Offering low on already reduced house

neas

Buying in 2007 with high interest rates is obviously silly idea.

Buying in 2010 with very low interest rates and some 15% or so already knocked off the 2007 price may be the right idea.

Buying 20XX with XXX interest rates and some XX% more off the 2010 price may orm ay not be the righht decision.

Basically you will know if you made the right decision in 20XX.

doire_2

neas wrote: »

Buying in 2007 with high interest rates is obviously silly idea.

Buying in 2010 with very low interest rates and some 15% or so already knocked off the 2007 price may be the right idea.

Buying 20XX with XXX interest rates and some XX% more off the 2010 price may orm ay not be the righht decision.

Basically you will know if you made the right decision in 20XX.

You make it sound as though im going to wait for years and years before buying.

Thats not the case. Im taking my time and will buy when i feel its right for me.

I have a very good deposit and im doing my research on the local area.

Taking into account the average wage in my area, the banks not lending silly money like they used to, interest rates to rise and the continued rise in unemployment - the average price in my area is not sustainable and will continue to fall.

roboticpink

sent another offer through today - estate agent got back straight away to say the house has sold in the last two days!

It's been on since JULY, it hardly seems possible that they have sold it in the last two days and I'm pretty upset she didn't think to tell us someone else had offered on it or was even interested.

Gutted.

neas

roboticpink wrote: »

sent another offer through today - estate agent got back straight away to say the house has sold in the last two days!

It's been on since JULY, it hardly seems possible that they have sold it in the last two days and I'm pretty upset she didn't think to tell us someone else had offered on it or was even interested.

Gutted.

Not to dance on the dust.. but DOIRE... SEE!

People will still buy houses, listening to generic advice on a houses value is pointless because the house may already be priced to sell.

Sorry you lost it mate.. it often happens like that. Our house now had no offers for 4 months (because it was overpriced) it dropped down to a reasonable level £175k and then had 2 buyers... fortunately for us they screwed vendor over so she dropped it 5k more... to £170k asking and we negotiated as the 3rd buyer at 163.5k.

Basically if you love a house you love it... £10k won't make much difference in long run i can asure you. Shame you lost it, just move on and next time you get that 'feeling' its your home go with it and don't listen to people on an internet forum (me included).

If i had listened to the people on this forum i'd still be renting in a little crappy 2 bed flat, as opposed to working on my lovely 3 bedroom house with garage, driveway and big garden... in a quiet friendly cul-de-sac.

Thats the other thing we live in a nice area.. can't put a price on good neighbours.

neas

doire wrote: »

You make it sound as though im going to wait for years and years before buying.

Thats not the case. Im taking my time and will buy when i feel its right for me.

I have a very good deposit and im doing my research on the local area.

Taking into account the average wage in my area, the banks not lending silly money like they used to, interest rates to rise and the continued rise in unemployment - the average price in my area is not sustainable and will continue to fall.

My previous two landlords bought cheap and have owned for 7-10 years.... most likely they owe less than 20-30k on each of their 120-150k properties now.

Tell me why would they be forced to sell now? If the same people like you who are waiting for the house prices to drop continue to support their rents and yields then houses will continue to become a savings vessel and will be supported by this. People who own property outright just wont sell at the price you want... because long term their home will recover...

Also you have already waited 4 years to buy... that 4 years will soon be 5 years ... how long is enough to wait?

roboticpink

I think we won't buy anywhere for a while now. We were hoping to get somewhere quickly because we have a date set in about 18 months to decide whether to stay here, or move somewhere else (where house prices are a lot cheaper).

We were planning to get somewhere here, live in it for 18 months, decide if we were staying or not then rent it out if we weren't (which would be easy, we live in a big city and rentals are snapped up particularly if they are in good condition).

Think we'll rent now but it's a real shame.

neas

buying to rent out now would be unwise in my opinion need to buy if you inted to stay somewhere for 5 years.

roboticpink

i work on contracts - i don't know where i'll be in five years. Should I never buy a house, just in case?!

We wanted somewhere we could do some work to, love as our own, pay off as much of the mortgage as possible while there, and in the future keep on as a rental property if we did have to move (while probably renting ourselves in a different area).

Don't see what is wrong with that or why it would be a poor decision. We researched the market for rentals and know what would rent, what wouldn't and how much they would rent for.

PixieP

neas wrote: »

Basically if you love a house you love it... £10k won't make much difference in long run i can asure you. Shame you lost it, just move on and next time you get that 'feeling' its your home go with it and don't listen to people on an internet forum (me included).

You do make sense, if you love a house and feel it'll be the perfect home, why worry about £10k? This is my current dilemma, found a house we love, and after the first viewing drove off thinking - 'right this is it, we love it, lets offer £250k (its on for £255k we're FTB) and lets go for it!'. It was only after doing our homework that we realised it it probably overpriced.

Now we could still offer £250k and I think we'd get it. We have the money - that's not the issue. The issue is that we'd want to stay there for 3-5 years. This is a lovely home, but not one we want to raise our family in. We know we want to move out from the city when kids (which we don't have yet) start getting to school age. Although the local primary is very good, so we do have a level of flexibility there just in case. But it's not what we ideally want.

