selling a shared flat

celiao82

Hi,

I recently posted as I was contemplating buying my flatmate out of her share of our shared ownership flat.

I had the flat valued today, which completely stunned me and has left me with 2 queries.

Firstly:
when we purchased our flat in 2006 it was valued at £250,000.
Today 2 estate agents said that it should go on the market at £360,000.

This is obviously a crazy increase in the value which I am disinclined to believe is 100% accurate. There is a comparable property for sale in our block that has the same floor plan but also has a balcony and parking space currently on the market for £350,000.

Should I pay to have a valuation done by a surveyor in order to get an accurate value? One estate agent said it would probably go for £325-£335 if someone walked in off the street and bought it today.

Secondly, I am now in a quandry about calculating how much money we would make from selling.

If we were to sell is this how it would work?

selling price £360,000
profit £110,000
20% share of profit (we each own a 20% share) £22000
minus 50% selling costs (estate agent @1.5% &solicitor fees) £3540

gives a total of: £18,460

What happens with the mortgage? We have currently paid off £7500 of the mortgage - would we also get an equal share of that as our profit after the remaining mortgage has been paid off?

including a 50% share of that as well as the profit we would walk away with approx £22100.

Is this figure correct?

I would appreciate any advice you can offer. C

Richard_Webster

If it is shared ownership before you do anything else you have to look at the rules about selling.

How do you know you can sell 100%? A lot of SO properties have booby traps in the lease wording which mean that you have to have owned the 100% for 3 months before you can sell it on.

If you can only sell your 40% then often you can only sell to people on the Housing Association list of nominees for the price the HA fixes so your own speculation about what to put it on at may not be relevant at all.

poppysarah

You can check if any properties have sold recently on houseprices.co.uk
Asking prices are only asking prices and may be wildly optimistic.

Is it the sort of flat a FTB would buy?

celiao82

The rules from our HA for selling are:
8 weeks on the shared ownership market, marketed by the HA and they charge 1.25% as fees.
After that it can go on the open Market where we would be entitled to list it with any EA we choose and have our share of the profit.

Would I get a better valuation from the HA surveyor? I am completely inexperienced when it comes to property valuations and I need to have an accurate valuation to be able to make a decision as to whether to sell or buy

RAS

Did you tell the EAs from who you requested the quote that you only have a 20 % share and it has to go on the shared ownership market?

Richard_Webster

Would I get a better valuation from the HA surveyor? I am completely inexperienced when it comes to property valuations and I need to have an accurate valuation to be able to make a decision as to whether to sell or buy

The HA's surveyor is only going to go round local estate agents collecting comparables to get a figure. It may be better or worse than what the estate agents say but it is only an opinion. The real proof of the pudding is what you actually sell it for. However, see below about HA valuation.

After that it can go on the open Market where we would be entitled to list it with any EA we choose and have our share of the profit.

Open market and able to sell 100% - i.e. use the buyer's money to buy the other 60% from the HA and pass it straight on? Is that what you mean?

If that's the case I am still doubtful that the HA will let you sell for what you want - they may well insist that their valuer values it and they will want paying 60% of what he says - which might be more than 60% of what you manage to sell it for. You need to check very carefully with the HA - and get it in writing that they will take 60% of what you sell for - rather than what their valuer says.