Part Exchange House Buying Questions
Discussion
I have recently seen pretty much the ideal house but I am not sure how to go about buying it. I bought my own place which is one of 4 similar properties on a street for 230k last year from the bank as a repossesion and put down 15% so owe about 195k. For what its worth it was marketed initially at 300k and then at 250k. It would rent for about 900pcm ish (4.3% yield) and was recently valued at 230k, however the remaining 3 similar size/beds/layout houses eventually went to auction due to a very slow market where I live (N.East) and went for 190k ish as basically bare shells, so unsure as to how this affects my current and potential value. However, mine has a much better plot and internal fittings/decor etc. The new place is up for 390k and is one of 2 self builds (the other at 380k as only has single garage) from a guy I assume is working as a Ltd company. Basically, he hinted that he would be interested in taking mine as a part-ex, if he could make the numbers work as he is a BTL landlord/developer and, potentially, to live in himself (it is a pretty nice house in fairness). Reading between the lines I got the impression he was quite open to offers and could do with some cash flow due to him having fingers in a few pies and he did mention he was happy to break even on the property. For what it's worth he seemed quite genuine.
Basically, at the moment, my (after tax) income is just shy of 100k but I have little liquidity (e.g less than 10k in the bank) due to putting most of my disposable into some long term investments and would like to not have to put much extra in out of my own pocket if I can help it (as it would be a pain in the arse). I currently have a lot on my plate with work, family etc and don't want the hassle of selling my own house in a crap market in the hope this is still available, because if it wasn't for this exact house being available (it really is ideal) I wouldn't be fussed about selling so I will only go through with this if he accepts mine as a part ex e.g way less hassle. My plan was to essentially say "I will offer you the asking price on this house but only if you give me 250k for mine and pay the stamp duty for me. This is the absolute minimum I can accept to make this work and is kind of take it or leave it" This is essentially means there is only c.4k coming out of my own pocket to keep an 85% LTV mortgage and would also help him achieve a good price for the other house. It is also basically true. Is this a decent way to do it? I want the house but not the hassle and this seems to tick the boxes. I really don't want to get too greedy because obviously asking more than 250k will increase the stamp by another 5k (i think, can anybody clarify how it works with a part-ex?) and obviously he is then paying the 11700 for mine, but equally, if he accepts it I will probably feel like I left money on the table, so to speak.
So a couple of questions:
- How do I best go about proposing this?
- Wo pays what for stamp duty in this type of part-ex
- Is there a better way to do this rather than a "take it or leave it" approach?
Not an expert with this sort of stuff so any advice much appreciated.
Cheers.
Basically, at the moment, my (after tax) income is just shy of 100k but I have little liquidity (e.g less than 10k in the bank) due to putting most of my disposable into some long term investments and would like to not have to put much extra in out of my own pocket if I can help it (as it would be a pain in the arse). I currently have a lot on my plate with work, family etc and don't want the hassle of selling my own house in a crap market in the hope this is still available, because if it wasn't for this exact house being available (it really is ideal) I wouldn't be fussed about selling so I will only go through with this if he accepts mine as a part ex e.g way less hassle. My plan was to essentially say "I will offer you the asking price on this house but only if you give me 250k for mine and pay the stamp duty for me. This is the absolute minimum I can accept to make this work and is kind of take it or leave it" This is essentially means there is only c.4k coming out of my own pocket to keep an 85% LTV mortgage and would also help him achieve a good price for the other house. It is also basically true. Is this a decent way to do it? I want the house but not the hassle and this seems to tick the boxes. I really don't want to get too greedy because obviously asking more than 250k will increase the stamp by another 5k (i think, can anybody clarify how it works with a part-ex?) and obviously he is then paying the 11700 for mine, but equally, if he accepts it I will probably feel like I left money on the table, so to speak.
So a couple of questions:
- How do I best go about proposing this?
- Wo pays what for stamp duty in this type of part-ex
- Is there a better way to do this rather than a "take it or leave it" approach?
