House prices

[jocelyn plummer]

After a seven month haul, and 16 viewers down the line, we now have 3 bites of interest. From those three it has become very clear that people are offering what they feel they can afford rather than what they think the property is worth to them. The figure offered by each is very similar but quite a way below the asking price. Two are on the basis of a property to sell and one is cash in the bank.

It was not been possible to assess whether our asking price was realistic until we had some offers.

Agents in our planned re-location area are reporting the same. In that area, asking prices have been cut twice, by around 10- 12% since December, just to get viewings.

Is anybody else experiencing similar trends?

 

[Moo]

Looking on the bright side, these dips in the housing market are really only important for people whose houses are investments rather than homes.
One gets less for one's own house, but it's correspondingly cheaper to buy the next one.
As an old friend put it - we all go up and down on the tide, a bit like ships in the harbour.

Glad to know that at last some people are appearing who appreciate your lovely house.

 

[Pford75]

Congratulations Jocelyn on getting some interest....I know what it can be like waiting for ages.

My tuppence worth, the offers dependant upon sales are not really 'offers' at all. Those buyers could wait months (as you have) and eventually secure a much lower figure than they had hoped...and then seek to pass this on to you.

So, even if the 'real' offer is the lowest, I would think long and hard about this one

 

[skier-hughes]

I agree with Pford 75, a bird in the hand is worth two buyers not sold and all that.

I wonder why all three offers are close?
Do you think your agent has said to them that this is the sort of price they ought to offer?
Surely all three buyers aren't so clued p on period properties that they can asses it's "worth" in todays climate so exaclty?????

Graham

 

[Penners]

I think Graham may be right. As a buyer (in the past) I can certainly remember selling agents saying to me "I think the vendor would probably accept an offer of £xxxxxxx". And at a time when sales are slow, the agent is going to be happy to grab the commission on a reduced price, rather than no commission at all.

But as Moo has said, if all the boats are bobbing up and down by the same amount, then hopefully your buying power won't be reduced.

Fingers crossed for you!

 

[FamilyWiggs]

Penners said:

As a buyer (in the past) I can certainly remember selling agents saying to me "I think the vendor would probably accept an offer of £xxxxxxx".

A seven-figure purchase? Surely your second home, then??!!

 

[middi]

Not unless he was selling four x :wink:

 

[jocelyn plummer]

Great replies!

We have our own agenda on the figure for this house, and are content with what is happening.

I am sure that our Agent has not suggested any figures to the would be purchasers , we are fortunate to have a very Professional Agent who is going to great lengths to ascertain the buyers' status and is carefully negogiating towards an agreeable sum.

One buyer has returned to our property now that he has finally completed a sale on his own property, so he knows what he's got available to spend.

After all, it's only a guide price reflecting number of rooms, land, outbuildings etc and can only be based on similar sales of this time last year.

Times is changing------

 

[Penners]

Penners said:

As a buyer (in the past) I can certainly remember selling agents saying to me "I think the vendor would probably accept an offer of £xxxxxxx".

A seven-figure purchase? Surely your second home, then??!!

No - it was five figures and two kisses.

Aaaah....

 

[arl]

Looking on the bright side, these dips in the housing market are really only important for people whose houses are investments rather than homes.
One gets less for one's own house, but it's correspondingly cheaper to buy the next one.
As an old friend put it - we all go up and down on the tide, a bit like ships in the harbour.

unless of course you have just bought your first home, in which case a large drop in house prices may leave you well and truely b******

 

[skier-hughes]

not really as all the others will have come down just as much, so it really makes no odds.

 

[Penners]

Well, yes... but remember that first-time buyers are normally carrying the heaviest burden of mortgage, and a drop in poperty values can risk leaving them in negative equity.

 

[Moo]

But surely, as long as they can afford their mortgage repayments they don't need to worry.
In all our decades of renting a house from the building society (aka mortgage) we weathered several price slumps.

