Selling house with possible 'movement' - advice please

old_git_6

Hi,


A long(ish) post, thanks for taking the time to read!

We're in the process of selling the wife's old house which was let out until last Aug but is now vacant. It's a standard 2 bed terrace on at approx. 100K. In a slow local market we got our first offer (after approx. 3 months) of 95K which we gladly accepted. However, the buyer was wary when their survey picked up possible movement/subsidence issues with the small kitchen/bathroom that had been added to the back of the original house (pretty standard additions for these victorian teraces in my experience). We got a structural engineer to look at the house and their report confirmed that there were some issues with movement - both old and some that is possibly on-going. He originally suggested some remedial work (metal ties into the brick work, some re-pointing etc) and said that it wasn't anything 'major'. We were happy to pay for these but the original buyer pulled out because they wanted to move in asap.

Talking to the structural engineer more recently they have changed their tune somewhat. They are now saying that any buyer having a survey on the house would be extremely unlikely to get a mortgage due to the movement issues and that we need to get everything sorted (bore holes dug, drains checked, metal ties inserted etc) and then it'll probably need monitoring for at least 12 months, before a buyers surveyor will be happy to okay it. We've been told that if we do the remedial work, any surveyor will pick it up and this will probably end the chances of mortgage approval!

So I'm after any advice as to our possible options (having never sold a house before). As far as I can see they are:

1. Leave it as it like it is hoping that someone takes it on without worrying about the survey/movement issues – possibly a cash buyer?
2. Reduce the price considerably (by approx 10% to 90K) and be upfront with the estate agent to tell potential buyers that it's at this price due to the issues listed above.
3. Reduce the price and offer it for sale to cash buyers only (presumably they don't need a survey and will include builders etc happy to take this on) - what is the stigma associated with "cash buyers only"?
4. Go to auction - any ideas what the usual 'hit' in price is when you go to auction, would we be looking at a guide price of approx. 85K'ish?
5. Try one of these buy you home for cash places - I know that they can be dubious!
6. Get the movement looked into & fixed (hopefully via the insurance). With monitoring this could be 18-24 months before we're in a position to sell.
7. Anything else that I've missed?

For more info we’re not in any money worries regarding the move (the mortgage is currently £200 p/m on this house). However, we are thinking of selling our current house and getting something larger / nicer area and we would need the equity tied up in my wife’s old house (approx 50-60K equity – if it sells for 90-100K).

I’d be glad for any suggestions / advice.

Shaun

going2die_rich

I'd personally try and sell it as is for the next 4 or 5 months. If it doesn't get anywhere after that then I guess you've missed the peak "buying" period for homes for the year so you might as well have the work done (presuming costs will be covered by the insurance?) and sit tight.

Or could you not possibly get the work done then change the current mortgage to a buy to let and get some of the equity from the house and then rent it out? Use the money from the house to buy your house then 2 years down the line sell the buy to let once it's shown the house is ok.

Biggie

i'm currenly purchasing an underpinned property though i'm not sure I can answer you question I can give you some info based on my research.

- Can go via insurance and yes they will take 5-18months to resolve it, they will mointor movement and then do the appropiate work underpinning or what ever is required.

- Your insurance premiums will increase drastically and most likily you will have to tansfer it to any protential purchaser as it can be difficult to obtain quotes. Especially if it's been done recently.

- An furture mortage company will be ok with remedial work as long as 1) you get it done properly with appropiate certificates, b) purchaser can obtain building insurance.

- Also building with structural problems have a stigmatisum associated to them some people see the advantages (i.e Underpinned properties are less likily to subside again) other people run a mile.

Weather you will sell depends on your area here in London with clay soil subsidence is quite common and is more acceptabile. Also depeneds on the popularity of the area. In my choosen area there very few houses for sale in my budget at the moment. That restricts me from obtaining a large discount or running as I don't have much choice and I do really want the house.

