Buying a House from Family - How to Establish a Fair Price??
Discussion
Looking for some impartial comments...
I have been offered a home from an emigrating family member based on buying the house for 100k against a value of 130k with the condition I pay back an undecided amount as and when I can. I expect they would want the full 30k difference.
The advantage of this is that I don't have to actually place a deposit as the mortgage company will accept the equity in the house as a deposit. Also the house meets all my current needs and I certainly wont outgrow it any-time soon.
The downsides are that put simply to me the house is worth 120k maximum and this value would represent just under 5 times salary and hence I wouldn't be comfortable with a larger figure.
The question is - based on the limited information - does 120k sound a fair offer (110k now and 10k within 3 years) based on the fact he can choose the date when he leaves?
For comparison next door sold for an inflation adjusted 119k although the house I am looked at is the end of the row and comes with an outdoor hot tub.
Thanks all,
I have been offered a home from an emigrating family member based on buying the house for 100k against a value of 130k with the condition I pay back an undecided amount as and when I can. I expect they would want the full 30k difference.
The advantage of this is that I don't have to actually place a deposit as the mortgage company will accept the equity in the house as a deposit. Also the house meets all my current needs and I certainly wont outgrow it any-time soon.
The downsides are that put simply to me the house is worth 120k maximum and this value would represent just under 5 times salary and hence I wouldn't be comfortable with a larger figure.
The question is - based on the limited information - does 120k sound a fair offer (110k now and 10k within 3 years) based on the fact he can choose the date when he leaves?
For comparison next door sold for an inflation adjusted 119k although the house I am looked at is the end of the row and comes with an outdoor hot tub.
Thanks all,
You need to ask the question to them what is the full price they are after. Also you will 100% want to get the final amount agreed and approved legally. Even if it were you parents always do it as you then know where you stand and no misunderstanding plus relationships can breakdown between anyone.
Both good comments.
WB - Completely agree that a contract would have to be drawn up - I wouldn't be prepared to do it without one.
ST - Also a good point. While I probably wouldn't choose the house if I were buying that is mainly because I would be looking at a lower price point were it not for the 20k equity giving a very good mortgage rate.
It has all that I would need or want - 3 bedroom, Garage, Garden big enough to sit out in - located almost exactly between work and where I will be studying next year. There are reasons its not perfect but which house would be?
WB - Completely agree that a contract would have to be drawn up - I wouldn't be prepared to do it without one.
ST - Also a good point. While I probably wouldn't choose the house if I were buying that is mainly because I would be looking at a lower price point were it not for the 20k equity giving a very good mortgage rate.
It has all that I would need or want - 3 bedroom, Garage, Garden big enough to sit out in - located almost exactly between work and where I will be studying next year. There are reasons its not perfect but which house would be?
Teocali said:
Both good comments.
WB - Completely agree that a contract would have to be drawn up - I wouldn't be prepared to do it without one.
ST - Also a good point. While I probably wouldn't choose the house if I were buying that is mainly because I would be looking at a lower price point were it not for the 20k equity giving a very good mortgage rate.
It has all that I would need or want - 3 bedroom, Garage, Garden big enough to sit out in - located almost exactly between work and where I will be studying next year. There are reasons its not perfect but which house would be?
one bit of advice I can give is when choosing a house I and after marrying have only bought houses when you see the outside and on going in you instantly know when it's the one. We have only bought when wee get that feeling. - and that's even for buy to let although all our buy to let's we have bought as our main residence and lived there first. WB - Completely agree that a contract would have to be drawn up - I wouldn't be prepared to do it without one.
ST - Also a good point. While I probably wouldn't choose the house if I were buying that is mainly because I would be looking at a lower price point were it not for the 20k equity giving a very good mortgage rate.
It has all that I would need or want - 3 bedroom, Garage, Garden big enough to sit out in - located almost exactly between work and where I will be studying next year. There are reasons its not perfect but which house would be?
It may or may not be the ideal house for you but there is a deal to be done. Note if he is selling it directly to you he is skipping estate agents fees which are usually £4k plus the dreaded so you'd want to knock that off plus it's also a family sale plus as he is leaving the country he wants a quick sale so in theory a fire sale.
One think which is a concern is the about fives times salary ... That's in more modern times fine but it is a stretch if you get a lady to move in with you then you'll be fine or be paying it off sooner than planned
Would a seller really be paying £4k to an estate agent on a £130k home?
That I didn't know - many thanks.
It is a bit of a fire sale but he could always rent the house and either way I am more than happy to pay a fair price, I just want to ensure there wasnt something I had missed - such as the above!
Thank you agian for the input.
That I didn't know - many thanks.
It is a bit of a fire sale but he could always rent the house and either way I am more than happy to pay a fair price, I just want to ensure there wasnt something I had missed - such as the above!
Thank you agian for the input.
You can sell your house for £462.
That's what we did. 125k sale price using housenetwork.co.uk
That might alter your bid price.
Have you put it to them that a similar place has sold for £119k. A hot tub is worth an additional 10k only if it's also a time machine and you went back 10 years or so
That's what we did. 125k sale price using housenetwork.co.uk
That might alter your bid price.
Have you put it to them that a similar place has sold for £119k. A hot tub is worth an additional 10k only if it's also a time machine and you went back 10 years or so
The person who values the house will be the bank during their valuaton survey. If you are out with your offer you will screw up your mortgage because your Loan to Valuaton (LTV) risk may be well off.
Get the house valued by estate agents (if they will) and take an average or pay a valuation surveyor to give you a profesional advice.
