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dude wheres my house

Credit Crunch In Action

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Perfect example of why house prices will fall - £105k mortgage is still sizeable for an FTB were talking combined salary of £42k at 2.5 tmies joint.

How long before the seller has to sell at the lower price as the "ex" demands it...

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What gets my goat is all the posters on MSE calling these two FTBs sub-prime!

.

What we actually have is a SUB-PRIME VENDOR who is looking to clear a mountain of other debt with

the house which "should" have increased in value by something like 30% and who therefore cannot

drop the house to a reasonable selling price.

.

Halfwits.

.

ST

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What we actually have is a SUB-PRIME VENDOR who is looking to clear a mountain of other debt with

the house which "should" have increased in value by something like 30% and who therefore cannot

drop the house to a reasonable selling price.

Spot on, really.

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What gets my goat is all the posters on MSE calling these two FTBs sub-prime!

.

What we actually have is a SUB-PRIME VENDOR who is looking to clear a mountain of other debt with

the house which "should" have increased in value by something like 30% and who therefore cannot

drop the house to a reasonable selling price.

.

Halfwits.

.

ST

Excellent point.

Sub-prime is not about how much you can afford to borrow really is it? It's about how much MORE you borrow than you can afford.

Question is how long before vendors get the picture that the buyers set the price? Like that expat one that was posted on here last week. The vendor being completely affronted that the EA suggested she consider an offer lower than the asking price, because she wouldn't sell her house for less than it was worth. Are these people idiots or have they been blinded by their greed?

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105k mortgage, 20k deposit would make the asking price. One would expect negotiation below the asking price too. A 10% deposit would be "normal" in the old days and up to 20% wouldnt be unheard of.

But as usual, "deposit" is a dirty word.

For me, the big shock is that people still expect to buy a house with no savings. That should surely trouble us all. No wonder people have forgotten how to save... you arent even expected to save up a big lump sum these days for the single biggest purchase of your life. Personally Id increase affordability by encouraging people to save first.

Dropping prices to cater for (some) people's poor financial planning almost seems like you approve of the credit culture!

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Spot on, really.

Thanks goldfinger.

.

I do feel sorry for the OP on MSE in a way. They are clearly not too bright and have bought into the

idea that people should be prepared to pay whatever they ask for a house which should have magicaly

appreciated in value to fund a lifestyle they (the vendor) patently couldn't afford.

.

Some people MEW the money out, others take on other debts and pay on selling up.

Isnt that how the Miracle Economy works?

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In a couple of years I will be buying a house off one of these muppets.

Still feel (a little bit) sorry for them.

.

ST

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Excellent point.

Sub-prime is not about how much you can afford to borrow really is it? It's about how much MORE you borrow than you can afford.

Agreed, and in an economy with sensible credit flow lenders have previously controlled from their side by

weighing up the risk of default.

But in a constantly rising, even accelerating market there is NO RISK, becuase in case of default the asset

has appreciated in value which bails out the lender in the event of repossesion and sale.

.

With less risk and the same or greater returns the gambler (the lender) will always stake more, which in

this example raises the cost of the asset further. Which further fuels inflation.

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But we all know this....

.

Why have very few people out in the "real world" cottoned on until its too late?

.

ST

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Reading on through the thread, it all becomes clear:

Bought for £84,950, spent a couple of grand on it, houses in area selling anywhere between £124-£138k. My house originally valued at £132,500. No houses on my road are up for sale at the moment.

And...

Profit yes only if I wasn't in debt up to my eyes! I have a 12 month history of depression and have not been working, plus being a single parent at the moment on benefits i need every penny and won't have hardly anything left for myself - pretty bad eh?!

Thanks for the advice given but I will still keep my property up at the price its at as long as I'm getting the viewings which I am. My initial post was just to ask if the FTB's who were interested in my property could go down a different route to get more money other than using the banks/building societies mentioned - I've come to realise that they've viewed a property out of their price range and that I will hang fire with reducing any further.

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This is interesting. Raw, human, irrational, behaviour.

She wants 125 and is offered 105. She is offended if anyone mentions supply/demand/affordability (and there seems to be a few comments from people here that simply fly over her head) then it transpires that she paid around 85 but she suffers from depression etc.

This is why housing markets can never simply 'calm down' the way pundits are about to tell us is happening to our housing market.

People are irrational and greedy. I haven't seen how long she owned the house but the after-tax return is around 23% on a sale price of 105 but she 'needs' over 40%.

This shows us how the housing market feels 'owned' by people who have no idea of how markets work. They simply decide on a number and expect that number.

The US inventory numbers are currently reflecting this type of behaviour. The US think the market has slumped but my guess is that the worst, by far, is yet to come (and the UK will follow).

Of course, if this lady sells for 125 she can claim that she was right all along, but the fact that she's on a site trying to find a way for particular buyers to access more capital suggests that the effects of the credit crunch are in place and property is headed for a radical devaluation.

So, she wants 47% profit because she's been depressed and has kids. 23% is not enough but a poster (WTF?) offered terrific advice in that the market 'may' keep going down and she'll be chasing it, and she was offended again.

This is watching a crash with a microscope. We get so used to watching the big picture but this is where the actual crash occurs; in the minds of people who think money grows on houses and it is their right to be wealthy.

Thanks for posting. This stuff is important. If we forget about all the personal crap there is some very important information about how these things transpire.

One can imagine, some time ago, in Holland, a servant whining that they 'need' double the price they've been offered for their tulip bulb collection.

