House selling question

seun

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This isn't a legal issue or anything heavy. I've just got a question.

I've never sold a house before so this is probably blindingly obvious to anyone who has. Say I paid X amount for my house and now want to sell it. Is my absolute lowest selling price the same amount I paid? Presumably, I can't put it on the market for less than I paid - is that how negative equity works?

I've got a valuation a week tomorrow and suspect that since the housing market went down the toilet about a month after we bought, our house is going to be worth easily ten grand less than we paid for it.
 

Cathy C

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Legally, you can sell your house for whatever price you want. The trick is, your lender will expect to be paid in full. So, if you have an 80% loan to value, the 10K difference might not affect you. If, however, you have a 100% loan, it's a big issue, and where the term "underwater" or negative equity comes from.
 

regdog

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Negative equity is when you owe more than the house is worth.

You can always list the house for less than you paid for it. What you can't do is sell for less than you owe, unless you negotiate a short sale with your lender. I don't even know if they have those in the UK.

If the market has completely bottomed out where you are, your house may not be near what you paid for it.

Since the market has bottomed out here our house is worth $120,000 less than it was 5 years ago. The value now is what the true value of the house and neighborhood is.
 

seun

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Legally, you can sell your house for whatever price you want. The trick is, your lender will expect to be paid in full. So, if you have an 80% loan to value, the 10K difference might not affect you. If, however, you have a 100% loan, it's a big issue, and where the term "underwater" or negative equity comes from.

Negative equity is when you owe more than the house is worth.

You can always list the house for less than you paid for it. What you can't do is sell for less than you owe

We've got a 100% mortgage plus a loan which we had to take at the same time to pay off other loans and to do some work on the house. Our provider has said we could sell for an amount which doesn't take in the loan and just pay that separately (although the interest rate on it would go up). The ideal selling price would be the buying price plus the loan but I don't think there's any chance of that happening.
 

spentastico

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What realtors and appraisers do is they put together what's called a "comparative market analysis." They take the average selling price of the houses relatively similar and near you and say that is pretty much what your house is worth. Of course, if you've done extra stuff to yours, that would increase the value.

Unfortunately, if you bought at the height of the housing bubble, you're probably going to be in a financial bind if you sell, because you'll still owe the portions of the loans that aren't covered by the sale.

There are some new mortgage restructuring programs coming out and a federal debt forgiveness thing that I don't know too much about, so you might look into those.

There's also the option of abandonment, too... ;)
 

seun

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There are some new mortgage restructuring programs coming out and a federal debt forgiveness thing that I don't know too much about, so you might look into those.

Cheers, but I don't think that would do much too good for some reason. :tongue
 

regdog

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Well, no one told you to live in the UK.
 

Silent Rob

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We just moved to germany a few weeks back, so we were trying to sell our place in the UK for most of last year. It was worth loads less than we paid for it, but we were in the lucky position of having paid off a reasonable chunk of mortgage, so we could theoretically take the hit. In the end, though, we decided to rent it out. That might be an option that's worth looking into. I never, ever wanted to be a landlord, but you just have to roll with things sometimes, I s'pose.

Anyway, good luck! Some people say that selling a house is no fun, but you shouldn't listen to them! Spending time with estate agents is fantastic!
 

seun

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Well, no one told you to live in the UK.

Can I move in with you in that case?

You might find this of help to get an idea of prices in your area:
http://www.rightmove.co.uk/house-prices.html

Nationwide also provide this neat little service:
http://www.nationwide.co.uk/hpi/calculator.asp

You should try to get three valuations for your house.

Will have a look at the links. Thanks. And three is the plan - one next weekend and two next month.

Anyway, good luck! Some people say that selling a house is no fun, but you shouldn't listen to them! Spending time with estate agents is fantastic!

You, sir, are a liar and a bounder. And probably a cad.
 

Priene

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Basically, you're going to get stuck with a debt. Your mortgage loan is only available as long as you have a house to back it up. When the house goes, the loan must be paid in full, so you'll have to take up another loan to pay it off. If that loan is unsecured, you'll probably have to pay quite a high interest rate, though interest rates are low at the moment.
 

seun

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Basically, you're going to get stuck with a debt. Your mortgage loan is only available as long as you have a house to back it up. When the house goes, the loan must be paid in full, so you'll have to take up another loan to pay it off. If that loan is unsecured, you'll probably have to pay quite a high interest rate, though interest rates are low at the moment.

I called our provider yesterday and asked about the loan as a separate issue from the mortgage (but didn't think about the negative equity issue). They did mention the higher interest rate and say we could pay it off separately from the mortgage, but as we're planning on moving to a different area, we'd need a couple of quid to finance that.

Anyone want to buy my house?
 

Priene

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Have you checked that you are actually are in negative equity? Even if the sum you paid at purchase is less than you sell it for, you'll have (assuming you have a repayment mortgage) paid some of your principal off, so you'll currently be owing less than you did when you bought the house.
 

seun

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Not checked it yet, P. The plan is to get a valuation and then speak to our provider. We're due a statement pretty soon, anyway.

The funny thing is if we hadn't bought when we did, we probably would never have got a mortgage. But at the same time, house prices went mad shortly after we did.
 

seun

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Two valuations in and it doesn't look like we're moving any time soon. First valuation puts us a few grand over our buying price from four years ago. The second puts us fifteen grand under. Based on the asking prices of houses in our area, I'm more inclined to believe the second one.

We've got a third quote this weekend, but I'm not holding out much hope.

Buggering bollocks.
 

regdog

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Sad to say, you're right. Oh,the shame. I think I may have to have Haggis give him dog lessons.