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Stressed-Out

Advice Please!

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OK I realize I'm probably not going to get much sympathy here, but I'd really appreciate some advice from some well-informed people.

I happen to have recently inherited £250K to spend on a property. Since my partner and I earn next to nothing (and are both self-employed), the purchase really needs to be an outright one, as we can't really raise any kind of a mortgage.

At the moment in our area, 250K will buy you a 2-bed house or flat.

For the last 2 years, we have been renting a small but nice 2-bed house in West Kent for around £800 pcm.

Basically, we'd be happy to stay here for another year, keep the cash in the bank, and see what happens to house prices. The 'problem' is that we have a daughter of 3-and-a-half who will be starting school in September 2006, which means that we need to put her name down with the LEA for school in February 2006. At present we live in the catchment area for a school that has a bad reputation. So, in the next 5 months (at the very outside) we need to move into the catchment area for a better school.

House prices are dropping in this area, but how long should we wait before we buy? Is it worth the upheaval of trying to find another place to rent in the catchment area for a better school (which would certainly cost us nearer £1,000 pcm, plus agency fees, deposit, etc.)? Or should we just try to buy something now? Or will we really regret it if house prices fall in the next year or so and could have bought something much better?

I appreciate that this probably seems like a 'non-problem' to a lot of people on this forum who are finding it hard to scrape together a deposit for a flat, but I feel really stressed-out by it all and would love some sound advice from those who have been watching the market closely.

Thanks!

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May I refer the person to the postings of Dr Bubb whom I consider to be very well informed and I personally would put an offer at 30% below asking price at the present time

The very best of luck and please keep the forum informed,thank you.

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Being in a similar-ish position (I need to move from my current rental to somewhere more expensive and must choose between another rental or a purchase - HPC aside I would be buying as we speak)... I have decided to rent in the new area for the time being.

I'll compromise for a smaller rented flat than I would buy - but at the same time I'll really get to know the area well and will know what to buy and for how much when the time comes.

That's my position.

Edit: Oh yes if you can get a -30% offer accepted that would be nice, but don't count on it just yet.

Edited by Nijo

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Where-abouts in West Kent are you? I am seeing 3 bed semis with gardens coming on at £180k ish at the moment in Tonbridge / Paddock Wood.

I can understand when you are getting stressed - having money in the bank doens't make it easy - it often throws up more unseen problems!

Not sure what I'd do to be honest - I'd probably put my daughter's education first & either move into another rental property or find myself a real bargain as a "cash buyer". You may not get 'rich' quickly buying now but if you are a proper cash buyer then you are not going to be left in negative equity.

Good luck :)

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Put the cash in a high interest account, use the interest to pay the rent and wait.

You wont regret it!

The best of dom luck to you.

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Thanks for all the good advice. It's really great to know that there are people out there who understand how I feel. Ultimately, I do have to put my daughter's education first, so I suppose we will have to find somewhere else to rent for another year or so in a better catchment area, since time is running out for us, and I can't see us being to persuade a vendor to drop 30% on their asking price in the immediate future.

It really seems to me that the world has gone mad when a normal 3-bed semi costs a quarter of a million pounds.

Good luck to everyone else in their search for a home - after all, that's what bricks and mortar should be, right? Just a nice cosy place to live, not some kind of financial investment. Down with all 'buy-to-let' investor scum!

Thanks!

p.s. I am in Tunbridge Wells - it's so overpriced here, but this is where our family are...

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I'm thinking when I come to buy I might go round to a shed load of agents and tell them i've got 250k in the bank ready to buy, but i'm only looking for desperate sellers who are willing to knock a massive chunk off in order to achieve a fast sale.

It might work or it might not, but if like me the areas you are looking in have massive oversupply, it may save a small fortune.

There are desperate people out there selling their props to companies for 70-75%, so if you can come in with 250k cash I don't see why you couldn't achieve the same.

Thats not to say prices wont fall more than 30%, but if they do I think we may have to worry more about economic meltdown than house prices.

anyone fancy starting a forum on economicarmageddon.com? :lol:

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We have just moved a couple of weeks ago into a new rented property and it is very close to our daughters new school. Our daughter is 4 and starting school for the first time.!. We are renting a very nice house that really we could not afford to buy.! Makes sense to rent it and keep our money in the bank and gain interest. We have no stress. Its only bricks and mortar at the end of the day.!.

Be flexible and leave it to fate. Look at both rented and houses for sale and see where it takes you. Sometimes I think its all mapped out.!

Lou.

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I'm thinking when I come to buy I might go round to a shed load of agents and tell them i've got 250k in the bank ready to buy, but i'm only looking for desperate sellers who are willing to knock a massive chunk off in order to achieve a fast sale.

It might work or it might not, but if like me the areas you are looking in have massive oversupply, it may save a small fortune.

There are desperate people out there selling their props to companies for 70-75%, so if  you can come in with 250k cash I don't see why you couldn't achieve the same.

