Selling to a developer

[madyogafan]

I'm a long time lurker but this is my first thread!
As background. Dh and I are 49(me) and 55. We moved 3 years ago into our dream home which was perfect for our specific needs (which are hard to find)The house went to sealed bids and we were only able to get it because we had significant savings and didn't need to sell our house to buy as we had a deposit already. (We sold our old house just after) We then had an extension to get it just as we wanted and are just coming to the end 3 years later!

Now a developer wants to buy our house for the land together with next door and possibly the people next door but one (ie next to our neighbour) . The house will be knocked down. We have been offered approx 500k over the average valuation to go. Now you would think this was a 'no brainer' but obviously there will be a lot of uncertainty as we can't find anything suitable now let alone in a year's time when we'd have to move. We would likely have to go into rented until we find somewhere suitable then do work on it to make it ok for us and there's the risk we may never find anywhere.

Everyone says we'd be mad not to take the cash but at our age I keep thinking life is short and we are happy here. We have the house we want and 0.25 acre land and close to a small but lovely village etc.
I know it's a first world problem but we are having sleepless nights over it and can't decide what to do!
We have modest pensions and savings and think we will be ok in retirement but not wealthy by any means!

So this is really a what would you do? It's uncertain whether if we pull out there will be a build involving next door and next door but one but it's possible if we pull out that nothing will happen. Next door want to move anyway so either they will sell to developer or another buyer.

I would start looking to see if you can find anything that might suit you, but in the meantime say that no you won’t move unless the right property comes up for you to move to. If you love your home and are happy there, and aren’t desperate for the money, then hold onto it!

For half a million pounds you should take it and if you can't find the right place buy and extend again. It's a huge amount of money. Must be very strange to have done so much work and sell it to be demolished though.

£500k if you only have modest pensions etc is HUGE.

You would be INSANE to not take that (tax free!!) kind of money. Even if you do have specific requirements - with an extra £500k you will find it easier to find a different place. Yes it will be a big old pain - but £500k will pay for a LOT of lovely holidays to get through it.

Hold on to it! Then when the perfect property comes up, accept it (you might even have found it is higher by then! ;-) )

The thing is that although that's the valuation on our house we can't get anything else that we like for the same money. We saw a few this weekend. One was ok and the others weren't. The one we liked was 50k over our valuation and needed probably 150k of work to get it to what we wanted. This would probably not increase the value that much as it's things that are specific to us (large garage and new kitchen etc) then there's stamp duty of 40k etc. We would have to sign up now but sale would be dependant on them getting planning so we can't look now really so its a gamble as to what would be available then. We reckon realistically we'd end up with 200 to 300k profit ....I just feel tired and want to be settled!!!

So to clarify we sign now not knowing what will be around when we have to move!
If we could find something first it would be easier and we would definitely sell!

200 to 300k - again unless you are wealthy - is an ENORMOUS amount of money which will make you much less tired in the long run.

I really do get how annoying it is to move, uncertainty etc. But like I said imagine when you're retired - and that money will have increased significantly if you invest it well - how many lovely restful holidays you'd be able to have.

Gift Horse. Shade your eyes from its mouth...

Thanks everyone. It feels a bit like monopoly money.

We can do pretty much what we want 're holidays at the moment while working but it's hard to know how it will be when we stop work!! We have quite modest needs really. We aren't bothered about flash cars etc. Plan to hopefully retire or go very part time at 60.

I guess we would be stupid not to take the cash but I feel truly devastated about it all and wish it had never happened! We've had a few really bad years with our daughter having significant health problems which will always be difficult for all of us and so I really wanted to be settled.

As said before I know we are lucky really to have the choice and it's a first world problem when so many struggle.

I think it could be very helpful for you to have a proper sit down and think about what it cost to fund a comfortable (not even flashy) retirement.

Spoiler alert - the answer is loads and loads! If you retire at 60 thats still hopefully at least a good 20 years of happy living to fund. If you do some projections I think that you will really appreciate how much of a difference 300k invested well now will make for your life longer term.

I really really do get the wanting to be settled. But you definitely will find another place sooner or later and then you will feel settled there.

I nearly sold my house to a developer
I did not because

• I worked out what my property was truly worth to them and realised that even the monopoly money was peanuts
• I could not find somewhere that ticked all my boxes for the money I'd have had

look at the property market with your "new" budget
if you find somewhere you want more than your current place
go for it
if not, haggle harder

Id have a very serious think and look to see what else is around. Do you know what they want to build on your land? If they went ahead with the two houses next to to what would you be potentially living next door to?

Ultimately i would be very tempted to take the money.

I wouldnt. When you want to sell then maybe you can build on it yourself. You may be able to get planning on a 0.25 acre garden - what would a plot be worth? Not suggesting you do it now but when you want to move.

Usually they have causes that if they don't get planning they don't buy. If it is refuse you will have pissed off the whole village and will have to move anyway!

So you have, in effect, been offered £1/2 m for the land. This is in addition to the value of the house.

It seems odd that you had enough money to buy this house without selling your first house and now you have the value of the house plus £1/2m and you cannot find anything else? How odd. I’m way older than you and so is my DH and we have a very expensive house with land. I would still take the £1/2 m extra and go if I thought that was fair. (We are AONB so it’s not going to happen). I wouldn’t be quite so demanding of a house because many can be altered to meet needs. We’ve altered ours three times down the years.

They need all the land to get road access in one would think. Therefore I would get a professional valuation to ensure the £1/2m is fair. If you have no access into your garden without other land being included, your land on its own isn’t worth much with your house on it. It’s the total package they want.

TBH In my case I was not willing to move for less than three times market - as that was what I'd need to buy a "non regret" house somewhere else

Thanks so much for all your replies.

