How can I help my son avoid overpaying for his dad's flat?

[Frikkinperiod]

Wasn't sure where to post:

22 yr old son lives with XH/myself alternate weeks.
XH is moving to US to be with his fiance. He can't work there for 18 months after moving.

Son has a sizable deposit to buy a property and a minimum wage job allowing him a mortgage.

XH is struggling to sell his flat. He's dropped the asking price twice, by 25% overall, since putting the property on the market 4 months ago.

XH has told DS he will sell the flat to him at a discount. It's still overpriced, as it's not selling. The discount amounts to a 2% reduction.

So, imo, the discount is irrelevant in market terms, as it's a pie in the sky asking price.

DS wants to help his dad. I'm concerned he'll pay £25k too much for a flat because his dad is keener to get money for his new life than think about his son.

How do I support DS to make a wise decision on this? I've already done a couple of viewings with DS to comparable cheaper/better properties. He's still keen to proceed with seriously considering buying his existing home despite the inflated price.

How can I guide him into making a good financial decision here?

Tell him that if he needs a mortgage the lender will probably value it below what he’s prepared to pay as it’s obviously overpriced. Gets him out of feeling guilty if he can ascribe the problem to a neutral party.
Your ex is a shit to do this. 2%!

Yes, XH is a shit. Since our divorce he's prioritised himself over all else. DD cut him off a few years back. DS keeps hoping he'll change.

I'm not sure the mortgage lender will do that. XH paid more for the flat in 2022 than he's selling for now. The change in B2L means flats aren't selling round here much any more.

But definitely worth considering. Thanks for the pointer.

Your son will need his own mortgage lender and they will do a valuation and not lend more than a percentage of what it’s valued at. If there is enough deposit to bridge the gap, it’s still possible but the loan to value will be reflected by the valuation.

I’d pay for an independent valuation to inform him (& privately make sure the valuer knows the context)

He needs to think about when he comes to resell if he’s Dad is having so much trouble now.

Get an independent valuation done. Then explain to your ds that his dad can't sell his flat because it is OVERPRICED. That by offloading it on his son, he is offloading the problem on his son too. That ds will be assuming debt that isn't his and accepting a millstone around his neck that could hold him back his entire life.

It’s standard practice for the mortgage provider to value the property an they will not lend more than it’s worth because they don’t want to be in a positions where if the mortgage holder defaults they can’t sell it and recoup their costs. Unless he has a big enough amount saved to cover any shortfall he won’t be able to pay for it anyway. He needs to get an independent valuation and offer his dad fair market value. If his dad refuses then your son needs to pull away from the purchase completely.

The person doing the valuation doesn’t need any context, they just need to look at the flat and value it as it is

We have a flat bought in 2018 that we cannot sell. We’ve just reduced and it’s on the market less than we originally bought it for. Tell your son not to buy a flat. There is a reason it is not selling!

The only way in this scenario is that you put your hand in your pocket and pay for an independent evaluation

This.

The dad is a piece of work.
Preying on the son's love to exploit.
Hope it goes shit for your exh in the USA.

Check if there is also a huge service charge, often quarterly. The higher LTV will mean higher interest payments too..

I would definitely make sure it's an independent valued/surveyor too, not an estate agent. An EA will likely over value the property to allow for negotiation and their commission. An independent will give you a realistic valuation.

Sorry to hear that you're stuck @Swarly

Seems an independent valuation is the way to go. Thanks all.

Tell your DS that he should only match what his dad gets on the open market. So your X should drop the price by that 2% and see if he gets any offers. Your Xh will still be better off if he sells to your son as he won’t pay estate agent fees.

If he gets no offers that tells your son it’s overpriced.

Have a look online at 'sold' properties that are similar nearby and compare. Even comparing things like cost per square meter for something standardised.

If your Son is looking to buy and is in a position to do so, perhaps he could be tempted by a better property. A small house? Something with a garden? Or a bigger flat in a better area? If ds can see he can get a better deal elsewhere then he may see he is being offered something bogus.

I sympathise as my Dad did something similar. Banks were refusing him a business loan so he came sniffing around siblings and me. Dressed it up as 'going into business together' and ' a great investment opportunity' my brother bit and handed over 25k. Of course the guaranteed dividends never appeared as they are being ploughed back into the business. My brother would never say anything. It's caused issues in his marriage too as that cash was supposed to pay for a new kitchen.

Sounds like he's not even got a mortgage in principle yet? I'd be surprised if the mortgage lender doesn't do some of the work for you here. And agree an independent valuer would be useful.

There is some value to being able to purchase a house you already live in. Less upheaval, no nasty surprises or moving costs, you already know what the neighbours are like. Also XDP might leave him the white goods too? But even so, it's unlikely that'll amount to 25k worth on what I presume must be a fairly cheap flat if one income NMW can buy it even with a chunky deposit.

Is this flat actually suitable for your DS - location, size etc also is it a good buy - how much are utility bills and service charges? The value is often affected because of high service charges also high utility bills due to inefficient electric heating and/or conversion of a drafty Victorian house. Is he driven by the ease - not having to find somewhere else, move his stuff etc? What seems like a good idea now, he might end up regretting if he wants to sell it in a few years time and can't find a buyer.

You need to emphasise how there are other cheaper/better properties available. Can you see any very recent sale prices for similar properties locally. But I agree that it might be worth the few hundred pounds? to pay for an independent valuation of the price for a quick sale in the current market. The 'discount' his DF is offering doesn't sound like a discount at all, if his asking price is still optimistic - 2% is comparable to the estate agents fees that he won't be paying due to selling to DS.