Not an expert with this sort of stuff so any advice much appreciated.
Cheers.
Edited by ADF123 on Monday 5th May 18:26
ADF123 said:
I have recently seen pretty much the ideal house but I am not sure how to go about buying it. I bought my own place which is one of 4 similar properties on a street for 230k last year from the bank as a repossesion and put down 15% so owe about 195k. For what its worth it was marketed initially at 300k and then at 250k. It would rent for about 900pcm ish (4.3% yield) and was recently valued at 230k, however the remaining 3 similar size/beds/layout houses eventually went to auction due to a very slow market where I live (N.East) and went for 190k ish as basically bare shells, so unsure as to how this affects my current and potential value. However, mine has a much better plot and internal fittings/decor etc. The new place is up for 390k and is one of 2 self builds (the other at 380k as only has single garage) from a guy I assume is working as a Ltd company. Basically, he hinted that he would be interested in taking mine as a part-ex, if he could make the numbers work as he is a BTL landlord/developer and, potentially, to live in himself (it is a pretty nice house in fairness). Reading between the lines I got the impression he was quite open to offers and could do with some cash flow due to him having fingers in a few pies and he did mention he was happy to break even on the property. For what it's worth he seemed quite genuine.
Basically, at the moment, my (after tax) income is just shy of 100k but I have little liquidity (e.g less than 10k in the bank) due to putting most of my disposable into some long term investments and would like to not have to put much extra in out of my own pocket if I can help it (as it would be a pain in the arse). I currently have a lot on my plate with work, family etc and don't want the hassle of selling my own house in a crap market in the hope this is still available, because if it wasn't for this exact house being available (it really is ideal) I wouldn't be fussed about selling so I will only go through with this if he accepts mine as a part ex e.g way less hassle. My plan was to essentially say "I will offer you the asking price on this house but only if you give me 250k for mine and pay the stamp duty for me. This is the absolute minimum I can accept to make this work and is kind of take it or leave it" This is essentially means there is only c.4k coming out of my own pocket to keep an 85% LTV mortgage and would also help him achieve a good price for the other house. It is also basically true. Is this a decent way to do it? I want the house but not the hassle and this seems to tick the boxes. I really don't want to get too greedy because obviously asking more than 250k will increase the stamp by another 5k (i think, can anybody clarify how it works with a part-ex?) and obviously he is then paying the 11700 for mine, but equally, if he accepts it I will probably feel like I left money on the table, so to speak.
So a couple of questions:
- How do I best go about proposing this?
- Wo pays what for stamp duty in this type of part-ex
- Is there a better way to do this rather than a "take it or leave it" approach?
Not an expert with this sort of stuff so any advice much appreciated.
Cheers.
Certainly no expert but I would tred very carefully, you sound as though you are in a good position at the moment, you hav only been in the house fore a year, what has changed you need to move ?Basically, at the moment, my (after tax) income is just shy of 100k but I have little liquidity (e.g less than 10k in the bank) due to putting most of my disposable into some long term investments and would like to not have to put much extra in out of my own pocket if I can help it (as it would be a pain in the arse). I currently have a lot on my plate with work, family etc and don't want the hassle of selling my own house in a crap market in the hope this is still available, because if it wasn't for this exact house being available (it really is ideal) I wouldn't be fussed about selling so I will only go through with this if he accepts mine as a part ex e.g way less hassle. My plan was to essentially say "I will offer you the asking price on this house but only if you give me 250k for mine and pay the stamp duty for me. This is the absolute minimum I can accept to make this work and is kind of take it or leave it" This is essentially means there is only c.4k coming out of my own pocket to keep an 85% LTV mortgage and would also help him achieve a good price for the other house. It is also basically true. Is this a decent way to do it? I want the house but not the hassle and this seems to tick the boxes. I really don't want to get too greedy because obviously asking more than 250k will increase the stamp by another 5k (i think, can anybody clarify how it works with a part-ex?) and obviously he is then paying the 11700 for mine, but equally, if he accepts it I will probably feel like I left money on the table, so to speak.
