Work Colleague Str's

[OLDFTB]

Apparantly they had an offer of full asking price from proceedable buyers within a few days of being on the market.

She and her hubbie have decided to sell up, take their equity, pay off Credit card debts etc and rent for a year or so.

Rest of equity being stashed away in a high interest account.

The idea, she told me, is to clear debts and gamble on house prices falling so they can then afford to get back on that "Ladder" but in an area closest to work.

She asked me : "Are we doing the right thing?"

I replied: "Does a Bear sh*t in the woods?"

Good luck to them. I told her i am currently renting & awaiting the inevitable downfall in prices as well.

I always thought they were very financially naiive (due to previous conversations) but have completely changed my mind now. It's absolutely the right thing to do in their current financial situation.

[nohpc]

Apparantly they had an offer of full asking price from proceedable buyers within a few days of being on the market.

She and her hubbie have decided to sell up, take their equity, pay off Credit card debts etc and rent for a year or so.

Rest of equity being stashed away in a high interest account.

The idea, she told me, is to clear debts and gamble on house prices falling so they can then afford to get back on that "Ladder" but in an area closest to work.

She asked me : "Are we doing the right thing?"

I replied: "Does a Bear sh*t in the woods?"

Good luck to them. I told her i am currently renting & awaiting the inevitable downfall in prices as well.

I always thought they were very financially naiive (due to previous conversations) but have completely changed my mind now. It's absolutely the right thing to do in their current financial situation.

1) STR when the market is achieving full asking price within days. Sounds like they are gonna lose (where are they)

2) Equity stashed away in high interest account - Gordon Brown will be rubbing his hands in glee at taxing their hard earned savings

3) STR to pay off their debts - good idea if they are heavily indebtebed which I guess they are (not including mortgage)

from the sounds of things.

Basically, if point 3 was there reason for selling up I think they have done the right thing. If points 1 and 2 then

[tara747]

1) STR when the market is achieving full asking price within days. Sounds like they are gonna lose (where are they)

2) Equity stashed away in high interest account - Gordon Brown will be rubbing his hands in glee at taxing their hard earned savings

3) STR to pay off their debts - good idea if they are heavily indebtebed which I guess they are (not including mortgage)

from the sounds of things.

Basically, if point 3 was there reason for selling up I think they have done the right thing. If points 1 and 2 then

1) yes, they should have waited till the market topped and then sold after 7 months at 15% lower than asking price.

'Better to sell a year too soon than a day too late' - can't remember who said this but it is sound advice.

[OLDFTB]

1) STR when the market is achieving full asking price within days. Sounds like they are gonna lose (where are they)

2) Equity stashed away in high interest account - Gordon Brown will be rubbing his hands in glee at taxing their hard earned savings

3) STR to pay off their debts - good idea if they are heavily indebtebed which I guess they are (not including mortgage)

from the sounds of things.

Basically, if point 3 was there reason for selling up I think they have done the right thing. If points 1 and 2 then

Point 3 is the main reason. I agree with you. Debt free = stress free.

"1) STR when the market is achieving full asking price within days." - Selling at the top of the market i reckon, how can they loose? They are in the Worthing area.

"2) Equity stashed away in high interest account - Gordon Brown will be rubbing his hands in glee at taxing their hard earned savings" - Taxes & death mate! And hardly hard earned savings.All down to price rises not hard work! They are not the types who play the stock market etc.

[nohpc]

Point 3 is the main reason. I agree with you. Debt free = stress free.

"1) STR when the market is achieving full asking price within days." - Selling at the top of the market i reckon, how can they loose? They are in the Worthing area.

"2) Equity stashed away in high interest account - Gordon Brown will be rubbing his hands in glee at taxing their hard earned savings" - Taxes & death mate! And hardly hard earned savings.All down to price rises not hard work! They are not the types who play the stock market etc.

You would expect the market to cary on rising if places are selling at full price within days. This is the sign of a booming market not a market teetering on the brink.

Money in your mortgage is tax free. Savings accounts are not. I have explained this many times and don't really want to get into it but basically if you overpay your mortgage it is like having an unlimited ISA allowance.

[nohpc]

1) yes, they should have waited till the market topped and then sold after 7 months at 15% lower than asking price.

'Better to sell a year too soon than a day too late' - can't remember who said this but it is sound advice.

[Gone baby gone]

'Better to sell a year too soon than a day too late' - can't remember who said this but it is sound advice.

Indeed, and if you are a day too late there is a good chance you won't be able to sell at all. Not to mention the stress of watching everyone lowering prices in an attempt to lure in the few buyers left around.

On a lighter note just heard from my brother that his 2 bed flat Fulham in going on the market next week. He can't afford to upgrade to a 3-bed house and "things are crazy down here" in his own words. He and his Mrs are going to STR and are thinking of renting somewhere further outside of London.

[OLDFTB]

You would expect the market to cary on rising if places are selling at full price within days. This is the sign of a booming market not a market teetering on the brink.

Money in your mortgage is tax free. Savings accounts are not. I have explained this many times and don't really want to get into it but basically if you overpay your mortgage it is like having an unlimited ISA allowance.

Disagree. This is now a sign of the "Must get on the ladder at any cost because prices are going to keep going up" mentality. (Circa 1989!) People are brainwashed. We all know what happened circa/post 1989.... don't we boys & girls?

It's unsustainable mate and will collapse under it's own weight.

"Money in your mortgage is tax free" - I don't want to get into that either suffice to say that mortgages had good tax implications when we were receiving MIRAS. (Circa 1989!)