Ignore the hottub. Worth nowt IMHO eg if it breaks you have a £2k bill coming. Look at state of windows roof etc y'know the big stuff you will need to shell out for if in a ropey state.
Get the house valued by estate agents (if they will) and take an average or pay a valuation surveyor to give you a profesional advice.
Ignore the hottub. Worth nowt IMHO eg if it breaks you have a £2k bill coming. Look at state of windows roof etc y'know the big stuff you will need to shell out for if in a ropey state.
Why do you think a house valued at £130k is only worth £120k?
Your finacial situation has no impact on this.
How has the £130k been reached?
There maybe some advantages to your relative selling to you but if person X turns up offering £1k more what's to stop them accepting that?
If you're serious about buying it then put together a qualified offer. Check similar properties for sale in the area and those that have sold recently - there's a small charge for finding this out from the Land Registry. Include the fees they won't be paying if they sell to you. You may even get it for less than you thought.
If you can say 'My offer is £x' and then qualify it positively then you could be onto a winner so to speak. Saying 'My offer is £120k cause that's all I can afford' is not going to get it.
ETA: What do you mean by 'inflation adjusted'?
Your finacial situation has no impact on this.
How has the £130k been reached?
There maybe some advantages to your relative selling to you but if person X turns up offering £1k more what's to stop them accepting that?
If you're serious about buying it then put together a qualified offer. Check similar properties for sale in the area and those that have sold recently - there's a small charge for finding this out from the Land Registry. Include the fees they won't be paying if they sell to you. You may even get it for less than you thought.
If you can say 'My offer is £x' and then qualify it positively then you could be onto a winner so to speak. Saying 'My offer is £120k cause that's all I can afford' is not going to get it.
ETA: What do you mean by 'inflation adjusted'?
Edited by mk1fan on Monday 20th September 13:39
Welshbeef said:
You can get cheaper but for a chain it will be 2% of offer price or min £4k.
Estate agents up here often offer a flat rate under a certain value rather than percentage. A lot of the ones in my area were £1500 +vat on anything sold for less than £150k. I didn't get the impression that this was particularly unusual.mk1fan said:
Why do you think a house valued at £130k is only worth £120k?
Your financial situation has no impact on this.
How has the £130k been reached?
The valuation has been reached by three independent mortgage valuers. They all valued at £125k for stamp duty reasons (before this was lifted) and one called back to raise the price to £130k once stamp duty had been lifted above £125k.Your financial situation has no impact on this.
How has the £130k been reached?
I agree that my financial situation has no impact on the selling price – however it does impact my offer price and I would like to see if others think my workings and hence offer is fair.
mk1fan said:
There maybe some advantages to your relative selling to you but if person X turns up offering £1k more what's to stop them accepting that?
Absolutely nothing and I wouldn’t blame him if he did.mk1fan said:
If you're serious about buying it then put together a qualified offer. Check similar properties for sale in the area and those that have sold recently - there's a small charge for finding this out from the Land Registry. Include the fees they won't be paying if they sell to you. You may even get it for less than you thought.
If you can say 'My offer is £x' and then qualify it positively then you could be onto a winner so to speak. Saying 'My offer is £120k cause that's all I can afford' is not going to get it.
Well put – this is what I came up with last night:If you can say 'My offer is £x' and then qualify it positively then you could be onto a winner so to speak. Saying 'My offer is £120k cause that's all I can afford' is not going to get it.
Valuation : 130,000
Average Reduction in Selling Price (4%) : - 5,200
Estate Agent Fee’s Saved : 2,200
Solicitor Fee’s Saved : 389
Average Listing in Weeks : 10
Cost to run House per week : 250
Saving by Instant Sell : 2,500
Total Reductions : 10,289
Proposed Sell price : £119,711
Average reduction in asking price and listing time taken from house location based on report from hometrack.
mk1fan said:
ETA: What do you mean by 'inflation adjusted'?
The most recent sale for next door (same layout but not semi detached) was in Nov 2004 for 108,000. By inflation adjusted I mean that converting this to current values based on house price increases over the last 6 years takes make the ‘buy it now’ price £119,000.Does the above sound reasonable?
He could argue that he’s missing out on three years interest on the 10,000 circa £900, but equally I can argue he would have to complete at least £900 of DIY to sell to the general public.
Thanks for the input everyone.
Teocali said:
Estate Agent Fee’s Saved : 2,200
Solicitor Fee’s Saved : 389
Average Listing in Weeks : 10
Cost to run House per week : 250
Saving by Instant Sell : 2,500
Total Reductions : 10,289
Proposed Sell price : £119,711
If you're going to ofer £120K then fair enough and they either accept or not but IMO I'd miss off some of the above. As Dave mentioned EA fees can be haggled down to less than that for that sale. Solicitor will still be needed, normally, and will cost more than that, normally. What were you think with cost per week? They still have to live somewhere in that time and the house that they buy will not be cheaper because they sold to you maybe a couple of months earlier.Solicitor Fee’s Saved : 389
Average Listing in Weeks : 10
Cost to run House per week : 250
Saving by Instant Sell : 2,500
Total Reductions : 10,289
Proposed Sell price : £119,711
BoRED S2upid said:
Ask 3 estate agents to value it they will no doubt give a range of valuations this will be a good way to determine what its worth hopefully 2 out of the 3 value it around your ideal offer value this way the family member isn't going to be too unhappy at your offer.
Exactly. Surely you need to get EAs round or alternatively show them the £120 for next door and see if they are happy with that? Gassing Station | Homes, Gardens and DIY | Top of Page | What's New | My Stuff