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Is It Ever A Good Time?

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hi all,ive been lurking for a long time, and now is the time to post. im in a position that possibly alot of others are, but probobly not a lot of you guys. i acknowledge that i am quite noobish , and you folk are the informed ones. i bought 5 years ago, a 3 bed ex council semi for 80,000 with a 88,000 mortgage on it now. my problem is that i am getting itchy feet, tired of the neighbours antics, and want to move out. i was considering selling now, estate agent valued the house at £110,000. i have spent probobly £20,000 on it at the mo, so was hoping for £130,000 to put £40,000 in my pocket, and i was going to rent until we hit 'rock bottom', as i cant afford to move up to a nice detached house with a big garden to keep the kids in. do you think that prices are to fall further, and i should take what i can get and run, or , am i looking at a 3 year wait until/if prices rise on my own property, and the house i would like to move up to. im thinking of putting it on the market, and seeing what happens...dont know what to do. hope all this makes sense. help please.

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80,000 with a 88,000 mortgage on it now...

estate agent valued the house at £110,000...

i have spent probobly £20,000...

hoping for £130,000 to put £40,000 in my pocket...

Register, welcome to the friendly NI forum!

Perhaps you could start by looking at your sums. Currently they don't add up and as you seem to be looking at this as a numbers game getting the sums right is important.

As I read it you have a mortgage of £88000, plus a further spend of £20000 on the house, giving a total cost to you of £108000. Correct?

Putting aside the difference between the valuation and your hoped-for selling price, even if you achieved the £130000 you hope for, the difference is not £40000, it is in fact £22000 before any of the associated costs of selling (and then buying at a latter date after a period of renting).

If you only achieved the estate agents valuation you will have nothing left "in your pocket" after selling (and costs).

Do you need to sell?

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I bought 5 years ago, a 3 bed ex council semi for 80,000 with a 88,000 mortgage on it now.

MEW!!! Agogo.

Scarcely worth selling; you will lose the house over your head.

Pootle, I think the total spend is 80k + 20k = 100k. Doubtless some of the 88k was mewed to do it up.

Anything the house makes over 90k (assuming 2k for selling fees) is money left "in his pocket" for him to spend and keep the economy going.

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MEW!!! Agogo.

Scarcely worth selling; you will lose the house over your head.

Pootle, I think the total spend is 80k + 20k = 100k. Doubtless some of the 88k was mewed to do it up.

Anything the house makes over 90k (assuming 2k for selling fees) is money left "in his pocket" for him to spend and keep the economy going.

Good point! Assuming the £8000 added to the mortgage was part of the £20000 spent on the house then the total cost/spend is £100000 as you say. However, I don't agree with you that anything over £90000 is left "in the pocket". The money that was spent on the house was still part of the cost of the house. If the house was sold now for £100000, then £88000 (possibly plus early redemption fees), would have to be paid back to the mortgage company. The remaining £12000 (minus other costs of selling) would only cover the out-of-pocket cost of the work done on the house. £100000 or thereabouts (depending on costs) represents the break-even point.

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Good point! Assuming the £8000 added to the mortgage was part of the £20000 spent on the house then the total cost/spend is £100000 as you say. However, I don't agree with you that anything over £90000 is left "in the pocket". The money that was spent on the house was still part of the cost of the house. If the house was sold now for £100000, then £88000 (possibly plus early redemption fees), would have to be paid back to the mortgage company. The remaining £12000 (minus other costs of selling) would only cover the out-of-pocket cost of the work done on the house. £100000 or thereabouts (depending on costs) represents the break-even point.

sorry, i was trying not to make a hash of this..

my mortgage is currently £88,000

if i sell now for Ea valuation of £110,000 i get £22,000

if prices keep falling i will get less next year and so on - maybe negative equity

it could be 3 + years before house prices rise again..

i dont need to move but i would like to, growing family.

is this just the way it is, tough luck get on with it?

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sorry, i was trying not to make a hash of this..

my mortgage is currently £88,000

if i sell now for Ea valuation of £110,000 i get £22,000

if prices keep falling i will get less next year and so on - maybe negative equity

it could be 3 + years before house prices rise again..

i dont need to move but i would like to, growing family.

is this just the way it is, tough luck get on with it?

Hi Register,

welcome to the forum.

