What reasons for house being sold way below market value?

loveka

I have put in an offer on a house. It is a 'rarely available' house in the perfect location.

Before we viewed it, we saw that the house was bought only 3 years ago, 33% cheaper than the asking price now.

We asked the estate agent why this was, as the improvements done since the sale were minmal.

He said there was a reason, but he absolutely legally couldn't reveal what it was. He said it really was nothing to worry about, and that the house had been sold way below market rate. As we have been looking in this area for 18 months, we know the market quite well, and the price we are paying is market rate now.

We have had surveys, our solicitor is happy. There doesn't seem to be anything wrong with the house.

The estate agent still says he can't tell us why it sold so cheaply though! I have a niggling worry about it.

Is there any obvious reason why houses sell so much under market value? It had been on the market for 6 months before it sold.

indianabones

Did you get the full structural survey? There are 3 types, the cheap one (around £150) the middle tier (around £300) and the expensive one (£750+) if I recall. If you went for the full survey and they didn't come back with any major issues then it's probably not structural. Sounds to me like there's something that could be legal. Whatever it is, as you're making the purchase they have to tell you.

There's a section on the legal forms for everything that the owner's side fills out, has anything come out there?

rach29

Odds are it was a divorce settlement. One partner buying out the other so the purchase price would have likely been just the amount the remaining partner needed to raise to buy out the other. No reason to worry about it, I don't think. As long as you are happy with the price, that's all that matters.

buggy_boy

Check the local papers or online from around the time of the sale, make sure there was not some murder or something... You could always ask the neighbours.

Failing that it could be that one family member sold to another family member and they sold it cheap to avoid some tax or divorce settlement.

lookstraightahead

Are you sure it is now worth 50% more? Maybe you are looking at it back to front and the price is too high now

seashore22

lookstraightahead wrote: »

Are you sure it is now worth 50% more? Maybe you are looking at it back to front and the price is too high now

The op says that they know the market well and the current price seems about right. No reason to doubt them.

bouicca21

I know of a similar situation. Partly stamp tax evasion, partly divorce settlement scam. I suspect more money passed between the parties under the counter.

loveka

Yes, all the forms submitted by the vendor are clear, no issues at all.

I believe that if it was structural then the estate agent would illegally have to tell us? As I know to my cost even a full structural survey can miss structural faults!

I don't think it was a divorce settlement, as the people who sold to the current owner were very old.

No murders! It is a very small village so would have been the talk of the town!

I guess it could have been a family sale.

scottishgirl87

We bought a flat in 2013 and paid £22k under the Home Report value (Scotland). The reason for getting it so cheap was the property had been part exchanged for a new build and so the developer who bought it wanted it off their hands ASAP. Could be that?

AnotherJoe

Is this rise out of the norm? My daughters house went up from 330 to 420 or so in about 18 months.

From say 100 to 150 in 3 years, to fit with your numbers of 33% cheaper, doesn't seem massive at all to me in that context. Depends on the area obviously.

AdrianC

loveka wrote: »

We asked the estate agent why this was, as the improvements done since the sale were minmal.

He said there was a reason, but he absolutely legally couldn't reveal what it was.

He could tell you, but he'd have to kill you... <rolls eyes>

Is there any obvious reason why houses sell so much under market value? It had been on the market for 6 months before it sold.

Because the vendor wanted to get shot in a hurry, and the only person who wanted it at the time didn't want to pay much. It's that simple.