Selling/buying in a rising market - strategy
Discussion
I've got a 1 bed flat in London and want to buy a 2 bed flat/terraced house in the same area (Greenwich). The flat should sell for about £310k, and the 2 bed will be approximately £500k (which is our maximum budget). Equity/income multiples/mortgage etc all work.
However, I'm confused how best to proceed. The market is currently rising quite quickly and suitable properties are going under offer within a few days of being marketed - although there are very few suitable properties on the market (1 or 2 beds).
Would we be better putting our place on the market now without having seen something suitable to buy, or hold off putting our flat on the market until we see somewhere we want?
I see pro's and con's to both strategies; if we sell now, we will become 'chain free' buyers, but will at best have to rent and at worst miss out on further house price inflation and could possibly be priced out of the market completely if we dont find anything suitable and price rises outpace us.
Does being 'chain free' give any real advantage? Would we not be taken seriously by sellers in a bouyant market if we hadnt sold out place already?
Does the flip side of the risk of having to rent (not ideal) or ending up not being able to buy anywhere in the area and having already sold out of a decent flat negate the potential benefits?
If we stay in the flat for another year, the mortgage will be lower, and we might benefit from a bit more growth, but the £500k place could well be £525 - £550k, negating any benefit (and more likely putting us in a worse position, as the growth in real terms will outpace us).
Fortunately, we don't 'need' to move, but know that once prices get above £500k it will be a lot tougher in terms of mortgages and the exposure we'd be comfortable with and we don't want to leave the area.
I think I probably know the answer, but given its the biggest decision I've had to make so far I thought I'd ask PH too.
However, I'm confused how best to proceed. The market is currently rising quite quickly and suitable properties are going under offer within a few days of being marketed - although there are very few suitable properties on the market (1 or 2 beds).
Would we be better putting our place on the market now without having seen something suitable to buy, or hold off putting our flat on the market until we see somewhere we want?
I see pro's and con's to both strategies; if we sell now, we will become 'chain free' buyers, but will at best have to rent and at worst miss out on further house price inflation and could possibly be priced out of the market completely if we dont find anything suitable and price rises outpace us.
Does being 'chain free' give any real advantage? Would we not be taken seriously by sellers in a bouyant market if we hadnt sold out place already?
Does the flip side of the risk of having to rent (not ideal) or ending up not being able to buy anywhere in the area and having already sold out of a decent flat negate the potential benefits?
If we stay in the flat for another year, the mortgage will be lower, and we might benefit from a bit more growth, but the £500k place could well be £525 - £550k, negating any benefit (and more likely putting us in a worse position, as the growth in real terms will outpace us).
Fortunately, we don't 'need' to move, but know that once prices get above £500k it will be a lot tougher in terms of mortgages and the exposure we'd be comfortable with and we don't want to leave the area.
I think I probably know the answer, but given its the biggest decision I've had to make so far I thought I'd ask PH too.
You're right - you need to be quick - the more you wait, the more devalued your pot of money becomes.
One issue a contact is having is not finding a suitable property. Whether this is because she's being overly fussy or the houses are genuinely s
te (some people appear to be drunk when either extending properties or building them from the ground up - she's shown me many properties and I've actually laughed at the stupidity of some architects/owners/builders), whatever the case her pot of money is slowly but surely losing value.
If your thinking is "buy any property irrespective of condition providing it is the right size and in X town" then you'll probably move in quite quickly. I would also get a feel for what offers are like - are people offering the asking price... or more? You could miss out on a few places if you offer too low a price. You might want to start firing off offers under the asking price to see if anyone bites even if you're not ready to buy.
One issue a contact is having is not finding a suitable property. Whether this is because she's being overly fussy or the houses are genuinely s
te (some people appear to be drunk when either extending properties or building them from the ground up - she's shown me many properties and I've actually laughed at the stupidity of some architects/owners/builders), whatever the case her pot of money is slowly but surely losing value.If your thinking is "buy any property irrespective of condition providing it is the right size and in X town" then you'll probably move in quite quickly. I would also get a feel for what offers are like - are people offering the asking price... or more? You could miss out on a few places if you offer too low a price. You might want to start firing off offers under the asking price to see if anyone bites even if you're not ready to buy.
Edited by Hoofy on Wednesday 12th February 10:36
I think being chain free not only makes you a much more attractive prospect but puts you in a far stronger psychological position.
Bad decisions can be made under pressure. Being able to sit back and make objective assessments about a property is invaluable but difficult to do when you're trying to ensure your own sale doesn't fall through.
Bad decisions can be made under pressure. Being able to sit back and make objective assessments about a property is invaluable but difficult to do when you're trying to ensure your own sale doesn't fall through.
In a fast paced, competitive market, you want to put yourself in the strongest possible position, which is to be chain free. When considering offers, would you prefer to accept an offer from someone who is chain free or someone who has a property to sell that's not even on the market?
Our seller took our offer which was 25k below another simply because we were chain free and seen as a safer bet!They were also keen not to miss out on the property they had their hearts set on which rather illustrates my earlier point, are the best decisions made when you're in a chain?