You sound like you want to move, so why not just put it on the market and see what happens.

If you get any offers in that work for your own situation then take the money, put it in a 1 year bond (some close to 4% at the moment), but possibly get a higher rate by the time the sale goes through).

Rent, in an area you like, and buy back in around 2011, using your money as a deposit ;)

Edited by sophia

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hi all,ive been lurking for a long time, and now is the time to post. im in a position that possibly alot of others are, but probobly not a lot of you guys. i acknowledge that i am quite noobish , and you folk are the informed ones. i bought 5 years ago, a 3 bed ex council semi for 80,000 with a 88,000 mortgage on it now. my problem is that i am getting itchy feet, tired of the neighbours antics, and want to move out. i was considering selling now, estate agent valued the house at £110,000. i have spent probobly £20,000 on it at the mo, so was hoping for £130,000 to put £40,000 in my pocket, and i was going to rent until we hit 'rock bottom', as i cant afford to move up to a nice detached house with a big garden to keep the kids in. do you think that prices are to fall further, and i should take what i can get and run, or , am i looking at a 3 year wait until/if prices rise on my own property, and the house i would like to move up to. im thinking of putting it on the market, and seeing what happens...dont know what to do. hope all this makes sense. help please.

I think this is a classic example of what is happening in the market at the moment, and may go some way to informing some of the discussions that have been happening at the moment.

We don't know this house - we have no idea what it is worth. Bought in 2004 for £80k, valued by EA at £110k owner wants £130k. If it went on the market at Offers over £110 people on this site may be saying - 'when are these people going to realize this house should be 3 x income' etc. My point is this man/woman doesn't need to sell. He will probably put it on the market and see what happens as Doccyboy says. He is not going to drop below his costs. This is a good example of the stalemate I am talking about.

Regester - EA's are usually valuing at or below value at the moment as they only make a fee if the house sells and tthey are desperate for fees at the moment. So there is every possibility of getting what he says. Get a few other Agents to value it to see if they are saying the same.

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However, I don't agree with you that anything over £90000 is left "in the pocket".

Of course it is. It is CASH - literally in his pocket. Most of the world don't really understand accounting profit; all they understand is cash. OP can sell his house and be left with CASH; in two years time he will be able to sell it and will be left with money owing to the bank...

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Of course it is. It is CASH - literally in his pocket. Most of the world don't really understand accounting profit; all they understand is cash. OP can sell his house and be left with CASH; in two years time he will be able to sell it and will be left with money owing to the bank...

Yup, that's why people think they really have made a load of dosh on their houses when in fact they haven't.

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Hi folks, first post for me so be gentle.

I noticed BelfastVI taking about stalemate and I think he is correct. I'd like to describe my experience so far with the market. Hope I don't bore yis rigid!

I have my house on the market from February 2009. It was valued then, by the Estate Agent, at £140K approx and I had a re-valuation performed by another estate agent a few weeks back. He re-confirmed an asking price of £140K approx to be realistic.

I would describe my house as a perfect first time buy semi with good gardens, which is what attracted us to it in the first instance. I have an outstanding mortgage of £88K on this house having bought it for £76K in Q1 2002.

As I now have a child and am there for seven years we are keen to move somewhere larger. My wife and I spotted a new build that we like a lot. It is a four bedroom semi around 1350 SQ foot and is currently priced at £175k approx. The value of this house has not dropped since Feb/March and the developer is, currently, not agreeable to any negotitation on the price.

We have had what can only be described as a decent amount of viewings considering the current downturn. However, the offers we have had on the property have ranged from £125K to £130K. Now these may be "realistic" according to many posters on here but to me it illustrates perfectly the stalemate that is currently ongoing. As I do not need to sell, all this guff about a buyers market does not apply to my house!

As the developer of the house is unwilling to negotiate on his price, I am unable - not unwilling - to drop substantially on the asking price I require, otherwise the move becomes a risk financially. Whilst not unaffordable - if interest rates go up or we expect another baby - it could be tight!

With the lack of alternative properties on the market in the second time buy category that are actually affordable - we are stuck.

Moreover, the banks have now compounded this situation even further with their unjustified hikes in five year fixed mortgages. Having been in a position where my previous deal had elapsed and I had the pick of the market, I was forced into a position where I had to re-mortgage with a bank due to their valuations of property being low and pushing me towards going above 75% LTV. Obviously I couldn't take this risk as the last thing I wanted to do was pay more for the house I was already in!

