Selling Apartment at a loss ?

P

Pablo74

Registered User
Messages
218
Hi all,
Just a query, my fiancee and her friend bought an apartment 3 years ago.
They are selling now because her friend is getting married and moving away.
Anyway, if they bought for 340k and sold it for say 310k there is a shortfall of 30k (15k each). Would the bank demand that money back straight away or how would it work ?.
Any ideas,
Pablo
 
What do you think yourself :confused::mad:. Of course the Bank would want their money and will chase to the other end of the earth to get it.
 
When there is a mortgage on the property, the lender uses the property as their security for the mortgage loan.

If you sell the property, the mortgage must be cleared in full using either the proceeds of the sale and/or other funds. The title deeds are then passed to the buyers solicitor in order for their lender to take security for their mortgage.
 
Thank PM1234
...and what if you dont have the funds to pay off the remainder of the mortgage in a lump sum ?
 
They must raise the balance from somewhere otherwise they can't sell*.

Possibilities - personal loan, (re)mortgage on other property (assuming enough "equity"), loan from family.

Could be "interesting" if one party can afford their half of the balance and the other can't.

Did they draw up a purchase agreement at the time? Did their solicitors explain to them what a mortgage meant?!


* In theory if they stopped repayments the bank would eventually repossess "freeing" them from the mortgage. But they would still owe the balance after sale and the bank could pursue this by seizing assets or getting an order for installments.
 
The solicitor acting for them would demand the balance to clear the mortgage in full prior to closing the sale so some form of loan etc would have to be in place. There would be estate agent and solicitor fees to be paid also so they would probably need closer to €40K in the example.
 
personally if i were you.....if they cant afford to sell then dont....rent it and balance up the difference in rent, it shouldnt be too much between the two of them and wait until the market settles and hopefully sell then to break even...could take a few years though....
 
Good idea...rent it like the other 19,000 properties on the market (and rising). Then throw away your money each month subsidising the rent. Also note that due to this vast over supply of rental property rent prices are falling.

I would suggest one of them buy the other one out if possible at a fair market price. Other than that sell and take the pain.
 
The point is that if they bought it 3 years ago for €340,000 then €310,000 is a very conservative estimatefor the current value. They need to get it valued or look at asking prices of other apartments in the area and take into account that the sale price will probably be lower again (min 10%). They could be looking at a shortfall of closer to €100k and this I'm sure changes the whole scenario. My pricing might be off because I don't know what area or development you are in but of all the properties that have been affected in the market apartments have been hardest hit and are most difficult to sell.
 
Mr DT said:
Good idea...rent it like the other 19,000 properties on the market (and rising). Then throw away your money each month subsidising the rent. Also note that due to this vast over supply of rental property rent prices are falling.

I would suggest one of them buy the other one out if possible at a fair market price. Other than that sell and take the pain.
Click to expand...

no need to be so smart

property is a long term investment...whats the point in taking a hit unless its really really necessary....if its already rented out then keep the lease goin if poss is what i meant....subsidising isnt throwing away money either once its a capital & interest repayment...
 
no need to be so smart
Click to expand...
I thought their post hit the nail on the head. It's not what people want to hear, but it's true.

property is a long term investment...whats the point in taking a hit unless its really really necessary....if its already rented out then keep the lease goin if poss is what i meant....subsidising isnt throwing away money either once its a capital & interest repayment...
Click to expand...
Can the person afford to subsidise someone else's rent? Why should they anyway? - it's hard enough to pay your own mortgage/rent. Sounds like a terrible 'investment'.
Consider that the amount of rent they get could also be far less than capital depreciation.
 
Some people can't afford to keep hold of a long term investment that in the short to medium term is losing them money. Nothing smart about that.

They could rent it, but being tried to a long term, not very liquid, investment may not suit the people in question. One of them want's to moving out because they are getting married.
 
Mr DT said:
Some people can't afford to keep hold of a long term investment that in the short to medium term is losing them money. Nothing smart about that.

They could rent it, but being tried to a long term, not very liquid, investment may not suit the people in question. One of them want's to moving out because they are getting married.
Click to expand...


Definitely there are different circumstances and sometimes you know that a particular development is destined to never recover because of its size, location etc but it is also important to provide people with the sense that all is not lost, there are developments that will recover and investments that will stand the test of time.
 
Yes the bank will want to be repaid in full. They would need to talk to the bank to see if they will be allowed to sell at a loss and the bank may facilitate this by giving a personal loan to the couple to repay the shortfall. Talk to the bank first to see how the land lies.

Does the person getting married have the 15K. I ask because I assume they are paying for the wedding with something?
 
Last edited:
Bronte said:
Yes the bank will want to be repaid in full. They would need to talk to the bank to see if they will be allowed to sell at a loss and the bank may facilitate this by giving a personal loan to the couple to repay the shortfall. Talk to the bank first to see how the land lies.

Does the person getting married have the 15K. I ask because I assume they are paying for the wedding with something?
Click to expand...

The flatmate has the money to pay off the loss as "Daddy" is paying for the wedding.:rolleyes:
 
DublinMo said:
personally if i were you.....if they cant afford to sell then dont....rent it and balance up the difference in rent, it shouldnt be too much between the two of them and wait until the market settles and hopefully sell then to break even...could take a few years though....
Click to expand...
The flatmate wants to sell so she and the hubby-to-be can get the mortgage to build their house down the country.
 
MrMan said:
The point is that if they bought it 3 years ago for €340,000 then €310,000 is a very conservative estimatefor the current value. They need to get it valued or look at asking prices of other apartments in the area and take into account that the sale price will probably be lower again (min 10%). They could be looking at a shortfall of closer to €100k and this I'm sure changes the whole scenario. My pricing might be off because I don't know what area or development you are in but of all the properties that have been affected in the market apartments have been hardest hit and are most difficult to sell.
Click to expand...

They bought the apartment off the plans for 340k. Similar apartments were sold after for 380,000 so i am just trying to be realistic. They got the apartment valued last week by 2 companys. They both valued it around 340k but in the current climate i am dropping 30k off it. There apartment is in the Rockview, Sandyford area.
 
I know it's probably minimal but have they any of the mortgage paid off against the price they bought the place for?
 
You must log in or register to reply here.
Back
Top