Crashes happen from the bottom, not the top. The people that caused it are at the top but it's when the bottom rung keeps exploding that the market topples.

This is the credit crunch, up close and personal.

(And a 23% profit probably isn't bad; she might get lucky in that her divorce was timed fortuitously.)

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This is why housing markets can never simply 'calm down' the way pundits are about to tell us is happening to our housing market.

People are irrational and greedy. I haven't seen how long she owned the house but the after-tax return is around 23% on a sale price of 105 but she 'needs' over 40%.

This shows us how the housing market feels 'owned' by people who have no idea of how markets work. They simply decide on a number and expect that number.

That's not the worst of it. She has increased her debts as her imaginary net worth has increased. People used to pay off mortgages; now they increase them inline with HPI - this is why she 'needs' over 40%. The Great British Economy.

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It's not nice to watch the proles squirm but its the only way the market will

adjust. People on the edges get squeezed first.

.

My brother is about to buy a house (FTB) and I wish I could stop him.

.

ST

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It's not nice to watch the proles squirm but its the only way the market will

adjust. People on the edges get squeezed first.

.

My brother is about to buy a house (FTB) and I wish I could stop him.

.

ST

A cousin of Mrs Goldfinger just had to sell her house in the US. Everyone was admiring how large and beautiful this house was. And her sort of wealthy parents had helped with the deposit as well. Well, obviously she now can't afford it anymore (although, she still has her old job etc.). Jumbo-mortgage re-adjustment anyone?

Edited by Goldfinger

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This is interesting. Raw, human, irrational, behaviour.

She wants 125 and is offered 105.

What makes her think that both the buyer and the surveyor will meet her asking price? The buyer could have offered £125K but the survey may still come back with £105-110k valuation anyway.

It is not unusual to have 10% or 15% under valuation during credit crunch and if are not in credit crunch already, we sure will be in one soon. I like the following reply;

You are trying to sell a house to someone who cannot afford it. The evidence also suggests that the people who can afford it don't want it. If you are not willing to recognise the flipping obvious, pehaps you could ask friends and family to chip in on the buyers behalf

nice one :lol:

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Yes, it made me laugh when I read a reply suggesting that her family and friends could help the buyer.

It was the kind of statement I expect to see here; cold logic (for the suggestion was that the buyer's family could help). Really, how dare she go on a forum to try to find a way for a buyer to access more capital. Maybe she thinks she's a large multinational selling to a private equity firm?

Mmm, those guys can't get cash either; maybe they should ask their families to help?

I would feel sorry for her if she were facing a loss, but she believes she deserves free money because she has children and she's depressed. She should thank the gods that they delivered such a gargantuan profit for nothing at all. And I suspect her timing is fortuitous; another six months to a year and her windfalls are toast.

I expect that's really the message New Labour have expounded (have kids, borrow money, get rich), so maybe she is not to be blamed?

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Shame she didn't post a link to her actual property, then maybe some prospective buyers might have read the thread and realised just what a motivated seller she really is (or ought to be).

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Quote from the MSE thread:

And, as the word is now out in the open world... these people are sub-prime. These are the sort of people lenders are really tightening up against now.

Buyers who refuse to take on a mortgage bigger than they can realistically keep up the payments on are what I would define as the precise opposite of sub-prime. Neither are they time-wasters. Rather, they're willing to call unrealistic sellers' bluff, hence the self-righteous indignation from the seller.

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Quote from the MSE thread:

Buyers who refuse to take on a mortgage bigger than they can realistically keep up the payments on are what I would define as the precise opposite of sub-prime. Neither are they time-wasters. Rather, they're willing to call unrealistic sellers' bluff, hence the self-righteous indignation from the seller.

People who don't get their mortgage offer sorted before looking for properties are time wasters though.

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People who don't get their mortgage offer sorted before looking for properties are time wasters though.

People that put their houses on the market at unrealistically high prices are time wasters though. They should just get with the program, and take the financial hit that's coming their way on the chin, and speed everything else up. That way people that are buying stuff they can actually afford can get on with their lives.

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People who don't get their mortgage offer sorted before looking for properties are time wasters though.

Another common theme on the original MSE thread.

What people seem to have forgotten is that the credit squeeze has really only just started to filter down to high-street lenders. These buyers probably put their details into someone's mortgage calculator, worked out that they could easily get their hands on the money they needed, and then went looking for a house to buy. Only now, just a few months later, the deals they were relying on have dried up.

Given how many mortgages have a non-refundable arrangement fee of hundreds (or thousands!) of pounds these days, I am hardly surprised that they would prefer to find a property to buy before "getting their mortgage sorted".

Sounds to me like they have made a perfectly serious and credible offer, and the ball is in the vendor's court. And it strikes me as particularly cheeky to see all these people writing off these buyers as "sub-prime" - I'd like to see how much the same lenders would be willing to advance to our indebted out-of-work mother-of-two... (just saying!)

Edit: forgot to actually, you know, make my point.

Edited by benj

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I wonder if she has life insurance.

At least that might make up the shortfall if she has to sell at a reduced price and the depression kicks in.

Maybe i should sign up with MSE and suggest it to her? :ph34r:

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But they did get a mortgage sorted out before they went house-hunting: it just wasn't a big enough one to satisfy demand of this particular seller. The fact that she hasn't got any offers at her asking price says to me which of the two parties is doing the time-wasting.

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