Having just lost their most recent buyer they are keen to sell but cannot afford to take an offer below the price previously achieved. You see, despite what most agents are telling prospective vendors, the market is not as good as it was. Prices achieved are still strong but they are not rising and listening to an over confident estate agent will not get you a sale on your home. Insist that an agent provides you with clear evidence for the price they put forward, at least then you can make an informed decision on your marketing price. Put your property in the market for strong money if you like but a least know that is what you are doing!
For the vendors I met on Friday to continue with their purchase whilst the property market slows down for the year end renting offers a very positive alternative.
Most vendors have experienced substantial equity growth over the last couple of years making this an affordable option. They will need to raise a deposit of at least 25% of their purchase price from their existing house equity. Then raise a mortgage on the new house using this 25% as their deposit. Additionally most landlords using this route would ensure the revised mortgage on the existing house was interest only to keep costs down. In this fashion, if the numbers work for you, rent should in many cases cover the increased cost of the mortgages. It goes without saying that you should consult a qualified financial advisor before embarking on this route...my comments are for general discussion relating to the lettings market only.
By taking this route you get to move, you become a proceedable buyer and are welcomed with open arms by your seller. You get the opportunity to sell your home at a higher price at some time in the future when the market has returned to strength. Equally if the market rises you get the benefit of an increase in the value of two homes instead of one. If prices falter a little you just retain the rented home until the situation changes, you only crystallise a loss in value if you sell.
If the rent is covering your costs there is probably not an issue if this situation continues for some time. Many landlords that entered the market previously are still landlords today despite them seeing substantial price rises allowing them to sell for much more and the initial view that it was to be a short lived fix to their situation. Further than this with the rental market continuing to be so strong many landlords in this situation have seen the returns increase as rental prices have gone up.
So I think we are likely to see more landlords reluctantly entering the market to resolve their current fix. They will be most welcome as stock levels remain low and applicant levels remain high.
If you want to discuss this route in more detail please drop in to my office when you are passing or email me at firstname.lastname@example.org
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