Back-to-back start home not selling - advice?

Merton

The market is falling and you have a choice of selling for the amazingly good price of 145K or chasing the market down. I would offer no more than 100K if I was looking in the area. Take the 145 and run!

wiggy001

Thanks for the constructive feedback guys, it's all much appreciated and I will read through it all properly when I have more time this evening.

I guess bottom line for me is that I (and others selling similar property locally it would seem) didn't realise quite how much the market had changed since the middle of last year, and expecting the same money now as I would have 6 months ago is not reasonable.

Can I just state again though that dropping (for example) £15k from my price and getting my next house for £15k less that I was expecting to would not leave me even:

Let's say for example I have £15k equity in my property (and no other savings to contribute to the deposit), and the deposit on my next house will be £15k. Selling at £160k with my equity intact leaves me with my deposit needed for the next house £15k. If the value of the next house drops by £15k, the value of the deposit needed does not drop my this amount it might drop by a grand or so say). So where does the deposit come from?

That is why I said previously that losing £15k on my place is not ok, even if my next purchase is £15k less than I had originally budgeted for.

Anyway, thanks again for the comments.

SerenaGoode

wiggy001 wrote: »

Let's say for example I have £15k equity in my property (and no other savings to contribute to the deposit), and the deposit on my next house will be £15k. Selling at £160k with my equity intact leaves me with my deposit needed for the next house £15k. If the value of the next house drops by £15k, the value of the deposit needed does not drop my this amount it might drop by a grand or so say). So where does the deposit come from?

That is why I said previously that losing £15k on my place is not ok, even if my next purchase is £15k less than I had originally budgeted for.

I see the problem, but that's only a short term view. Imagine you get your new home for £15K less - you take out a loan for the £15K deposit. Then you immediately remortgage the extra £15K back from the loan on to the new house.

may not be possible, but it's just a demonstration of the fact that the two situations are essentially the same. The lack of £15K at moving time is a pracitcal issue, assuming you can't get a 100% mortgage. But you're not worse off in real terms if it works out this way.

wiggy001

SerenaGoode wrote: »

I see the problem, but that's only a short term view. Imagine you get your new home for £15K less - you take out a loan for the £15K deposit. Then you immediately remortgage the extra £15K back from the loan on to the new house.

may not be possible, but it's just a demonstration of the fact that the two situations are essentially the same. The lack of £15K at moving time is a pracitcal issue, assuming you can't get a 100% mortgage. But you're not worse off in real terms if it works out this way.

Thankyou for taking the time to explain the point that I think others assumed I would be thinking automatically.

I guess my only fear here is that if I am getting the next property for £15k less because it is actually worth £15k less, then I'm unlikely to be able to remortgage another £15k as that will take me up to the actual value of the property (ie 100% mortgage)? I could always take a 100% mortgage I guess (after my deal expires in September to avoid the early redemption penalty), but would need to consider the financial aspect of this.

Thanks again...

SerenaGoode

wiggy001 wrote: »

Thankyou for taking the time to explain the point that I think others assumed I would be thinking automatically.

I guess my only fear here is that if I am getting the next property for £15k less because it is actually worth £15k less, then I'm unlikely to be able to remortgage another £15k as that will take me up to the actual value of the property (ie 100% mortgage)? I could always take a 100% mortgage I guess (after my deal expires in September to avoid the early redemption penalty), but would need to consider the financial aspect of this.

Thanks again...

Yes, what I'm suggesting may not be practically possible, I appreciate that. But at the root of it, you'd go into that situation with the same overall debt if you could find a way to make it work. It is true that you may no longer be able to get a 100% mortgage, and also that a lender may turn you down if the deposit is a loan, so this may be no practical help in your specific situation - even though technically the debt situation would be the same.

Another possibility is that your lender will allow you to transfer the mortgage as a 100% mortgage as it makes no real difference to them which property it is secured against, and if your current home is worth £145K you already effectively have a 100% mortgage.

Tricky, but hopefully you'll find a way. There are people in worse situations than you.

poppy10_2

SerenaGoode wrote: »

Imagine you get your new home for £15K less - you take out a loan for the £15K deposit. Then you immediately remortgage the extra £15K back from the loan on to the new house.

That's going to be very difficult in todays climate.

geoffky

i would grab the latest offer and run as fast as you can, if not i feel you will chase the market all the way down on this one ie next round of offers will be £130k as the market is moving that fast on these types of places.because one thing it is not moving and you need to move it,,welcome to the real housing market where negative equity is happening here and now....

RichC1

1 -- the price you "need" to achieve is irrelevant. Any potential buyer doesn't know, and more importantly, doesn't care how much money you need to clear from the sale. It all comes down to what the potential buyer is going to offer.

2 -- the competition is not just what other houses are being listed at. For all you know, none of those other houses is ever going to sell because the competition also includes houses and flats to rent. You can rent a three bed detached house in Orpington for the amount of money it will take to pay the mortgage on your small one bedroom -- and by renting you won't lose 15k every 6 months as you just have. As the easy money from the house price boom is over, who in the right mind is going to buy your place when they can rent a real house instead?

3 -- accept 145k and get out while you can

SquatNow

Can you smell that? (SNIFF)

That's negative equity that is.

Even if the seller wasn't buying again, the agents fees and legal fees will leave him out of pocket.

OP: The longer you wait, the less you'll get. In 4 months you'll be unable to sell at all as the negative equity will make it impossible to sell and pay off your outstanding mortgage... what's known as the "negative equity trap".

(You can't sell your house unless you can pay off the existing mortgage at the point of sale... if you are going to sell for less than the outstanding mortgage, you need cash or an unsecured loan to make up the difference, or the bank wont release the deeds.)

The OP has a choice... sell now and start again with just a small loss to cover fees, or stay there forever. (Well for 18 years until the next HPI peak or until he has paid off enough of the mortgage to match the reduction in price!)

Seymie

Bought a new build detached 3 bedroom Dec 2006 120k en suite with large rear garden in a regeneration area close to motorways,Edinburgh 40 mins, Stirling 30 mins,Loch Lomond 40 mins,city centre and 2 large retail parks 10 mins...Sold to day for 150k...

Glasgow is a great place to live and there are plenty of jobs...Defo no HPC here....

PS..I am just about to open my own EA in North Glasgow....:D