To buy parents house? Hmm....

Meiko

Hello

I'm new here and could do with some advice.
Me and my partner are actively saving for a deposit on a house. BUT my parents have offered us an interesting proposition....

Currently we are renting a coach house in Stratford upon Avon (where my partner grew up) as some might be aware, Stratford is a very sought after area and to buy a house here would require a hefty deposit for a hefty mortgage for small 2bed house or apartment.

My parents (who live in Rowley Regis) are thinking of moving house and have said we could have theirs for a reduced cost (from 150k down to 135k) with no deposit needed.

The dilemma is that We are not too keen on the area (but after living in Stratford who would be?!) but we are dying for a garden and a dog and some space to start a little pet boarding business on the side.

Do we (or would you)....

Stay in Stratford, carry on building a deposit, in 2-3yrs time be able to buy a small place, but love and enjoy the surrounding area.

or

Buy my parents house so we can be on the ladder straight away, have a dog, garden and start a side business, and keep the deposit money we have saved, but the area isn't as nice.

My mind is in two halves. Would we be silly to turn this opportunity down? or is it really an opportunity?

Argh! We need some advice!!

Annisele

Before you go any further with this, are you absolutely sure your parents' house is worth £150k?

If that's the estate agent's valuation, then the surveyor might not value it at more than £135k anyway - meaning that you'd have to come up with a deposit to buy your parents' house.

Meiko

Well they would only sell it us if we didn't have to pay a deposit, which is the point of their offer. If they couldn't do that, then the opportunity isn't there.

Annisele

In that case, I think you need to know where the valuation of £150k came from.

If the £150k came from an estate agents recently, then I think there's a good chance that a lender would want a deposit if you bought for £135k (because the surveyor might not value it at more than £135k).

If your parents have received offers of £150k from unconnected people, and their house is on the market for a little more, then you might be able to buy for £135k without a deposit.

Meiko

Apologies Annisele, I think I may not have made clear in my first post. Whatever the value of the property we will be getting a gifted deposit from my parents. The question is less about the value and more about the circumstances.

dopester

Meiko wrote: »

Well they would only sell it us if we didn't have to pay a deposit, which is the point of their offer. If they couldn't do that, then the opportunity isn't there.

That is a big anchor still dropping down deep into the price ocean on house values.

So many FTBs can't raise sufficient deposit required by lenders in order to buy. Some can, but there aren't nearly as many proceed-able buyers around when there were 95%-100%+ mortgages, self-cert ect, during the boom years (1997-2007).

Some people (hello) think we could be going through a process where values still have considerable adjustment from the old conditions. Where increasing numbers of sellers will have to adjust their asking prices to meet the new conditions.

I wonder how much of a "favour" your parents are really doing you a favour here. £15K discount on a £150K house? Could they really get £150K for it on the open market, today, or in 6 months time? Have they got a queue of interested parties if it's up for sale at £150K. Asking price is just an asking price.