Flat inheritance - want to sell, but unsure when?

krazyhorse

Hi There

My mother has recently passed away, and she has left me a 2 bed ground floor flat.

I have been renting a 2 bed flat close by, living life as normal with my wife and child.

As I now have a 2 bed flat under my name (my mother paid off the whole mortgage), I dont see the need to stay in my current 2 bed flat, renting and giving someone else money.

I want to know, when is a good time to sell my mothers flat? I am not at all with the current buzz of property prices at the moment - I have a very VAGUE idea that prices are falling, so right now, my thoughts are to sell up quick, get about £170k (i've checked similar prices on nethouseprice.com) asap; then wait for 2 bed house prices to drop (assuming property prices are falling); then wen the right 2 bed house arises for £170 odd or there abouts, buy then.

I really do NOT want to take an additional mortgage to pay for a higher priced property, neither a loan. I would rather play the property price game, but need advice! Hope I'm clear, any advice would be very much appreciated.

BitterAndTwisted

Worrying about rising or falling property prices is a quick route to getting an ulcer. Unfortunately no-one has a crystal-ball so anything anyone tells you would be guess-work and you can do that for yourself just as accurately.

Move into your mother's flat and live there rent-free. Bank the rent you won't be paying to build up a nice big, fat fund for your move to a house. There's no rush, you will have a free roof over your head forever if you want. That's a seriously good place to be.

property.advert

Unless you have credit problems, I'd use this opportunity to get the family house you want, the final property you will need.

Get a 5 year fixed rate mortgage with your huge equity position and sit pretty paying next to nothing as you pay down the mortgage ASAP.

Blankly saying you don't want to borrow anything is closing the door on a once in a lifetime opportunity because no-one else is going to gift you £170k anytime soon.

G_M

You have 4 options:

1) move in and live in your mother's flat and save the rent
2) rent out your mother's flat. But being a landlord has lots of implications. Read here.
3) sell your mother's flat now, and buy one you like to replace it immediately
4) sell your mother's flat now, save the money, and hope prices don't rise locally. They might you know!

HAMISH_MCTAVISH

krazyhorse wrote: »

I am not at all with the current buzz of property prices at the moment - I have a very VAGUE idea that prices are falling,

VAGUE is nowhere near good enough for you to play the property market.

You need to become an expert in your local area, house price trends, influences, etc, and that will take a lot of time and research.

Where you are also makes a huge difference.

In my local area, house prices are several tens of thousands of pounds higher than they were at the start of 2007, which is generally considered to be the previous peak of the market. In other areas, they've fallen dramatically since then.

In most areas, prices have actually risen since early 2009.... And have been relatively stable over the last year.

So while you may indeed have "a vague idea prices are falling", that idea may also not be accurate.

so right now, my thoughts are to sell up quick, get about £170k (i've checked similar prices on nethouseprice.com) asap; then wait for 2 bed house prices to drop (assuming property prices are falling); then wen the right 2 bed house arises for £170 odd or there abouts, buy then.

Very roughly, according to the latest RICS report, prices are rising in around 10% of local areas, falling in around 20% of local areas, and stable in around 70% of local areas.

If you need significant falls in house prices for your "plan" to work, then you'd better be very sure your local area is both falling markedly, and likely to continue doing so.

More importantly, even if you live in an area where prices are falling, there are transactional costs involved in buying and selling which can easily outweigh any small differences in price.

So for example, if you sell a house today, and prices fall by less than 1% in the next year (as that's all they've fallen as a national average in the last year) then you have gained 1%..... But cost yourself several percent in transaction costs to sell.... And then several percent more to buy.

Whereas if you keep the house and rent it, or live in it and save the money you'd otherwise spend in rent, you'll likely end up 5% ahead this time next year.

I would rather play the property price game, but need advice! Hope I'm clear, any advice would be very much appreciated.

Spend the next few months over on this board.....

http://forums.moneysavingexpert.com/forumdisplay.php?f=149

Ask a lot of questions about house prices, the wider economy, your part of the country, etc. You'll likely get some well thought out answers from both sides of the fence as you consider your options.

And realise that selling a house to "play the property price game" is a very risky business, where more people lose than win...

grey_gym_sock

G_M wrote: »

You have 4 options:

1) move in and live in your mother's flat and save the rent

a perfectly good option.

G_M wrote: »

2) rent out your mother's flat. But being a landlord has lots of implications. Read here.

financially, this is similar to (1): you own the same flat as in (1); the difference is you pay 1 rent and receive another rent. but it's a lot more hassle than (1).

G_M wrote: »

3) sell your mother's flat now, and buy one you like to replace it immediately

a perfectly good option, if you can comfortably take on the debt required. taking on debt to buy your own home is reasonable if the debt is under control; the alternative is (for most people) only to buy when you're a lot older.

or start with (1), and move on to (3) later on.

G_M wrote: »

4) sell your mother's flat now, save the money, and hope prices don't rise locally. They might you know!

risky: this relies on calling the property market correctly. what would you do if the market rises instead?

you're already exposed to the property market, i.e. own a flat. if your ultimate aim is to own a house (i.e. be more exposed), then it's odd to start by scaling your exposure down to nil (selling the flat). it's a lot more reasonable, if you're nervous about the market, to postpone scaling up from a flat to a house (i.e. keep the flat for now).

krazyhorse

all your above reasons, are why I needed to ask - very eye opening.

I think logically, reason one makes sense - move into my mothers flat and live rent free. However, it will be tough for me to live there, but emotions aside, this makes sense for now.

The aim will still be to get a House, as we are a small family, and we want more children... seems like research and wise decision making is now the key. thanks for all your advice folks

Brallaqueen

My sympathies for your loss.

Being mortgage free / rent free is a wonderful position to be in (and very enviable ). It might help to use some of the money saved to put your stamp on the flat in small ways, just to make you fel more comfortable rather than 'living in mum's house'.