Parents Want To Sell Their House To Me!

[AskFrank]

My parents want to move away and I want their property.

We have agreed on a price, which is 10% less than what it is currently on the market for. We have decided that I should not use my deposit as this will come in handy to do up the place! Therefore my parents will sell their property for the current advertised price and hence effectively pay my deposit for me.

I know it's become quite popular of late, for sellers to stump up the deposit, especially for first time buyers. However, I've also heard that a valuer may turn up and say the property is worth less because of that.

As it would be sold for the price it is on at, at the moment, and will be sold to me (with my parent paying for their child's deposit) am I likely to come up against any problems?

Also I know a lot of parents are stumping up their kids deposits at the moment. Are there any tax obligations? I know weddings are exempt from tax obligations, but I thought if a monetary gift was given to your child over a certain amount, then there are tax obligations.

Your views appreciated. Thanks!

[Guest Parry]

My parents want to move away and I want their property.

We have agreed on a price, which is 10% less than what it is currently on the market for. We have decided that I should not use my deposit as this will come in handy to do up the place! Therefore my parents will sell their property for the current advertised price and hence effectively pay my deposit for me.

I know it's become quite popular of late, for sellers to stump up the deposit, especially for first time buyers. However, I've also heard that a valuer may turn up and say the property is worth less because of that.

As it would be sold for the price it is on at, at the moment, and will be sold to me (with my parent paying for their child's deposit) am I likely to come up against any problems?

Also I know a lot of parents are stumping up their kids deposits at the moment. Are there any tax obligations? I know weddings are exempt from tax obligations, but I thought if a monetary gift was given to your child over a certain amount, then there are tax obligations.

Your views appreciated. Thanks!

Can't you just sort the Will out and 'fluff a pillow'?

[Rick62]

Parental gifts of equity (if genuine discounts) are generally fine with lenders. However, a valuer is unlikely to agree with 'the price the property is on the market for'. Generally houses are selling for about 90% of asking and valuers are being very cautious at the moment.

Tax, in practice the revenue would not know that you had been gifted some equity unless you told them. I believe the rules are that small gifts (e.g. £3,000) given out of income are fine, not taxable at all. Capital gifts are, I believe, potentially subject to Inheritance tax if the parent dies withing 7 years. If they survive there is not tax, if they die withing 7 years then it is a pro rata amount. Please note I am not a tax expert and this is my understanding only and might be wrong or out of date.

[Mikhail Liebenstein]

Are you sure you are not overpaying?

Have they had other offers?

Edited June 27, 2009 by mikelivingstone

[kara gee]

I think firstly you need to find out what the property was worth at peak. Zopla can give a good indication if there are similar houses around. More difficult if house is unlike others.

You then need to take around 22% off to get the current value. (I think a valuer may value up to 25% off peak).

Then take your parents discount of 10% off.

So for a property valued at £200k at peak, 'could' be valued at £150k. (Of course this all depends on area, type of property etc.)

If your perants are going to pay the 10 % deposit of £15k, you will need a mortgage of £135k.

Obviously without more accurate info on the property price, area, affordability, it is all just guess work.

[Bosh]

Do the deal with your parents, at the last minute, after they have made all future plans DROP the price by a further 20%.... It`s buisness.

Give them 10 minutes to make a decision, meanwhile sit in your Dads favourite chair with a stern face and keep checking and tapping your watch.

Your parents will be proud of you. Just in case that does not work. Do you have anything on any of your parents? Affairs? false insurance claims etc.

At Christmas you can all look back and laugh about it all

[keef]

Do the deal with your parents, at the last minute, after they have made all future plans DROP the price by a further 20%.... It`s buisness.

Give them 10 minutes to make a decision, meanwhile sit in your Dads favourite chair with a stern face and keep checking and tapping your watch.

Your parents will be proud of you. Just in case that does not work. Do you have anything on any of your parents? Affairs? false insurance claims etc.

At Christmas you can all look back and laugh about it all

Excellent advice, very well put

[Guest KingCharles1st]

Perhaps you would be kind enough to post a precis on just why your parents wish to sell, and to you!

I can then print it off and send it to my idiot parents who have already equity released and are intent on scooting around their overly huge old split level humounguo-property in Dalek-esque mobility equipped fashion while moaning they have no money

Edited June 27, 2009 by KingCharles1st

[bateman]

Do the deal with your parents, at the last minute, after they have made all future plans DROP the price by a further 20%.... It`s buisness.

Give them 10 minutes to make a decision, meanwhile sit in your Dads favourite chair with a stern face and keep checking and tapping your watch.

Bang on.

After your mum has finished crying you should try for a final 5% off.

Nail the bastards to the floor.

[Pytyr]

Am I the only one who thought, "Uh-oh. The parents can't sell it and want to get as much equity as possible by ripping off their kid"?

[babesagainstmachines]

Am I the only one who thought, "Uh-oh. The parents can't sell it and want to get as much equity as possible by ripping off their kid"?

Get a firm, proceedable offer in the market, not a valuation.