 

[Flyfisher]

Yes, I've never really understood the problem with negative equity, for the home buyer at least. The open market value of a house doesn't, direct, affect one's ability to pay the mortgage repayments and the negative equity generally doesn't last more than a few years (historically, at least).

Surely it's more of an issue for the mortgage lender since they no longer have adequate security for their loan in cases of default?

Anyone who has ever bought an item of, say, consumer electronics generally ends up with 'negative equity' in terms of it being worth less than it's purchase price after a year or two. New cars are the same - worth significantly less as soon as they are delivered.

I suspect it's more of a psychological issue than an economic one.

 

[Penners]

I'm fortunate enough never to have been in negative equity, during my 35-year mortgage. In terms of the ultimate value of the property, then I suppose those in negative equity don't have too much to worry about.

Unless they want/have to move. Then they're in a bit of bother.

I also don't know what mortgage providers' attitudes are to negative equity. Do they start cutting up rough because the asset against which they lent won't cover the loan?

 

[Flyfisher]

Not sure about the moving issue and negative equity.

If you have a £100k mortgage and your house is worth £110k and want to move to a house worth £125k then you need to find an additional £15k from somewhere.

If you have a £100k mortgage and your house is worth £90k and want to move to a house worth £125k then you need to find an additional £35k from somewhere. Not much different to moving to a more expensive house - assuming you can afford the extra amount of course.

So, yes, you need to find more money (although the new house would have also dropped in value), but it doesn't prevent you from moving as such.

As for mortgage provider's attitudes to negative equity, I can't see what they can do except hope that their customers maintain their payments! How can they start 'cutting up rough'?

I've also read that even if you are in negative equity, you can't simply opt out and hand over the house to the mortgage company. If you owe £100k then that's what you owe. If you opt out and just hand back the keys to your £90k house, you still owe the mortgage lender £10k (probably more in practice taking into account redemption costs and fees!).

 

[FamilyWiggs]

If you can afford the repayments, then there's no issue.

The only people I can see really affected by temporary price drops are:

a) those moving region, where differential price changes can impact on relative affordability;

b) those coming to the end of interest-only mortgages who are relying upon the capital appreciation to repay the loan, and any surplus to purchase their next/final "downsized" home.

 

[jocelyn plummer]

We've come to the conclusion that it's all about the 'ability to pay'--- thank goodness our mortgage is less than 10% of the value of our property, bin it and downsize is our decision.

Problem is, I notice that my driving licence is due to be renewed/ expires round about the same time---------------

 

[AMc]

Yes, I've never really understood the problem with negative equity, for the home buyer at least. The open market value of a house doesn't, direct, affect one's ability to pay the mortgage repayments and the negative equity generally doesn't last more than a few years (historically, at least).

It doesn't matter if you don't have to move but if you have to move it kills you. It hurts first time owners the most because they have no repayment/rise equity.

Friends of ours bought a studio flat at the height of the 80's/90's boom. Then she got pregnant and they had to buy a bigger place to live. In the meantime the value of the flat had decreased below the level of the mortgage owed.
So they had to sell the flat and borrow more than 100% of the value of the next place to make up the difference.

If you started with a deposit of 5% and a 95% mortgage and the market drops 10% in the first couple of years you're really screwed. You get stuck with a higher rate because you don't have any equity for the bank to hold you against.

Your only other alternative is to sell the house and file bankrupcy on the remaining loan - which of course means you have to rent for the next few years while your credit rating recovers.

The consequences lessen as you have more years of repayment behind you and more historic rise in equity as a cushion.

 

[MdB]

My first house (bought 8 years ago) was a 2 bed semi 1980s box in the middle of an estate. I couldn't even think of buying it now even though my salary has doubled since then. Fortunately I was able to stay on the housing ladder and combined with the money made from selling my wifes house we now live in a 4 bed pile of rubble in very nice location.

We consider ourselves very very lucky and feel very sorry for people trying to get on the housing ladder now. In Cornwall it is basically impossible for locals to do this as there is so many people from london buying second homes.