Negative Equity....

I'd like to hear some opinions from some of the learned masses on here...

The situation is this;

Offer made on a house of £165,000. Owner really wants £170,000. House next door sold for £165,000 in 2010 and prices have dropped 6% since then.

The concern about raising the offer is that it could leave the new owner in negative equity from the start. Do people think this is only something to worry about when you come to sell and if the prospective new owner plans to stay for a good few years, is it really an issue?

 

Unless there is something that makes it superior to next door, tell the vendor he is lucky to get £165,000.

 

Depends what you think house prices will do in the time you live in the house, compared to the deposit paid - if you're paying £35k deposit don't think there's an issue.

At the moment, unless the house is in outstanding school catchment, the area is on the way up or the purchaser HAS to move asap, they could go whistle for £170k. Leave the offer on the table.

 

If he is gonna live there a good few years then its not an issue

also how big a deposit is he/she putting down.I bought a house 4 years ago for £145k , put down £55k..its now valued at £165k.. I am a winner, if I sell, but don't wanna sell it.Well not yet.

 

Re: If he is gonna live there a good few years then its not an issue

Probably between 10 and 15%

 

10-15% deposit I would say. So in effect the mortgage would be well below the purchase price but the risk is a loss of a part of the deposit if the price does not rise or stay the same.
If you planned to stay there ten years you would like to think that we might have recovered a little by then...

 

I think you are right.

 

if he can make 15% then I would not hesitate at £165k

thats about £25k down leaving £149k mortgage , I reckon thats a good enough buffer for fluctuations. Also at 15% deposit his rate will be quite good.

 

Within 10 years prices will rise.

Still wouldn't be paying £170k in current market.

 

15% desposit is the magic number for cheaper deals on the mortgage rate. as for the purchase price a house is only worth what someone will pay for it, 2010 prices are a guide i guess but if the buyer really wants it whats 5k if he intends to live there for a decent period of time, if he's someone who moves quite often he might want to play hardball and leave his offer on the table as any seller in todays market has got to accept some amount of negotiatio though

 

So you would hold out at £165,000?

I should note that the house is on the market for more that £170,000.

The current owner is apparently trying to move up and needs £170 to make this happen I think. Not a reason to pay over the odds though!

 

No it's not - **** him.

What situation is the buyer ? If not in a chain then sit tight. The other thing to ponder is deposit.

Let's say they pay 170 - a 15 % deposit is 25.5k compared to 17k for a 10% deposit. Unless the buyer's going to get more than £8,500 back over the term of the fixed deal then keep cash in bank imho. We recently moved and paid as small a deposit as we could - when we got down to details the 'better' deal with a 15 or 20 % deposit worked out about £40 a month over 2 years. **** that. Cash is king.

 

Pondering selling or renting out at the minute.

 

you would then become a landlord and be moving towards the tory ideal of rich getting richer etc ..... you naughty socialist you!!!!

 

Get it rented out then hit him with £160k.

There'll be another house along soon enough if that falls through.

 

When I completley disagree with pensions, I need to make some provision for my old age. I will ahve no itention of letting anyone live in a flea pit either.

 

I offered some one £165K they turned me down; 3 years later (2012) they finally sold for £150K. In the meantime I bought a much better house at a price I'm happy with. Hold on to your money - if they want to move, they or someone in the chain will come down. In the meantime somewhere else might crop up. House prices are, at the best, going to remain static for the next few years. If you're in a position to buy, you have the upper hand (just don't panic buy).

 

only jesting Mr R Edstar..... i actually think pensions should be illegal as they are at present. You pay a barrow load of your own money into a pension and they then tell you when you can have it and how much a month........be better of putting it in a savings account and then you can do what ya want when ya want with ure own money.

Outrageous... shouldn't be allowed

 

I would not come back to them, just keep quiet and let him/her mull it over the weekend. If they reject it, then withdraw the offer to stop them using it as a fallback and move on. Be a reluctant buyer, there are plenty of properties on the market.

 

Thanks for that.

Aye there are. But not many that I like!