Thats not to say prices wont fall more than 30%, but if they do I think we may have to worry more about economic meltdown than house prices.

anyone fancy starting a forum on economicarmageddon.com?  :lol:

A variation on that advice.

Print up a leaflet & get walking round the neighbourhood you want to buy in. Put a leaftlet explaining what you want and that you have cash waiting for a place at the right price. Put one in the door of every house in every street in the area you want to live in.

You'll get fitter & you might get a bargain as well.

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I've wondered about this recently TTRTR, and you might be a person with insight.

Yes I'm chain free and have a mortgage secured. I can go around and offer -30% if I want to. If accepted this would presumably eliminate the risk of any potential HPC and represent a bargain, even for the bears.

But why would anybody accept that (from me!) right now? If a vendor were willing to take -30% I'm sure there are 10 other people that would gladly make an offer of -15%. Is it just down to luck? Or picking properties that are not the cream of the crop?

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I've wondered about this recently TTRTR, and you might be a person with insight.

Yes I'm chain free and have a mortgage secured. I can go around and offer -30% if I want to. If accepted this would presumably eliminate the risk of any potential HPC and represent a bargain, even for the bears.

But why would anybody accept that (from me!) right now? If a vendor were willing to take -30% I'm sure there are 10 other people that would gladly make an offer of -15%. Is it just down to luck? Or picking properties that are not the cream of the crop?

I don't think you need to stoop too low to get a bargain.

IMO when people dress up their places very well & repaint & weed etc, they suddenly feel that their place is worth a mint. Sadly there are buyers that love these places and will jump at the chance of overpaying (after all, they can afford the mortgage - they think to themselves) for one of these trophy homes/status symbols. So you don't want to compete with them, stay away from the perfect places.

But then you've got the completely run down places, needing masses of renovation & at asking prices that make your eyes water when you factor in the hassle and cost of fixing them up. The problem here is that you're competing with people who are experienced and can renovate for a profit. They'll buy one of these places, renovate it with all the latest improvements like chrome switches & granite worktops & feed the property up to the section of the market searching for trophy homes as described above. So you can't win in the current market, because these people have more resources than you to put into a place (I'm assuming here).

Then there's the middle ground. Places that have been used & loved over the years, but that just aren't fashionable or the kitchen is out of date (but perfectly good). They're not that appealing when you walk into them, but you can see they don't need renovation, just a lick of paint & it'll be great when the vendor moves their old shabby furniture out. These are the places you should be looking for IMO.

They're acceptable, they don't appeal to the trophy home hunters & they don't appeal to renovators & developers. They often sit on the market for a long time & the vendor eventually has to give up and take a hit for no good reason. I believe I've bought 5 places that fit these descriptions. They have been a hit with my tenants after a paint & new carpets & new furniture & have been revalued much higher within months of my purchase without any real renovation going on.

Another point. It is a well known tactic to send a friend or two around to your favourite place. They have to be a good friend, get them to view, comment that they like it but this & but that, then a few days later they put in a nasty low offer. The vendor rejects the offer. Do it again if you've got another good enough friend (maybe a family member with a different surname?). You're not expecting the vendor to say yes, but these seriously low offers are softening up these vendors & when you come along and make your offer which happens to be a fair bit higher than the offers they've just rejected, the chance of them saying yes could be much higher in a slow market like we have now. This is a process that would take a couple of weeks, but what the hell is a couple of weeks versus say 20% off a place?

Edited by Time to raise the rents.

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That is precisely one of my worries: Namely, why would a vendor accept an offer as low as -30% at the moment? The types of houses in which it would be possible to negotiate down the price successfully would seem to me to be the ones least likely to be the 'ideal' family home (i.e. 3-bed semi).

For instance, I can see how you could potentially negotiate down the price of a new build, but most of these (in our area at least) are either flats or big detached houses.

I'm sure you could also negotiate on the price of a recently 'improved' property by a speculator who, say, might have bought the house a few months ago for £200K, have added a new B&Q Kitchen and Bathroom (at a cost of approx. £2,000) and is now asking £250K (there is a house of this precise description around the corner from me). But, you're never going to persuade them to sell for less than £220K, are you? Otherwise they won't have made any profit at all on the place, by the time estate agency costs, etc. are taken into consideration. In addition to which, there's the awful scenario of having to buy a house that you know cost less than you're paying for it only six months ago.

And I imagine you could persuade someone to lower the price of the house they're selling if it belonged to their recently-deceased/gone into a care home parents or relatives. But, quite apart from the moral issues involved in trying to 'beat down' someone who is potentially grieving, these properties tend to be bungalows/flats.

Or, of course, they might live in a bad catchment area...

But, please correct me if I'm being pessimistic

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These are very good points, thank you.

I think my problem (which is one of inexperience) is that I sometimes can't see beyond the superficial finish of a house. I like shiny things.

Plus... you don't think that EA's know the softening trick? It's a good one, but my suspicious self sees it as kind of obvious.