Now, I'm restricted to using the one bank to fund any move and they have themselves upped their rate for 5 year fixs substantially.

Result: Statemate all round.

And it sucks...

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Of course it is. It is CASH - literally in his pocket. Most of the world don't really understand accounting profit; all they understand is cash. OP can sell his house and be left with CASH; in two years time he will be able to sell it and will be left with money owing to the bank...

this is my mentality at the moment. i think i want to take what i can,and get out of 'ownership'. Rent somewhere nice and come back if i can afford something better in the future. the downside is ,is that if prices dont go down , i will have messed up. if i cant get a minimum of £20k out of the sale for future, i dont think i would be pleased, but well see. thanks for all your help.

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Register: It's an interest only mortgage. It will be worth £70,000 at most in 2 years time, and £70,000 at most (in real terms) in 10 years time IMO. Get rid of it right now - for £105,000 (£100,000 after costs of sale, estate agent lawyer etc) or live in it for the next 10 years. Your decision. This chance to get rid of it will expire without warning, probably in the autumn, and it takes 3 months to sell a house; so you've got about one month to get an offer if you want to go down the selling route. That's my personal opinion of course.

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Result: Statemate all round.

And it sucks...

Interesting and informative first post! Welcome aboard.

While the stalemate position may be a reality, the problem is that a market is only formed when a buyer and seller actually agree to an exchange. For example, a man may stand on a street corner and offer apples for sale, he won't accept anything less than 100 groats per apple, but the people passing him cannot afford (or do not place that value) on the apples and so do not buy them. This is not a market, just some people who are walking down street past one man who is standing there. It doesn't have any effect on the price of apples being sold elsewhere. The price of apples is set where a buyer and a seller agree to a fair exchange of value as expressed in the number of groats per apple.

If a house, or a mouse or an apple is offered for sale at a particular price point and it doesn't sell...well, you can work the rest out yourself.

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Hi Bergy, welcome to the forum.

In your situation, i would be tempted to sell the house for whatever you can get.

Being in a cash position gives you a lot of leverage with the developer on the other house.

At the moment you are in a chain and not that attractive to a developer. Having a pile of cash with no chain puts you in a much better position to negotiate. And I know you might still need a mortgage for the other house, but i am assuming you would get a mortgage ok.

Disclaimer: in the end of the day its your call, so don't blame me if it goes wrong ;-) But seriously i think others will agree being a cash being puts you in a fantastic position.

Edited by leftofcentre

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Hi Bergy, welcome to the forum.

In your situation, i would be tempted to sell the house for whatever you can get.

Being in a cash position gives you a lot of leverage with the developer on the other house.

At the moment you are in a chain and not that attractive to a developer. Having a pile of cash with no chain puts you in a much better position to negotiate. And I know you might still need a mortgage for the other house, but i am assuming you would get a mortgage ok.

Disclaimer: in the end of the day its your call, so don't blame me if it goes wrong ;-) But seriously i think others will agree being a cash being puts you in a fantastic position.

I was tempted to sell it at the reduced offer of around £130K and rent. However this sounds easy and great on paper. Sell your house, pocket the money and yeah, hopefully in a few years you'll be in a great position with lots of cash to put down a sizeable deposit on your house. I totally see your point about the leverage with the developer also, though I have noted a general reluctance from this development in general to reduce over the past 18-20 months to reflect rapidly decreasing prices.

However, it is also a lot of upheaval and with a young child to consider then this becomes a less attractive option. There are other factors to consider. What if I move to rented accomodation and don't like it there/have bad neighbours etc etc. We are fortunate in that we are "happy" in our house - bar a desire for something bigger. Good area, decent neighbours, good gardens, near to shops & schools.

So you got to balance up the profit aspect vs the - I'm happy enough where I am and surely, eventually, the differential bet. the two houses will return to affordable levels. Just as an aside - does anyone know what the step up in money would have been pre-boom to move from a 3 bed semi to a 4 bed semi?

Also, having made that decision to re-mortgage, it would now cost me 5K to sell up and settle with the bank. Too much dinero amigo to hand to Mr Banker for nada

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Hi mate and welcome

Sounds like you just want a clean move and don't want to rent. Thats cool. Personally I would stay put for the next 2-2.5 years and pay off as much of your mortgage as possible and forget about the market.