So a couple of questions:
- How do I best go about proposing this?
- Wo pays what for stamp duty in this type of part-ex
- Is there a better way to do this rather than a "take it or leave it" approach?
Not an expert with this sort of stuff so any advice much appreciated.
Cheers.
Edited by ADF123 on Monday 5th May 18:26
Do you think he will pay £20,000 over your house valuation on a property that previously did not sell quickly in an area you quote as having a very slow market.
If he is a property developer the likelihood is there will only be one winner, I would be very carefull in how you progress any deal.
Is the £390,000 asking price for the new property an actual valuation, or is it negotiable ?
Hi, thanks for the reply. Essentially, I quite like my current house but this new one is absolutely ideal, one of a kind "Dream House" kind of territory and I really wouldn't be moving at this stage for anywhere else. E.g perfect location/size/scope for further development if required etc. However, I have too much on my plate to drag out moving so would only do it on a part ex.
My logic for the offer would be that, yep his houses are negotiable and an offer of around 360-370k would potentially be ok looking at similar properties but by doing it this way rather than pay this versus a trade-in of 230k the extra 20k in the trade in goes towards the deposit meaning I wouldn't have to find it right now so would have an initially higher mortgage (which will be hugely overpaid in the next few years anyway). Also, if he sells this one at 390k if makes it easier for him to sell his other property for asking price, so potentially giving him another 20k of value implied.
Also, as an investor, I would hope he would see the long term value of just how much house he is potentially getting in mine, even at 250k, despite the current market, even to live in himself.
Basically, although I have a pretty reasonable net-worth and moving in the right direction, I started to run a bit before I was walking properly and shorted myself as far as a "rainy day" fund, hence really wanting to get this house without having to put anything else down out of my own pocket initially.
My logic for the offer would be that, yep his houses are negotiable and an offer of around 360-370k would potentially be ok looking at similar properties but by doing it this way rather than pay this versus a trade-in of 230k the extra 20k in the trade in goes towards the deposit meaning I wouldn't have to find it right now so would have an initially higher mortgage (which will be hugely overpaid in the next few years anyway). Also, if he sells this one at 390k if makes it easier for him to sell his other property for asking price, so potentially giving him another 20k of value implied.
Also, as an investor, I would hope he would see the long term value of just how much house he is potentially getting in mine, even at 250k, despite the current market, even to live in himself.
Basically, although I have a pretty reasonable net-worth and moving in the right direction, I started to run a bit before I was walking properly and shorted myself as far as a "rainy day" fund, hence really wanting to get this house without having to put anything else down out of my own pocket initially.
Edited by ADF123 on Tuesday 6th May 09:18
The figures put on his property and yours are largely irrelevant, it's the cost to change thats the key.
I'd be very suprised if he paid you £20k more than you paid for your property 12 months ago (knowing that the others sold for £190K, even at auction).
Why not just ask him outright what value he'd be prepared to put on yours?
I'd be very suprised if he paid you £20k more than you paid for your property 12 months ago (knowing that the others sold for £190K, even at auction).
Why not just ask him outright what value he'd be prepared to put on yours?
We did a part ex on a private basis - it worked as two 'normal' transaction. ie he bought ours we bought his. So two lots of stamp to pay (on eachs full price).
You will of course have no EA fees.
You will owe SDLT £11,700 on the £390k property. So you are effectively asking him to pay £32k extra for your house. With others recently sold for £190k ish. Sounds unlikely to me but you don't get if you don't ask.
You will of course have no EA fees.
You will owe SDLT £11,700 on the £390k property. So you are effectively asking him to pay £32k extra for your house. With others recently sold for £190k ish. Sounds unlikely to me but you don't get if you don't ask.
Gassing Station | Finance | Top of Page | What's New | My Stuff