We have looked at our pensions and savings and have a combo of final salary and stock market pensions which aren't huge but guaranteed and then we have savings on top and the potential to save more over the next 10 years or so. We hoped to be ok prior to all this happening with the thought we'd downsize if really necessary (but hoped not to have to)

We have haggled and they've said this is the final offer

There's no point spending all the cash on a new house because we'd be in the same position financially as we are now as we don't want to move again if poss. To be honest there is very little for sale in our area at the price range we are looking at. There are lots of new estates which wouldn't suit us as we prefer old houses with a bit of space.

We can't find anything for the same price or a bit more(say 100k more) that we like as much. My dh has car related hobbies and needs a massive garage. We had one built here but it's hard to find a house with enough land to build one. Most houses are extended such that all the land at the side is used up with house! We saw one today which had potential but it needed work and was smaller and more expensive than ours. I'd say probably overpriced. I like ours much more. So it seems either stay and say goodbye to the money or move to a worse house but have more money in the bank. Im kind of wondering what id do with the cash and whether we would even spend it!

My thought was to say that if all 3 houses go we would take the cash and move but if not we wouldn't as it needs 2 out of 3 for a build to happen. It is for a care home for the elderly which wouldn't bother me that much but we have been advised it would put others off if we came to sell in future.

Do you know how the developer reached their valuation? I know it's a large amount of money but it depends how much your house is worth? And how the housing market is performing in your area.

If you sign an option agreement now and in 12 months they buy at that price how much could your property have risen in price? Are they proposing a year but then a clause to continue if they are at a certain point in the planning process they can keep the option running?
When you say you've haggled, have they raised their offer?

Julius - The developer just offered us what they'd offered next door to start with! That was 100k over the valuation for next door .(they had their house on the market anyway when they were approached) Our house is a bit smaller but nicer IMO. Both 5 bed detached. We pushed them up another 375k but they've said that's it!

Yes the contract will be 10 months for planning then another 9 if it goes to appeal. Offer is index linked if prices rise but not if they go down. In our area there isn't much on the market and when something goes on that's reasonably priced it sells within the week!

I'm thinking now that a 200k profit isn't enough if we end up in a worse house especially with all the hassle of going into rented first and being in limbo for 2 years!
It's possible if we say were walking away they will increase but they'd need to increase by a lot more for us to get a better house. Its mainly the fact that nothing comes up in this area thats suitable.

Do not fix the house value now only the uplift value. Yes the contract is only for 19 months, but highly likely that if they have invested all the way to appeal they will want to keep going till they get planning. Housing prices can dramatically change in that period.

In my case it took three years. You will live with uncertainty as you will probably be moving, but won't know when.
However, if they obtain planning and serve you notice you are in a strong position as you have already exchanged contracts.
Though if your circumstances change you can not sell to anyone else while you are in contract.
It worked for me, but my daughter and I lived with uncertainty for three years. However, the day I was served notice the perfect house came on the market and I was successful in buying it.

So what is your house actually worth as it stands? What percentage is the £1/2m? The value to the developer is the land, not your house. That’s just part of the cost to the developer as they are demolishing it.

Do you need to live exactly where you are? Could you look for a property in a wider area? Why are other houses you have looked at so much more expensive than yours for less of a house? That might indicate yours is undervalued. I would still get professional advice. Why do you need 5 bedrooms? I would consider a smaller house with outbuildings or space to build a garage. Or rent the garage space.

£1/2m is always handy! I would plan how to enjoy myself a bit!

My house is around £2.5m so I don’t think 3x would be realistic. Not going to happen as we are AONB but you need to be very financially secure to turn down £1/2m.

So in your retirement plan you might need to sell?? That's going to be a whole lot more upsetting and disruptive than now!

It sounds like you're very tired.

Im kind of wondering what id do with the cash and whether we would even spend it!

A lovely care home when you're old.

Seriously - I know I keep harping on about it - but people really don't understand how expensive having a nice retirement is!

But I shall stop my pension speech now! It's a bug bear of mine!

I would leave it unless they up the price significantly. It sounds like you don't want to and are happy as you are. If you can't get a better or equal house then what's the point? You probably have quite a lot of equity in your house and you can downsize in retirement if you need to.

Will they just build all around you if you don’t sell?
I expect you can push them further. They are pretty good at playing the “cant pay more” game... you’ll need to push till they squeal.

If you love your house and the surrounding land couldn’t be developed without it then fine. But I am looking at a development site st the moment with random houses in the middle and I can’t help wondering whether they will regret not selling (am not the developer by the way!)

Some friends of ours were offered a similar deal. Then the 2008 crash happened and it all went on hold. However, because the plans have been approved, no one now wants to buy their house and it's hard to sell. They are still there!

OP have you had a surveyor independently value your house and garden. If you were to sell your house in a regular sale you probably have a good idea what it's worth and the garden in that case has a certain value.

In selling to developers it has a different value and a decent surveyor should be able to put a value on it. Thats why I asked how they valued the plot. How large will the nursing house be, I would imagine it will generate large revenues so it is even different that the developer building properties that they then sell as there is the long term revenue it will generate.

And I agree with pp it depends what percentage the 500,000 Is in relation to the current house and also how much you and your dp currently earn because yes it is a huge amount of money but you need to know exactly what it is worth to the developers to see if it's a good deal for you.

Is it a ransom strip situation, could you get together with your neighbours to create some leverage. I think it's not about being greedy but getting was is actually fair in the circumstances.

Just because the builders/developers wants to buy your home, doesn't mean that you have to sell it to them.

If you have created a home specific to your needs, and you love it, then think very, very hard (I know you already have done so).

Money is not everything - and I know I will probably be shot down for saying that - but it isn't. What if you take that money, and never again find / create a home/neighbours/village that you have now.