We will be having (the UK) a double-dip recession, due to the unavoidable spending cuts after the next general election. As you know this province is very dependent on state spending and will be hit hard again. This will force the market down further along with the increasing number of repos.

As you know as house prices fall the "rungs" of the housing ladder narrow allowing easier trading up which will suit your circumstances in a couple of years.

Either way, good luck with any decision you make, and as always take what we say here with a pinch of salt.

Edited by Vespasian

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Hi mate and welcome

Sounds like you just want a clean move and don't want to rent. Thats cool. Personally I would stay put for the next 2-2.5 years and pay off as much of your mortgage as possible and forget about the market.

We will be having (the UK) a double-dip recession, due to the unavoidable spending cuts after the next general election. As you know this province is very dependent on state spending and will be hit hard again. This will force the market down further along with the increasing number of repos.

As you know as house prices fall the "rungs" of the housing ladder narrow allowing easier trading up which will suit your circumstances in a couple of years.

Either way, good luck with any decision you make, and as always take what we say here with a pinch of salt.

Thanks for all the welcomes and advice, it is much appreciated.

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In answer to the main post, my view is that prices will continue down for at least another 3 years, so adding on normal interest rates onto that and it could be 6 years before you make a 'cash' profit again, more likely is a 10 year period. This is the best case scenario, so if you want to move then you need to sell ASAP and not chase the market down. The only way is to sell first (before buying) at the moment, there are just too many stalemate chains where people have agreed on unrealistic prices, after having their own place 'valued'.

Its all very interesting hearing about the stalemate positions, and very true, low interest rates are holding off the fire sale. However, this poster needs to know how to play the market. My advice is to sell to rent, you will 'lose' money either way (you should not expect profit from doing nothing), but renting is still much cheaper than buying and very flexible with lots of places available now.

As for EA valuations, I don't agree they are undervaluing at the moment, they are clearly over valuing because the rate of sales is very low. Until the rate of sales returns to some sort of norm, prices are too high. The high prices were, of course, all related to increased ease of credit but credit does not make an economy. EAs are mostly still living in their own fantasy bull land, and a competitive business approach has been lost from their ranks due to too many years of easy money. From at least one EA internal meeting I heard about, they don't think that 200 sales @ half the margin is better than 10 sales at the peak margins. Their response to decreasing revenue is to try to increase selling prices, at least it was suggested, but was poo-pooed by the accountant trying to explain that their current pricing model was not sustainable.

Don't forget that that is no 'fair value' for a 2nd hand house/land, cost is merely a way of distributing the land in a way to encourage people to contribute in the most valuable way to society. Prices are really based on credit, wages and numbers of buyers.

As for a worst case view..well.. this was all assuming the cycles continue as they have before, but the cycles are getting larger in amplitude and at some point they will exceed the ability of gov't/tax payers to absorb the bust part. Could it be this time?

None of us can predict the future, especially we do not know what gov't/banks might come up with to start another credit binge. If buying and selling houses is not your daily business then do not expect to make profits, take the lowest risk route and at the moment that is renting.

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Hi folks, first post for me so be gentle.

I noticed BelfastVI taking about stalemate and I think he is correct. I'd like to describe my experience so far with the market. Hope I don't bore yis rigid!

I have my house on the market from February 2009. It was valued then, by the Estate Agent, at £140K approx and I had a re-valuation performed by another estate agent a few weeks back. He re-confirmed an asking price of £140K approx to be realistic.

I would describe my house as a perfect first time buy semi with good gardens, which is what attracted us to it in the first instance. I have an outstanding mortgage of £88K on this house having bought it for £76K in Q1 2002.

As I now have a child and am there for seven years we are keen to move somewhere larger. My wife and I spotted a new build that we like a lot. It is a four bedroom semi around 1350 SQ foot and is currently priced at £175k approx. The value of this house has not dropped since Feb/March and the developer is, currently, not agreeable to any negotitation on the price.

We have had what can only be described as a decent amount of viewings considering the current downturn. However, the offers we have had on the property have ranged from £125K to £130K. Now these may be "realistic" according to many posters on here but to me it illustrates perfectly the stalemate that is currently ongoing. As I do not need to sell, all this guff about a buyers market does not apply to my house!

