Thinking of selling up!. Advice please & we only have house a year

H

Headachecity

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Hi,

Before we go to our lender and start anything I was hoping for some feedback here and a bit of advice.
We are considering selling up and we only have the house a year. We have taken various personal things into consideration etc and it's an option. We also realise we should have bought a 4 bed and we are concerned with a certain element that got houses from the county council in our lovely estate. It's just not good at all.
We paid €380k for the house, put over €30k into it. It is a brand new 3 bed semi near Wicklow Town. We borrowed €320k to by it so are we mad selling up already??.
We have an idea of 2 properties we want to look at and they are both priced at €370k.
Are we mad?.
Thanks in advance.
 
So you effectively paid c. €410K for it. How much is it likely to sell for? Don't forget that each time you buy/sell you incur certain fixed costs (e.g. legal/conveyancing fees etc.).
 
Well to be brutally honest, the house is probably going to go on the market for €390k and with the way the market is we are lucky if we can get that or maybe I am being too pessimistic. We live on a very sought after part of the estate with bigger garden and fab views though. Thing is, eventhough our road is sold out and so are the middle sections of the estate, there are still about 6 houses still not sold in the estate. That's the way things are now though!. I know we will incur legal cost etc and have factored that in!.
Also wanted to add that it is our first house so we were FTB's when we purchased this house last year!
 
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Headachecity said:
Well to be brutally honest, the house is probably going to go on the market for €390k and with the way the market is we are lucky if we can get that or maybe I am being too pessimistic.
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So you could be losing €20K+ excluding transaction costs on the original purchase, sale of this property and purchase of the new one? Sounds like a significant hit. If the properties that you are looking at are not new builds then you may also be liable for stamp duty on the purchase.
 
Must show hubbie this so!. There is no way in hell will I sell this house if we are going to loose money. I wanted to stay for at least 5/6 years initially and see how we go, it's just certain things have changed for us and we discussed selling up. Now, the discussion is closed!!
 
Hi there,
If you sell now at a loss you will find it very hard to buy another place as you wont be exept for stamp duty - is it really worth selling now when if you wait for a few yeears things will have rectified itself...
 
Headachecity said:
Must show hubbie this so!. There is no way in hell will I sell this house if we are going to loose money.
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Well based on the information posted so far you are almost certainly going to lose money so I guess that's that?
 
You will not "lose" money from:

A lower selling price for your house, which is reflective of the general decline in market prices to date (say 15%-20%).
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Please could you elaborate on this? Surely if you buy for €X and sell for €X-Y, you are losing €Y?
 
leghorn said:
Please could you elaborate on this? Surely if you buy for €X and sell for €X-Y, you are losing €Y?
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Yeah - I don't get Camry's comments either. The original poster paid €380K (€320K mortgage and €60K of their own cash) and then spent a further €30K which is a total of €410K. They have paid €90K of their own cash and owe €320K to the lender (well - less any equity purchased in the meantime). They also paid interest on the loan to date. They estimate that the property might sell for €390K which would mean a loss of €20K. This is apart from any other "losses" due to trading costs etc.
 
I think what camry means is that if they sell this house at a price of 10% below what they paid for it and buy a new one at 10% below it's peak price then they are not in effect incurring a loss, as what they are losing on one side they are gaining on the other.
 
Camry said:
I can't see how any money has been "lost" here.
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Original purchase:

€60K cash
€320K mortgage
€30K renovations
€410K total

Property sells for €390K. Original poster clears the €320K loan and there is €70K left. They already spent €90K so they are €20K down.

QED surely? :confused:
 
Camry said:
Let's just get one thing clear. These are ways in which you would "lose money" from trading on:

1. transaction costs (legal, survey, etc.)
2. taxes and duties (stamp duty)
3. poor selection (i.e. you overpaid for your specific house at the time, or you are going to overpay on the new house)
4. You bought too much house and need to trade back down (i.e. you only wanted or needed a smaller house)
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Also in this case where the OP has spent 30000 on improvements to the house they stand to lose this in a declining market.
In a rising market they might even lose this investment too of course as the market value does not rise to reflect any improvements made exclusively.
 
There's another way of looking at the issue of "losing money" when selling a house.

Put simply, you don't make a loss when you sell it. The loss is made when the house is falling in value. All you do on sale is to realize that loss.

Hanging on to a house you don't want because you're determined not to make an accounting loss on it makes no sense. You've already lost that value. You are where you are now. The logical course of action to take is that if you would be prepared to pay the present value of your house + €x to live in another house you should go and bid no more than that total amount. If you secure the other house for less than or equal to that bid then you should buy and, if not, you should stay where you are.

Just how long should somebody stay in a house they don't like in a falling market otherwise?
 
....and then they buy a house which is now cheaper because prices have fallen.

They are selling up to buy on. Show me where my simple calculations are wrong.
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The fact that they are buying another property is a bit a red herring. They are independent events.

They are also not really 'saving' anything in the second transaction, just paying the market price.
 
FTB and non FTBs are exempt from SD on new builds under 125sqm.
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And there are further exemptions for houses over that size (depending on certain criteria)
 
Camry said:
Then explain to me how I get my result. Excluding transaction costs they are in exactly the same financial position whether they:

b) trade on
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No they're not - they're €20K down as I outlined.
 
Camry said:
Refer to my posts above. I address this fallacy in full.
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Sorry - your logic makes no sense to me. I have dealt in hard figures. You are dealing in seemingly nebulous concepts and inappropriate analogies (e.g. comparing houses to cars).
 
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