To sell or not to sell?

by Readers Question

14:05 PM, 28th November 2013
About 7 years ago

To sell or not to sell?

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To sell or not to sell?

First of all thank you for all your suggestions and opinions. I have a property in negative equity, which I don’t live in, in a different area of country to where I am now located. I owe the mortgage lender £130,000 and I have it on sale now for £103,000. I have a buyer and I am now 5 months in to the process. However, I am considering withdrawing because it has taken this long to get to this point in sale ans we still have not exchanged contracts. This is mainly due to everyone assuming I have an abundance of time at my expense. I have been paying out about £700 a month in mortgage and council tax. To Sell or Not To Sell

The property itself is a 2 bed which lets at about £550 a month. It is near a good school, hospital, small shopping area, 15 minutes drive from a big ASDA. Decent local transport links as it is in the West Midlands. It is a nice area near a big park, 15 minutes drive to a motor way which you cannot see or hear from the property. It has private parking. The main issues is that there is probably an excess of similar properties in the area.

Running costs are £1,000 a year management fees, £150 a year ground rent, £650 a year consent to let fees as the mortgage lender does not do BTL mortgages and won’t cut me a special deal so far.

If I sell I probably stand to personally lose £20,000 to £30,000. If I keep it I’ll lose £3,000 a year, possibly more if maintenance is needed. I have lost about £5,000 (over 6 months) so far just in the process of this current sale as currently there are no tenants as the estate agents don’t sell with a tenant in-situ.

I know the markets will recover eventually….. well maybe.

The question is should I just get rid of it or keep it and hope for the best?

Thanks

Dan


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Comments

Colin Childs

18:22 PM, 28th November 2013
About 7 years ago

What arrangement have you come to with your existing lender to settle the shortfall upon the sale of the property? This is an obvious stumbling block.

As for your buyer. Possibly there are being very astute. As your bargaining power is obviously very weak from their perspective. I make this comment in the context that the buyer doesn't know your full position either.

There's something physiological about holding onto a badly performing investment in the hope that things must get better. Sometimes you just have to bite the bullet and take the shot to the head. Personally I would try and take a detached emotionless view. Asking myself what is the direst possible outcome if events turn against me. There's an old saying, " If you expect the worst, you'll never be disappointed".

Elaine Hassall

18:56 PM, 28th November 2013
About 7 years ago

hi Dan, if it makes you feel any better you are not alone......we are just in the process of sell one our flats, it's been nothing but trouble, lost thousands on it, caused sleepless nights and grey hairs - can't wait to see the back of the bloody thing!

Edwin Cowper

20:45 PM, 28th November 2013
About 7 years ago

One thing you don't mention is whether the lender knows that you are selling at £103k but owe £130k. One correspondent assumes you have the £27k shortfall in savings. But perhaps you haven't.

I'm sure your solicitor will advise you on what to do in that case. You have the right to sell the property for the market price, and if there is a shortfall, the lender has to release the property and you effectively have an unsecured loan with the lender (whether it likes it or not). What terms that would on and whether the lender would want to take a charge on the property you own, I don't know. That would need specific advice. But the effect is caused by a case during the last property bust (or was it the one before that?),As somebody said on this thread: this is a cycle.

Also if the lender doesn't know you have funds or equity elsewhere, it might enable you to negotiate a discount on the payment you make to cover the amount from the sale and the amount you owe.

Julie Brant

22:27 PM, 28th November 2013
About 7 years ago

Reply to the comment left by "Mark Alexander" at "28/11/2013 - 15:26":

Hi Mark and Ian

Bank of England are going to put rates up slowly. I keep my eye on Bank of England like a hawk lol. So Dans mortgage is more than the house is worth his repayments will be sky high when they put the rates up :(.

His mortgage is higher than his rent, and he pays high maintenance + fees costs a year.

And the council does not pay more than a private let they pay less. But they guarantee a 2 to 5 year let and paid in advance. This is only good when you have a good rent much more than your mortgage.

I really feel for this guy and I would say sell. Cut your losses.

Always happy to help

J

Ben George

23:29 PM, 28th November 2013
About 7 years ago

Reply to the comment left by "Mark Alexander" at "28/11/2013 - 14:17":

MY main point of view of that I can use the £27,000 somewhere else to make more cash or buy another property, so I want to hold

Ben George

23:32 PM, 28th November 2013
About 7 years ago

Reply to the comment left by "Deepak Rajput" at "28/11/2013 - 14:37":

I did consider rent to buy , but they wanted me to switch to a interest only mortgage. My mortgage lenders won't do this anyway cause my equity is low, and also, I don't want to owe the same hefty amont in 5 years with no progress

Ben George

23:34 PM, 28th November 2013
About 7 years ago

Reply to the comment left by "Jeremy Smith" at "28/11/2013 - 14:41":

Would love to relocate but the Mrs can't and really doesn't want to live there as she hasn't found a local job in her field which is quite specialised 🙁

Ben George

23:37 PM, 28th November 2013
About 7 years ago

Reply to the comment left by "Julie Brant" at "28/11/2013 - 14:48":

Hi July all your assumptions are right, we have lost money and it is all still running at a loss. I keep calling lawyer, main outstanding issue is a reply we are awaiting from the management company from a query. Also, I have the buyer just seems to be the ultimate procrastinating nervous ******. Anyway, I have saved £30,000 but I'd rather re-invest that and build up the difference over a few years than just give it to the mortgage lender.

Ben George

23:39 PM, 28th November 2013
About 7 years ago

Reply to the comment left by "Jerry Jones" at "28/11/2013 - 14:53":

One reception, can rent single rooms but don't think it is the right market for this area as it is not in the city centre, but more on the outskirts of Birmingham, so not convinced I will have the right numbers.

Ben George

23:40 PM, 28th November 2013
About 7 years ago

Reply to the comment left by "Jerry Jones" at "28/11/2013 - 14:53":

One reception, can rent single rooms but don't think it is the right market for this area as it is not in the city centre, but more on the outskirts of Birmingham, so not convinced I will have the right numbers.

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