Your best solution may be to put it under the hammer with a reasonaible reserve price. Depends how quickly you want to or need to sell.

elvis_girl

I think as Biggie says it depends how quickly you want to sell. My understanding is that the insurance company will want monitoring for at least 12 months before they will undertake any remedial work. What are the signs of the movement (any cracking etc?). Could you do a patch up job & say nowt?

old_git_6

Cheers for the replies:

Biggie - the house in not in an area usually associated with subsidance due to clay soils (it's actually in the midlands). The structural engineer that we got in actually mentioned that they had looked at the next 2 houses in the street a couple of years ago - both showed signs of movement "possibly due to shallow or inadequate foundations/poor ground bearing".

I don't think we'd really like to wait 12-18 months for it all to be sorted - even if it was I'd think that the stigma of having had a subsidance claim would put the majorty of buyers off and we might end up having to cut the price / go to auction anyway.

Elvis girl - the signs are some crack to the inside walls (relatively small about 5mm wide), especially along the wall ceiling junction. We coud just fill these in and paint over them as best as poss. However, extenally there is some stepped cracking above a couple of windows - we could scrape out and regrout but again I guess it'll be noticeable?

I think patching it up and saying nowt might be the best option for now - see if any cash buyer is interested (it's in a area popular with btl (if they are still going)).

Sh

Biggie

Cash buyer may still get a survey - personally i'd think they would be mad not too spending that much money , especially on an old house.

I have to admit this is a difficult one.

how about auction ? quite common in this cases.

old_git_6

Auction may have to be the way forward - the house cost 50K (approx. 6 years ago, current mortgage is 40K) and is currently on at 100K - still one of cheapest on the road. Not sure what the 'hit would be takng it to auction, I'm guessing a reserve of aprox. 85K?/ This would still give us 40-45K towards any new purchase.

We're still getting a few viewings so I guess that we'll leave it on with the estate agents for the moment - maybe someone will be 'stupid' enough to just get a valuation report, or have those days disappeared with the current credit cruch?

Sh

Doozergirl

I'd think that auction would be the way where you might be lucky that someone doesn't pick up on the problem.

Most people only have valuation reports, but whilst they have a less comprehensive list of what to look for, the first thing will be movement.

If your house is moving, I say you stand very little hope of selling to someone with a mortgage - and how fair is it for you to accept offers and for people to keep spending out on surveys when you know yourself that parts of the house are potentially unsound?

If it were me, I'd fix it and get the best price for the house. Anyone who will buy cash from you will be looking for profit. That means the cost of the work and then some knocked off the price.

old_git_6

Cheers for the input Dozergirl.

I know that's it's unfair on potential buyers to have to shell out on a survey if we know that's there's a problem. However, the structural engineers report that we had done wasn't 100% that there is ongoing movement. The phrases used (from memory) were "evidence of structural movement on front (stepped cracking), repointed in the past but cracking shown again since.....damage appears to be of some age"......."evidence of slight settling in/settlng down giving a legacy of old cracking"...."cracking to party wall.......from single inspection apperas that movement is quiet and damage should be repaired to enable further monitoring"......"cracking to party wall (upstairs)....this may be a legacy of old movement".

Wha was more worrying was the fact that the engineer mentioned that they'd visited the adjacent house a few years back and noted movement concerns with it and the house one further on. The potential damage to ours appears related.

I guess we'll have to look into getting it checked out - they quoted approx. £900 to check the drains, dig bore holes + soil analysis. Might have to contact the insurers.
sh

Doozergirl

At least if you have it monitored and there isn't a problem then you can cover up the existing damage and you will also be able to provide reports, if asked, saying there is no movement. If there is, well, you're only back where you were.

So maybe it's worth waiting.

old_git_6

Presumably if we contact the insurers they will want to monitor first before deciding if any action is needed. If there is no ongoing problem then does it not go down as a 'subsidence claim' - I guess I'm thinking of how easy it will be to sell once it's all sorted with the subsidence claim issue.

On a related note, a friend knew someone who had a similar problem with steeped cracks. They claimed on the insurance who said it was down to the drains - which were lined and the cracks made good. I think he only had to pay out the standard excess (£100 ?) for a claim against drains rather than the £1000 for a subsidance claim. Thinking ahead, if that's the case here, would it go down as subsidance or simply an insuance claimn aginst drains?

Much appreciate all your help - only ever have bought one 1 house, never sold one before so I guess I'm a novice (even at 38)!

Sh