Edited by Nijo

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If there were not desperate sellers out there willing to take a big hit then the following companies (to name a few) would have no business:

http://www.mpginvestments.co.uk/

http://www.a-quick-sale.co.uk/

http://www.all4property.net/

http://www.sell-quick.co.uk

http://www.nationalhomebuyers.co.uk

If these people can do it then I certainly believe I can. Given a bit of hard work sourcing a desperate seller may save you 1 or 2 years gross salary I can't see why its not worth a try.

You need to approach these things with a positive attitude, like everything in life, believe that someone somewhere in your area will accept 25% off (and i'm sure there is someone fitting this description) and you just might find them!

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I happen to have recently inherited £250K to spend on a property.
For the last 2 years, we have been renting a small but nice 2-bed house in West Kent for around £800 pcm.

My back of an envelope calculations seem to show you ought to be able to generate £600 a month off the 250k without risks, and given that you're already finding 800 a month rent that gives you a lot of renting options in an area with a more attractive school.

One thing I will say though is that I think the biggest factor in any child's education isn't the school, it's the parents and the attitudes and skills they teach their children every day of their lives. A good school would be nice as well, obviously. But there are always options. For example if you saved even 10k by waiting another year or so to buy, that money would buy quite a bit of extra tuition, or pay for music lessons for a long time or character-building holidays/activities (whatever that means!), or... you get the idea.

It seems to me you're in a strong position in the current housing market. By being patient you may be able to put your family in a stronger position in the long term (living in a better area, nicer house, with happier parents... a huge factor IMO) than if you gamble now.

I should point out I have no children so far and may be talking complete rubbish here. It's easy to have opinions when it's not your child's future on the line. :-)

Andrew McP

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Andrew McP,

You are absolutely right that your children are affected more by how you bring them up than they are by their schooling, but school also plays a hugely important part in their lives, and I really think it can affect their happiness, which is my main consideration. I'm not that bothered about my daughter doing well academically, but I don't want her to be bullied and/or ignored in a class of 30+ kids. So, while I realize that I could stay put and send her to a school with a bad reputation, I'm not sure that a bit of extra private tuition would be able to recoup her 'spirit' (sounds pretentious, but I'm sure you know what I mean) if it was beaten.

Basically, I have to try to find somewhere else to rent in a better catchment area and take my chances on the market going down next year...

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My God, TTRTR - You are so devious! But I like your thinking...

Another one which I was reminded of by your post above:

Scan the local obituaries to find out who has recently died. Apparently EA´s do it to drum up business. They contact the family discreetly looking to put the house on the market for them.

No reason you couldn´t make direct offers in that situation.

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These are very good points, thank you.

I think my problem (which is one of inexperience) is that I sometimes can't see beyond the superficial finish of a house. I like shiny things.

Plus... you don't think that EA's know the softening trick? It's a good one, but my suspicious self sees it as kind of obvious.

It´s obvious to you, but how could they know?

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I'm not sure that a bit of extra private tuition would be able to recoup her 'spirit' (sounds pretentious, but I'm sure you know what I mean) if it was beaten.

That's fair comment, and I agree it's a gamble I'd prefer not to take and a solution I'd hate to put to the test. All I was getting at is that you can be bullied in the nicest of schools with the best of result tables (that's what children do to each other, after all), and domestic circumstances should be given equal priority. With a strong and happy base at home, in a decent area, children are so much better equipped to face whatever the school world throws at them.

If you can manage both without compromising your strong financial position in a market set for what looks like a long term fall, all the better. Good luck with your decision.

Andrew McP

PS On balance I guess peace of mind is worth more than money.

Edited by Andrew McP

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Thanks for all the good advice. It's really great to know that there are people out there who understand how I feel. Ultimately, I do have to put my daughter's education first, so I suppose we will have to find somewhere else to rent for another year or so in a better catchment area, since time is running out for us, and I can't see us being to persuade a vendor to drop 30% on their asking price in the immediate future.

It really seems to me that the world has gone mad when a normal 3-bed semi costs a quarter of a million pounds.

Good luck to everyone else in their search for a home - after all, that's what bricks and mortar should be, right? Just a nice cosy place to live, not some kind of financial investment. Down with all 'buy-to-let' investor scum!

Thanks!

p.s. I am in Tunbridge Wells - it's so overpriced here, but this is where our family are...

I have a lot of sympathy with your position - I have moved before now to help with schooling for my children. My advice, on a fiscal level, would be - 'DON'T BUY NOW' and to help with the 'upheaval' just try to cultivate the idea that moving house is not such a big deal.

I'm 52 and STRed in Dec 2003. Decided to move from our present rented house into a bigger one in September. It's no big deal. A day with a van and a few able bodies. Rent again. You have been mighty lucky to get that money but it probably won't buy you the house you want (not in Tunbridge Wells) - by staying out of the market for another couple of years it may well buy you a house a step or two up the ladder nicer for the same money.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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