So we're just worried about being in negative equity when we come to sell. We've been saving so long and hard for the deposit, it'll be horrible if we lose it because we've overpaid. You say "£10k won't make much difference in long run", but what about the short 3-5yrs run? I know we'd be happy in this house, but we'd always be a bit worried about selling it when the time comes. Realistically house prices are going to drop about 5% this year, stay stagnant next year, then start rising slowing in 2013 (my opinion from the research I've done). Now if this, or something similar happens, and we've already overpaid by £10k, surely this isn't going to put us in a good position in 4 yrs time?

And yes.. I am a typical nervy FTB!! And as per your advice, I might not listen to your advice, but it's still welcome!

neas

PixieP wrote: »

You do make sense, if you love a house and feel it'll be the perfect home, why worry about £10k? This is my current dilemma, found a house we love, and after the first viewing drove off thinking - 'right this is it, we love it, lets offer £250k (its on for £255k we're FTB) and lets go for it!'. It was only after doing our homework that we realised it it probably overpriced.

Now we could still offer £250k and I think we'd get it. We have the money - that's not the issue. The issue is that we'd want to stay there for 3-5 years. This is a lovely home, but not one we want to raise our family in. We know we want to move out from the city when kids (which we don't have yet) start getting to school age. Although the local primary is very good, so we do have a level of flexibility there just in case. But it's not what we ideally want.

So we're just worried about being in negative equity when we come to sell. We've been saving so long and hard for the deposit, it'll be horrible if we lose it because we've overpaid. You say "£10k won't make much difference in long run", but what about the short 3-5yrs run? I know we'd be happy in this house, but we'd always be a bit worried about selling it when the time comes. Realistically house prices are going to drop about 5% this year, stay stagnant next year, then start rising slowing in 2013 (my opinion from the research I've done). Now if this, or something similar happens, and we've already overpaid by £10k, surely this isn't going to put us in a good position in 4 yrs time?

And yes.. I am a typical nervy FTB!! And as per your advice, I might not listen to your advice, but it's still welcome!

we took a similar risk but house is less money 170k asking compared to 250k so we got less money to lose percentage wise. I cant make the decision for you i just know i did the following to ease my mind>


1. Checked house price on mouseprice.com.. it was bought for 160k in 2004, so only paying 3.5k more than in 2004 in 2010 so hopefully i've already got a good negotiation to counteract some of the house price falls. Dont get me wrong i believe houses will fall.. but only by about 10-15% over next 3 years and over a 5 year period recover slightly. You won't gain money on the house but you won't lose too much due to Interest rates being low.

2. I planned to overpay mortgage by £500 a month to counteract any losses.. it seems silly but basically once you got mortgage dont matter about house prices until you sell and that big mortgage should be reduced asap like a savings vehicle.

3. worked out a comparison in my head of our 3.99% fix 5 year fix against a 15% fall in 2 years time.

Imagined i would wait 2 more years, buy then and compare vs buying now.

Basically mortgage now = 108k mortgage then would be 83k in comparison. So i would gain 25k or so by waiting.

Heres my calculations that reduced this 'loss' even if house prices did fall and we had to sell at a less amount:

1. I would still have equity to move as i'd been overpaying over 5 years 500 quid a month meaning total mortgage would be around 60k. While not linked to loss would mean unless house fell 60% or so i wouldnt be in Negative equity... and the bonus being if they did fall the next 4 bedroom house would be significantly cheaper thus actually saving me money... and making me money in a weird sense.

2. My mortgage interest was initially 330 quid or so some £1800 saving over paying my rent (capital repayment is essentially saving). So over the two years I would have overpayed another £3600 into mortgage. Net effect of 25k loss would be reduced to £21,400.

3. Interest rates would have risen so for the first 3 years i would be paying 6% interest rather than the 4% i secured now. 2% more interest on the lower mortgage of 85k =£1,700 per year, some £5,100 extra. Net effect of 25k loss would be reduced to £16,300

4. Stamp duty exemption . We saved £1,600 in stamp duty being FTBers.. no way to guarntee we would have the same in 2 years. Net effect of 25k loss reduced to £14,700.

5. Initial negotation, i believe we got a bargain discount on our property and saved some 5-6k on its price.. 8 months later the exact same spec house has sold for 1.5k more than ours. This mitigated the fall... so overall loss would be around £10,000.

So basically if house prices fell by 15% and interest rates rose just 2% giving 3 year fixes a 6% value then i'd be worse off by £10,000.

For that £10,000 i would've overpayed into the mortgage £24,000 so wouldn't be phased by it.

For that £10,000 i got 2 years of owning my own house, got to tend to my garden, experience BBQs, firework parties and work on the house (kitchen and living room etc).

For the sake of £10,000 it would be worth it because it was 'our' house we got the feeling. After all renting was a misery for us with neighbours not being friendly having to listen to peoples washing machines etc. It was great to save a deposit but notthing likeowning our own house.

Of course the point is its about balancing risk. I could've misjudged it and houses plummet more than 15% maybe 25% but we wouldn't be in negative equity. we could still move and buy that bigger home for less. If house prices didnt fall and interest rates went up we'd be in our intiial fixed period and beavering away to reduce our mortgage.

Basically i won't worry about it until its near the end of my 5 year fix (5 year to get over the current financial crisis).

You got to take a deicision, you may get it wrong.. but waiting forever will just mean you will miss the boat.