[tara747]

You would expect the market to cary on rising if places are selling at full price within days. This is the sign of a booming market not a market teetering on the brink.

Money in your mortgage is tax free. Savings accounts are not. I have explained this many times and don't really want to get into it but basically if you overpay your mortgage it is like having an unlimited ISA allowance.

The Irish market turned almost overnight - this according to an Irish EA on daft discussion boards.

Indeed, and if you are a day too late there is a good chance you won't be able to sell at all. Not to mention the stress of watching everyone lowering prices in an attempt to lure in the few buyers left around.

On a lighter note just heard from my brother that his 2 bed flat Fulham in going on the market next week. He can't afford to upgrade to a 3-bed house and "things are crazy down here" in his own words. He and his Mrs are going to STR and are thinking of renting somewhere further outside of London.

Yes, in Ireland everyone is resenting their neighbours and local developers for undercutting them, while trying to do the same themselves! Not a pretty sight.

[tara747]

At what point would you advise them to sell, assuming that they will do so at some stage?

[nohpc]

The Irish market turned almost overnight - this according to an Irish EA on daft discussion boards.

Yes, in Ireland everyone is resenting their neighbours and local developers for undercutting them, while trying to do the same themselves! Not a pretty sight.

Is there actual any hard evidence that the market in Ireland has turned? I'm not saying that it hasn't but I've heard is rumour, and quotes like "an estate agent told me".

[nohpc]

At what point would you advise them to sell, assuming that they will do so at some stage?

When they need to move.

[tara747]

Is there actual any hard evidence that the market in Ireland has turned? I'm not saying that it hasn't but I've heard is rumour, and quotes like "an estate agent told me".

Read all the links I've posted, I'm not going to go through it all again.

www.thepropertypin.com/forum

http://daftwatch.atspace.com

etc

When they need to move.

But since they are doing it to clear their debts, they plainly can't afford to pay their mortgage AND service their other debts. I think they've made a good decision.

[nohpc]

But since they are doing it to clear their debts, they plainly can't afford to pay their mortgage AND service their other debts. I think they've made a good decision.

Yes. For them it was the right decision for that reason alone. I was leaving that fact out of the equation and assuming we were talking about people who didn't have a lot of debt and weren't struggling with the mortgage.

[Disillusioned]

I was leaving that fact out of the equation and assuming we were talking about people who didn't have a lot of debt and weren't struggling with the mortgage.

Oh, you mean people who are renting!

[nohpc]

Oh, you mean people who are renting!

No, I mean people who have mortgages that they can afford and save money by not renting because they have significant equity.

[Bidin'matime]

No, I mean people who have mortgages that they can afford and save money by not renting because they have significant equity.

Same old misguided claptrap - I had 100% equity in my house so no mortage, so it was completely free to live there, was it?? Of course not - it was costing me the interest I could earn on the value of the house (known as opportunity cost). The 'value' of the house is only a made up paper figure unless you sell - then with rental yields so low, you can rent for less than the after tax interest you earn - that's what I do - our landlord paid £500k for the house (per land registry), tidied it up, then we moved in paying £1,400 per month rent - you do the maths...

[Fergie]

Equity stashed away in high interest account - Gordon Brown will be rubbing his hands in glee at taxing their hard earned savings

There's nothing hard earned about mortgage equity ffs.

If you've earned money fighting in a war zone, or cleaning people's houses or whatever, it's hard earned. HPI equity is pure luck and absolutely sod all to do with hard work.

Edited April 30, 2007 by Fergie

[the winkler]

You would expect the market to cary on rising if places are selling at full price within days. This is the sign of a booming market not a market teetering on the brink.

Money in your mortgage is tax free. Savings accounts are not. I have explained this many times and don't really want to get into it but basically if you overpay your mortgage it is like having an unlimited ISA allowance.

A further anecdote which might suggest markets turn quicker than you might think.

I str'd in Aug 2004. The house went on the market early May 2004- quite a few viewings and had under offer in 1 week. The agent left the property open for viewings just in case it fell through. Interestingly, viewings completely stopped within the next 2 weeks... coinciding with a prediction of a further increase in interest rates. If you look at graphs of month on month annualised house price inflation it peaked at around 15% pa in Aug 2004 and then dropped off a cliff, reducing to virtually zero growth 12 months later.... guess what , the BOE reduced interest rates in mid 2005... boosting confidence and starting a further growth spurt.

Point I'm making is that when confidence turns in a rampant bull market, it's too late to do anything about it, unless, perhaps you already have your house under offer and and you have people in a trouble free chain who already have their finance arranged, and don't get cold feet and pull out!

In my view you need to be about 3 months ahead of the curve ( minimum) ie before the actual turn in the market

Hope this helps

PS the timing of my sale was due to gut feeling and a fair bit of research at the time .... turns out the market recovered a year later ... but what would have happened if the BOE had'nt reduced interest rates in mid 2005, or even continued to increase them instead? Would the graph have continued on downwards I wonder?.....

Edited May 1, 2007 by the winkler

[nohpc]

PS the timing of my sale was due to gut feeling and a fair bit of research at the time .... turns out the market recovered a year later ... but what would have happened if the BOE had'nt reduced interest rates in mid 2005, or even continued to increase them instead? Would the graph have continued on downwards I wonder?.....

Then you may not be sitting here thinking why the fxxk did I STR?

[nohpc]

our landlord paid £500k for the house (per land registry), tidied it up, then we moved in paying £1,400 per month rent - you do the maths...

No maths needed. Your landlord is an idiot that's all.