Buying & selling - Advice?

desiman

Hi,

Situation is as follows, buying and selling

Selling - 2 bed property, on the market for £80,000 - mortgage remaining £35,000

Buying - 3 bed semi, offer accepted at £113,000, needs about £15k worth of work. Similar properties in the area around the £140+ mark (in similar condition to when the work I do will be completed) - I also need a £23k deposit which I want from the sale of my house.

Dilemma -
When I started the process back in March, the market changed pretty suddenly in our area and whereas in the first few weeks I had a viewing a day and even had a confirmed offer of 76k, I held out and now the best I'm getting is 70k or so, even though I'm now willing to drop to 75k

The vendors are taking their time, as they hadnt been granted probate at the time of my offer being accepted, however its been nearly 8 weeks since and I tihnk they are near to getting it so they are pretty soon going to want to exchange. This has kinda worked in my favour so far as I still dont have a buyer.

I've arranged a mortgage with First Direct at the good rate (5.29% fixed for 5Y) and have arranged a temporary loan of £23k from family to tide me over for the deposit until my house is sold - So i'm ready to buy

My dilemma is I cannot afford to sell my house at £70k or lower as my sums dont add up. If I sell at £70k & pay off the remaining mortgage I have £35k left over. Out of this I need to pay £23k deposit for the new house and £15 for essential repairs. This makes it £38k at a sale of £70k, thats a 3k shortfall - an even bigger shortfall if I sell for less than £70k.

As mentioned its been about 8 weeks since my offer on the purchase property has been accepted, so we are nearing the completion of the transaction. The only way of protecting myself from a potential shortfall is to gazunder the vendors and offer a revised purchase price, as the market has gone down since. I plan to make an offer of £100,000, thats £13k less than the agreed price.

I dont feel in any way unethical about doing it as people got gazumped when the prices went up, so lets not get into the ethics of it.

I think it could be a goer as the houses in the area are not shifting that quickly any more, even the vendor's estate agent's will confirm this. Plus as they have inherited the property I'm hoping they want to cash as quick as they can, so this could work in my favour, although it could easily go the other way.

I'm not desperate to sell my current property, I'm financially quite secure with no other debt (student loan!) and a good salary so if my offer is not accepted I am prepared to walk away.

What do people think, am I right or wrong? This is only my 2nd house buy and I'm a bit unsure, but I wanted to see if theres a hole somewhere im missing.

Thanks for reading!

kimosaaby

Consider re-mortgaging ( instead of selling ) the original property and let it out to cover ( most of ) the mortgage payments depending on what you can get for rent: The rental amount determines the BTL mortgage ceiling so you may be able to release at least 38K you need to get the target house and clear the deposit debt plus have an appreciating asset in the long term. Look to release as much spare cash as possible so you have cash to cover rental voids.
Unless you have a good reason for dropping the agreed price I would expect the gasunder victims to tell you to go away. They are presumably not desperate to sell?
IF the repairs were not part of your original calc's - fine, otherwise stick to the original deal if you can.

desiman

Thanks, although I'm not sure I will get 38K released over and above the 35K I have as a mortgage on the property anyway.

I dont have a specific reason, yes some smaller issues came up in the survey, but I plan to put the revised price through anyway, as this is a buyer's market and gazundering is the word of the day

desiman

Thought I'd post an update to the above. I have a few buyers lined up at 70k so hopefully I should be able to sell at that price.

On the buying side, the vendors have now been granted probate and they are now ready to exchange so I have put in a revised offer of £98,000, 15k less than my accepted offer; They are mulling over it!

Reasons are I'm making less than I thought on my current property and also other houses in the area have started to drop in price - ones that dont need work, were on for 140k earlier are dropping to 130k or so and even seeing things like £5,000 "cashback" or "reduced FQS" !!

I'm quite happy to sell my place and rent for a few months, but I think I would be a fool to let go of the 5.29 fixed rate, so will definitely buy within the next 5 months.. lets see how it goes!

brit1234

Sell at £70,000 and wait 6-12 months and you will be able to buy that original house or better for £70,000.

:exclamatiBig house price drops on Fridays Nationwide figures to be announced.:exclamati

desiman

Thanks Brit, love the optimism!

I dont think I want to wait that long as I have a nice fixed rate from FD booked, if I miss that the next ones will be 6% upwards, with extortionate booking fees, oodles of interest!!