Advice please - buying to restore chain

littlelily

A little background - our house is on the market for £549,999. It has been on the market since April. We have had three offers all fall through due to broken chains. We are moving into rented for about 18 months whilst we renovate a wreck - the proceeds of the house sale will fund the renovation.

We have a potential buyer desperate for our house but his property has not sold. It is on the market for £324,000.

IN PRINCIPLE, what are the disadvantages of us buying his house so that he can buy our house?

I have factored in additional costs of around £15,000 to cover surveys, stamp duty, solicitors fees, EA fees etc etc. So if we could buy his for, say, £310,000, and sell it in the Spring for around £320,000, we should all be happy...Or would we??? Have I missed something glaringly obvious in my cunning little plan???

Any advice would be much appreciated. Thanks!

dolce_vita

littlelily wrote: »

A little background - our house is on the market for £549,999. It has been on the market since April. We have had three offers all fall through due to broken chains. We are moving into rented for about 18 months whilst we renovate a wreck - the proceeds of the house sale will fund the renovation.

We have a potential buyer desperate for our house but his property has not sold. It is on the market for £324,000.

IN PRINCIPLE, what are the disadvantages of us buying his house so that he can buy our house?

I have factored in additional costs of around £15,000 to cover surveys, stamp duty, solicitors fees, EA fees etc etc. So if we could buy his for, say, £310,000, and sell it in the Spring for around £320,000, we should all be happy...Or would we??? Have I missed something glaringly obvious in my cunning little plan???

Any advice would be much appreciated. Thanks!

You are effectively taking their house in part-exchange for yours.

If they can't sell their house for for 324k now, I can't see you selling it for 320k next year.

You'd be much better of dropping the price of yours for a quick sale.

good luck

paintpot

littlelily wrote: »

A little background - our house is on the market for £549,999. It has been on the market since April. We have had three offers all fall through due to broken chains. We are moving into rented for about 18 months whilst we renovate a wreck - the proceeds of the house sale will fund the renovation.

We have a potential buyer desperate for our house but his property has not sold. It is on the market for £324,000.

IN PRINCIPLE, what are the disadvantages of us buying his house so that he can buy our house?

I have factored in additional costs of around £15,000 to cover surveys, stamp duty, solicitors fees, EA fees etc etc. So if we could buy his for, say, £310,000, and sell it in the Spring for around £320,000, we should all be happy...Or would we??? Have I missed something glaringly obvious in my cunning little plan???

Any advice would be much appreciated. Thanks!

A very short answer but firstly the hassle of selling another property, secondly, if his house hasn't sold how do you know the valuation/the figures you have calculated etc stack up, it sounds to me like it could be overpriced? £4k off a £324Kprice is nothing.

CB1979_2

yeah would just imagine the extra fees that's you've mentioned, obviously buying & selling fees of that extra house.

erm missed interest on the £310k not being in the bank.
extra mortgage payments possibly?

Doozergirl

How long has he been on the market? What you really need is a price at which you are confident of selling his then take off all the relevant fees. eg. knocking £15,000 off his asking price for fees and then expecting to get near his asking price is a bit crazy because you're taking a £15k hit before you accoutn for what his will actually sell for. If the house was keenly priced at £324,000 then you would be under offer with a chain underneath you already! £4000 is nothing to drop

If you did go ahead, I'd decide on a sensible price for his, work out the balance he has to pay and drop both prices below below the relevant SDLT thresholds. eg. pays you a balance of £240,000, you keep both properties vaguely around market value but market value is a very subjective thing. So you pay £250,000, he pays £490,000. Saves you both significantly on Stamp Duty (You can do the maths!)

silvercar

Speaking as someone who has done this to complete a chain, your figures don't seem to make it worthwhile.

You risk losing 15,000 on costs and taking on the added risk of the sale price of the property you don't want. In the current market it is too much of a risk. The only time it would be worth considering would be if the yields worked to let the buyer's property; that way if you couldn't sell it quickly you could easily rent it out for a while. This gives you 2 options to proceed.

You risk losing 15k on the costs plus another 15k+ on the sale. If you did buy it and the only offer you could get would be 299k, with interest costs mounting up, maintenance issues council tax etc you'd be forced to sell, leaving you 35k+ adrift. May as well find a buyer for yours at a lower price.

littlelily

Thanks to all for your advice - really, really appreciated!

I feel a bit of a plonker - I was sure I'd found a way forward! To my logic, I simply saw it as two houses that were both sticking - and thought we'd be better off trying to sell a house at £325,000 in a difficult market than one at £549,000!

So, if I get you all right, I'd be better off dropping my house price by the £15K than risking it in my cunning plan?

Doozergirl

littlelily wrote: »

So, if I get you all right, I'd be better off dropping my house price by the £15K than risking it in my cunning plan?

Or a great deal more than that if his house weren't to sell at his asking price. You're actually down £19,000 on an expectation of acheiving £320,000 and I'm afraid you've already wildly underestimated the associated fees nevermind the potential drop in what it really does sell for.

I'm concerned by your trust in EAs valuations, especially on someone elses house!

Have you posted up your house on the board already? If you're doing up a wreck now, I'd expect your place to be in pretty good nick.

Curv

littlelily wrote: »

So, if I get you all right, I'd be better off dropping my house price by the £15K than risking it in my cunning plan?

IIRC, don't yoU have three potential purchasers? You could always suggest they all do the same too... thus increasing the chances of one of your interested parties selling quickly and that way they would feel you were helping them, rather than trying to sell from under them. Although the option to sell to another (4th?) party is still open to you.

In fact, in cases where properties are proving tricky to shift, it's 'the done thing' to have half your drop met by the next one up the chain, so a £15K drop on your part could mean a £30K drop by your purchaser - surely that would help their chances of a sale?

littlelily

My house has not been posted - because I'm too much of a Luddite to know how to post a link!!!! If anyone has the time to tell me, I'd appreciate it very much.

With regard to the buying of my buyers house - I do hear what has been said, but isn't there a logic to say: if you're stuck with a house that won't seel, it's better to be stuck with one at around £325K than £550K. Or am I missing the point AGAIN????

Doozergirl

littlelily wrote: »

My house has not been posted - because I'm too much of a Luddite to know how to post a link!!!! If anyone has the time to tell me, I'd appreciate it very much.

With regard to the buying of my buyers house - I do hear what has been said, but isn't there a logic to say: if you're stuck with a house that won't seel, it's better to be stuck with one at around £325K than £550K. Or am I missing the point AGAIN????

You're not selling your house for £550,000k are you? You're potentially selling for somewhere unknown under £525-530,000 (accounting realistically for fees). His house could be wildly undervalued!

Why not just market your house at £525,000, hopefully find a buyer and have NO house to sell?

To post a link, bring up your house on rightmove or the EA's website.
Highlight the full address in the address bar up top (eg. http://forums.moneysavingexpert.com/blahblahblah)
Right click on it and choose 'copy'
Left click in the reply box on here to start a new reply
Right click and choose 'paste'

Otherwise just give us your postcode if it's on rightmove :rotfl: