approx £26k. Its a long story but my sig explains a bit. Have sold it for the same as we paid. The negative is our problem not the purchesers.
Have been told the first charge get their money then ea`s, soliciters, Fp get whats left. There could be delays though if the second charge um and arr about lifting that charge.
Messy

Pal

Just don't do anything until the Bank's surveyor has given the go ahead for the sale - you don't want to spend any more money just to have the sale fall through because the Bank wants more money that you are willing to pay.

ReportInvestor

negative equity

There's a blast from the past .

https://www.nethouseprices.com

What a marvellous tool for the modern buyer, in these and other circumstances .

dora37

Back in 1995 the property my OH had bought jointly with 2 friends (before he met me), was sold with negative equity, however as my OH made up the difference (begrudgingly) of £10,000 :eek:, the sale went through normally - so I guess it depends whether it is negative equity AND there is no way of making the difference up.

Father_Karras

Latest news is that vendor's lender has agreed the sale, as they're buying another property and will be allowed to take the negative equity against it. So the purchase goes ahead after all (I have to ring EA, solicitor, surveyor again... :mad: )

nelly_2

ReportInvestor wrote:

There's a blast from the past .


What a marvellous tool for the modern buyer, in these and other circumstances .

Thats the 1st blast of many to come it'll sound like world war 3 soon.