House sold well below market value a couple of years ago

sh856531

Hi all,

We are doing some due diligence on a property we want to buy. The property seems great, beautifully presented and there are no obvious problems that were obvious to the untrained eye.

Literally the only issue with the property is that 3 years ago it was sold for 147K and then 6 months later it sold for £126. The seller now wants 160K

Now to be fair, there is quite a lot of evidence that that sort of house should be sold around the 160K mark but we have a question about why the property sold for a lot less than this a couple of years ago.

The seller said that they got into an odd situation where they sold the house to a couple, and then six months later that couple split up and they had to buy it back from them (presumably at a big discount). I've no reason not to believe them and will do a homebuyers survey to make sure there are no hidden nasties in the property.

My question is whether my bank are going to see the house selling quickly a couple of times a few years back and then suddenly jumping up in value as a red flag.

I'm going to have a chat with the seller about why the property value was jumping about so much - I expect the answer to be reasonable, I just wonder about how the bank will view it.

Thanks in advance

S

davidmcn

I doubt the price achieved 2.5 years ago is recent enough to be relevant for the bank's purposes (or rather their valuer, the bank itself won't be looking at historical prices).

societys_child

Houses often change hands below market value for various reasons.

Example: vendor does a part exchange on a new build and the builder off loads cheaply for a quick sale as he's already made a good profit on the new build.

bouicca21

At one stage I was thinking of buying a flat that had a similar history of a price reduction. The reason was that it was repossessed and the debtor (who was very, very dodgy) somehow managed to buy it back. Though he bought it in a new identity (not kidding about being dodgy!).