So, sell now and rent seems to be the general consensus. I assume as we are in no rush to sell, we can be a bit cheeky and try and squeeze a bit extra out of the sale price, rather than aim to have it sold inside of a week (as seems to be the market) - perhaps that works in our favour.
I really would prefer to avoid 2 house moves in short succession, but it looks like we might have to.
In the back of my mind I do have the worry that we sell, bank the money, but cant find anywhere to buy and end up not being able to afford to move. I guess that's my real fear - as we'd have been better off just staying put if that was the case. Risk averse and rising market probably arent the best bedfellows.
I really would prefer to avoid 2 house moves in short succession, but it looks like we might have to.
In the back of my mind I do have the worry that we sell, bank the money, but cant find anywhere to buy and end up not being able to afford to move. I guess that's my real fear - as we'd have been better off just staying put if that was the case. Risk averse and rising market probably arent the best bedfellows.
There's lots of cash buyers paying over the asking price for the kind of property you're describing. I very much doubt you'd get an offer accepted with your flat not even being on the market (unless you put a really high offer in).
As the market is buoyant you should hopefully be able to sell your flat quickly.
As the market is buoyant you should hopefully be able to sell your flat quickly.
Maxf said:
well, yes 
As an aside - what happens to my current (Nationwide) mortgage if we sell now and have nowhere to port it over to? I have an early redemption fee, which is quite high - do they generally let you put it on hold/continue paying?
Nationwide should give you a window in which to complete your subsequent transaction but it would be fairly short eg 3 months but you would need to clarify that time frame with them specifically as it varies from lender to lender.As an aside - what happens to my current (Nationwide) mortgage if we sell now and have nowhere to port it over to? I have an early redemption fee, which is quite high - do they generally let you put it on hold/continue paying?
Sell your flat so that you are in a better position to buy.
If you don't complete a purchase before you sell, rent a flat locally to where you want to live.
Use some of the cash from the sale to buy the House Price Index (use one of the major spread betting companies) so that you are hedged against inflation in the market.
You are now a local purchaser, ready to move and with a neutral stance on price, which should put you in a strong position to buy what you want when it becomes available.
If you don't complete a purchase before you sell, rent a flat locally to where you want to live.
Use some of the cash from the sale to buy the House Price Index (use one of the major spread betting companies) so that you are hedged against inflation in the market.
You are now a local purchaser, ready to move and with a neutral stance on price, which should put you in a strong position to buy what you want when it becomes available.
sideways sid said:
Sell your flat so that you are in a better position to buy.
If you don't complete a purchase before you sell, rent a flat locally to where you want to live.
Use some of the cash from the sale to buy the House Price Index (use one of the major spread betting companies) so that you are hedged against inflation in the market.
You are now a local purchaser, ready to move and with a neutral stance on price, which should put you in a strong position to buy what you want when it becomes available.
what about price deflation? Or are we all thinking prices will go up forever? Should he hedge his hedge? If you don't complete a purchase before you sell, rent a flat locally to where you want to live.
Use some of the cash from the sale to buy the House Price Index (use one of the major spread betting companies) so that you are hedged against inflation in the market.
You are now a local purchaser, ready to move and with a neutral stance on price, which should put you in a strong position to buy what you want when it becomes available.
menousername said:
sideways sid said:
Sell your flat so that you are in a better position to buy.
If you don't complete a purchase before you sell, rent a flat locally to where you want to live.
Use some of the cash from the sale to buy the House Price Index (use one of the major spread betting companies) so that you are hedged against inflation in the market.
You are now a local purchaser, ready to move and with a neutral stance on price, which should put you in a strong position to buy what you want when it becomes available.
what about price deflation? Or are we all thinking prices will go up forever? Should he hedge his hedge? If you don't complete a purchase before you sell, rent a flat locally to where you want to live.
Use some of the cash from the sale to buy the House Price Index (use one of the major spread betting companies) so that you are hedged against inflation in the market.
You are now a local purchaser, ready to move and with a neutral stance on price, which should put you in a strong position to buy what you want when it becomes available.
Im sure that prices could go down, and possibly will. However, in London (the nice bits) they really havent - even when we were in recession.
What I dont want to bet on is that house prices will fall, where I want to live, before I *need* a bigger house. They are rising monthly at the moment, which is making it more and more difficult to afford to move - we want to move, before we need to, and probably wouldnt be able to afford to. Thats the problem and market I'm trying to find a strategy to sell and buy in.
What I dont want to bet on is that house prices will fall, where I want to live, before I *need* a bigger house. They are rising monthly at the moment, which is making it more and more difficult to afford to move - we want to move, before we need to, and probably wouldnt be able to afford to. Thats the problem and market I'm trying to find a strategy to sell and buy in.
I sold chain-free and it was much less stressful to my surprise, aside from dealing with lettings agents. But don't think you will save money, you may not and it may end up costing more if you get stung renting. The whole point is to facilitate your next purchase, which I can definitely say it does. I did happen to knock a fair bit of my purchase because I wasn't in a chain and they needed a buyer but this was more luck I think.
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