As the developer of the house is unwilling to negotiate on his price, I am unable - not unwilling - to drop substantially on the asking price I require, otherwise the move becomes a risk financially. Whilst not unaffordable - if interest rates go up or we expect another baby - it could be tight!

With the lack of alternative properties on the market in the second time buy category that are actually affordable - we are stuck.

Moreover, the banks have now compounded this situation even further with their unjustified hikes in five year fixed mortgages. Having been in a position where my previous deal had elapsed and I had the pick of the market, I was forced into a position where I had to re-mortgage with a bank due to their valuations of property being low and pushing me towards going above 75% LTV. Obviously I couldn't take this risk as the last thing I wanted to do was pay more for the house I was already in!

Now, I'm restricted to using the one bank to fund any move and they have themselves upped their rate for 5 year fixs substantially.

Result: Statemate all round.

And it sucks...

DROP YOUR PRICE OR STOP WHINGEING!!!

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bit harsh reply there :(

you get trolls like that on every forum. It's a sad form of existence really...

He seems to have totally missed the point as well - which is also par for the course for illiterates.

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I noticed BelfastVI taking about stalemate and I think he is correct.

Just to add to what Pootle said...

People like yourself may be in a stalemate situation. However, that also makes you bystanders in the current market place, not a real seller. You will chase the real market price down. Actual sales will set the market price - not seller asking prices. Increasingly, people who need to sell because of the 3 D's (death, divorce and debt) will be setting the market price. These people will not be in the 'stalemate situation'. They will be forced sellers. I suspect that there are a lot more people in this position than most realise. Their debts are currently manageable due a historically low BoE base rate of 0.5%. This base rate of 0.5% has never been seen before in the 300 year history of the Bank of England. And if you think about it, it is a good indication of how much trouble the economy is in this time round. If everyone is in your position then house prices will have bottomed out and prices will stop falling. If there are forced sellers out there then house prices will continue to fall until there are no more forced sellers. At this point prices will level off - because as you say, people can afford not sell.

... we are just not there yet. ;)

On the positive side - the rungs of the ladder will be getting closer and closer as we get to the real bottom in house prices (ignore the current false bottom). When I bought my new 3 bed semi in 1993 the next rung up cost just £12,000 i.e. detached house with a garage. When my brother bought his house in 2002 it would have cost him just £25,000 to go from his new 3 bed semi to a new detached with garage. As I expect prices to return to 2002 levels - then a 3 bed semi will cost around £70k-£80k and a detached with garrage £100k-£110k. So even though you will get alot less for your current house, the move up the ladder will cost you a lot less.

Edited by Belfast Boy

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On the positive side - the rungs of the ladder will be getting closer and closer as we get to the real bottom in house prices (ignore the current false bottom). When I bought my new 3 bed semi in 1993 the next rung up cost just �12,000 i.e. detached house with a garage. When my brother bought his house in 2002 it would have cost him just �25,000 to go from his new 3 bed semi to a new detached with garage. As I expect prices to return to 2002 levels - then a 3 bed semi will cost around �70k-�80k and a detached with garrage �100k-�110k. So even though you will get alot less for your current house, the move up the ladder will cost you a lot less.

Good post mate. Your points are of course correct and at the end of the day, I'm not particularly bothered what i get for this house as long as the differential between the two is affordable. So, the above scenario would suit me perfectly. This is why I made the point about not being unwilling to reduce just not able to in order to get the house that I would like. This was missed so spectacularly by my buddy above!

Edited by Bergy100

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Good post mate. Your points are of course correct and at the end of the day, I'm not particularly bothered what i get for this house as long as the differential between the two is affordable. So, the above scenario would suit me perfectly. This is why I made the point about not being unwilling to reduce just not able to in order to get the house that I would like. This was missed so spectacularly by my buddy above!

The thing is you can have a bigger/better place NOW if you rent, buying prices will take a few more years yet to get to more affordable levels.

If you are still not convinced on renting try it this way ; houses are losing value about 3x faster than it costs to rent them. A house at £175K will lose £1,458/month if prices are dropping at 10% per year (and they dropped about 25-30% here recently). £1458/month will rent you an £800K house maybe. If you convert your house into cash it will deplete slower if you pay rent instead of owning the house.

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