[3 Men In A Boat]

Am I the only one who thought, "Uh-oh. The parents can't sell it and want to get as much equity as possible by ripping off their kid"?

No

[The Generation Game]

Do the deal with your parents, at the last minute, after they have made all future plans DROP the price by a further 20%.... It`s buisness.

Give them 10 minutes to make a decision, meanwhile sit in your Dads favourite chair with a stern face and keep checking and tapping your watch.

Your parents will be proud of you. Just in case that does not work. Do you have anything on any of your parents? Affairs? false insurance claims etc.

At Christmas you can all look back and laugh about it all

Bosh is on da dosh

[3 Men In A Boat]

Just in case that does not work. Do you have anything on any of your parents? Affairs? false insurance claims etc.

At Christmas you can all look back and laugh about it all

[SMAC67]

Sounds like a very bad idea, business and family never go well together. Can't you simply wait and then inherit the house, it would be a lot cheaper...............

[Leonard Hatred]

Demand at least 30% off as compensation for them not giving birth to you a few years earlier, whereby you could have avoided their generation screwing you over

[Akrasia]

I doubt that your parents are trying to rip you off. They probably think that the house is worth at least its current asking price, and that they're doing you a favour by offering you 10% off.

However, the average agreed sale price (LR) is something like 25% lower than the average initial asking price (RM). As your parents don't seem to have a proceedable buyer the figure that they're working from sounds more like the RM figure than the LR figure.

They may not be trying to rip you off, but there's still a good chance that you're overpaying. Also, by overstating the sale price in the way that you described, you'll be doing your bit to keep the house price bubble inflated so others overpay too.

Still, at least you know that if you do pay too much then you should get your money back from your parents when they die. Arguably, you can't lose. Just make sure they don't go spending your inheritance...

Edited June 27, 2009 by Akrasia

[Selling up]

My mother and her sister faced a situation recently where they each inherited half a property and my aunt wanted to buy my mother out - but at what value?

My advice was to put the house up for auction, and the aunt would naturally have the option of topping any bid from the floor. That seemed the obvious way of finding out a "true" price.

However my aunt thought was wasn't necessary and simply paid very generously for my mum's half. Oh well, you can lead a horse to water... I'm not complaining!

[Giordano Bruno]

Perhaps you would be kind enough to post a precis on just why your parents wish to sell, and to you!

Am I the only one who thought, "Uh-oh. The parents can't sell it and want to get as much equity as possible by ripping off their kid"?

I thought something like that also.

[juvenal]

My parents want to move away and I want their property.

We have agreed on a price, which is 10% less than what it is currently on the market for.

Actual market value and asking price (bold above) have nothing to do with one another.

A house by me (BH15) started 'on the market' last year at £240K

Its actual value? What it sold at in May 2009 (LR figure)

£172K

Sixty eight thousand pounds less than the original 'asking' or EA valuation.

Get the house correctly valued, factor in another 15% drop and set a new figure.

You are too naive to be involved in deals like this at the moment.

[crashologist]

Ask for a DNA test.

[juvenal]

I doubt that your parents are trying to rip you off. They probably think that the house is worth at least its current asking price, and that they're doing you a favour by offering you 10% off.

However, the average agreed sale price (LR) is something like 25% lower than the average initial asking price (RM). As your parents don't seem to have a proceedable buyer the figure that they're working from sounds more like the RM figure than the LR figure.

They may not be trying to rip you off, but there's still a good chance that you're overpaying. Also, by overstating the sale price in the way that you described, you'll be doing your bit to keep the house price bubble inflated so others overpay too.

Still, at least you know that if you do pay too much then you should get your money back from your parents when they die. Arguably, you can't lose. Just make sure they don't go spending your inheritance...

No poster's parents are ever going to be paying nursing homes fees (£500-£800pw), are they?. So who are the half million elderly people in residential homes?

Never bring inheritance expectations into financial planning. Life has a way, as many older people on here know, of not conforming to your plans. Many old peoples total assets (house included) will go to fund care. My own parents did. See link for info.

http://www.guardian.co.uk/money/2009/may/1...gs-saving-money

Edited June 27, 2009 by juvenal

[BROF]

My parents want to move away and I want their property.

Your views appreciated. Thanks!

Arggh!

Is it a house?

Call it a house then!

Pwobbberrrdeee ffs. Its so Krustyesque.

[Guest Parry]

Actual market value and asking price (bold above) have nothing to do with one another.

A house by me (BH15) started 'on the market' last year at £240K

Its actual value? What it sold at in May 2009 (LR figure)

£172K

Sixty eight thousand pounds less than the original 'asking' or EA valuation.

Get the house correctly valued, factor in another 15% drop and set a new figure.

You are too naive to be involved in deals like this at the moment.

I can see now how other species from the animal kingdom can eat their young.

[juvenal]

I can see now how other species from the animal kingdom can eat their young.

I think the parents in this case are probably in ignorance as to real current value. But they need the electrodes of reality applied to the testicles of financial expectation.

Edited June 27, 2009 by juvenal