How much profit to sell house to move?

[Kitchendrama1]

Houses are selling for crazy money at the moment and I want to sell mine.

No reason, just for money.

I’ve however spent a bit getting stuff done and I like the house generally and the area is convenient.

So I guess no reason to sell.

I’m getting the house valued/estate agent looking around.

If I got £220k I would sell. Bought for £160. However a house down the road has sold for nearly £300k and its bigger and better.

Realistically what’s a good “profit” to sell?

Thing is, it isn't really 'profit' until you no longer need a home to live in.

If you sell your home, then won't you need to buy a new one?
The ones you are looking at to buy, have also gone up in price, by the same %

If you like the house, and where it is, and have no reason - like moving for work, or having had triplets in a one bed flat - then why would you want to go through the stress and expense of moving?

Agree with pp - its not about profit, its about market value. If a house is worth £300k and you bought it for £200k, but then spent 90k on it, you'd make £10k on it. If you'd bought it for £200k and spent nothing on it, you'd make £100k. The price is the price, irrespective of what you bought it for / spent on it.

@Kite22

Thing is, it isn't really 'profit' until you no longer need a home to live in.

If you sell your home, then won't you need to buy a new one?
The ones you are looking at to buy, have also gone up in price, by the same %

If you like the house, and where it is, and have no reason - like moving for work, or having had triplets in a one bed flat - then why would you want to go through the stress and expense of moving?

I’m single and want more rooms to make money/support a lifestyle.

My salary has however dropped by £10k so I don’t think the bank will look favourably on that.

@Africa2go

Agree with pp - its not about profit, its about market value. If a house is worth £300k and you bought it for £200k, but then spent 90k on it, you'd make £10k on it. If you'd bought it for £200k and spent nothing on it, you'd make £100k. The price is the price, irrespective of what you bought it for / spent on it.

I would sell for a big enough profit to cover moving costs/legal fees etc.

Just fancied a change.

So if you want to buy a bigger place, the difference between what you own and what you want has also gone up. There is no “profit”.

£83.59

I’d want more profit than you have. At least 100k. Stamp duty, fees, moving costs etc. will all eat into your profit.

Regardless of profit it is not sensible to spend the fees and stamp duty just for a change. You would need to be unhappy where you are/forced to sell/it no longer meets your needs.

@LastStarfighter

So if you want to buy a bigger place, the difference between what you own and what you want has also gone up. There is no “profit”.

Assuming I’m not moving to a cheaper neighbourhood?

I think I get your question.
For me it’s stamp duty on new property + deposit for new property + fees. Then I’d move easily if that was covered by the increase in property price!

I think the answer can vary by person. Honestly, I worked out what I wanted from a new house, what I could borrow and worked back from their to work out the profit on mine etc.

So work out what you want, get valuation on yours. Work out rough equity / profit for new house and see if it is enough.

The stamp duty is really low

You only really make a profit if you can clear your mortgage, pay all the bills associated with moving, stamp duty, price of new property etc and then the profit is what is left over.

If you still owe on the mortgage for your current property you are very very unlikely to make "a good profit" but you haven't said if you've got a mortgage and what, if anything you owe on it - that's the key question.

Say you sell your property for 220k. How much is a bigger property? 300k? So you need to be able to afford the moving costs and the stamp duty PLUS be able to borrow enough on a mortgage to make up the rest. If you can all good, if you can’t then you have to rethink moving or move to a smaller place or move areas. ‘Profit’ really really doesn’t come into it while you still need a roof over your head!! All that matters is if you can afford the next house.

@Kitchendrama1

The stamp duty is really low

It does go up in October in case that wasn't on your radar.

I would guess you allow 10k for moving costs so anything under 10k less you pay for new house is profit. *I may have misunderstood question.

Unless you’re downsizing you don’t make ‘profit’.

Is what you’re asking really, how much would your property have to have increased in value for you to sell up?

For me, that would be over £100K, I reckon. Enough to therefore be able to buy a decent family-sized home (even if smaller/less desirable) outright with no mortgage.

@NoSquirrels

Unless you’re downsizing you don’t make ‘profit’.

Is what you’re asking really, how much would your property have to have increased in value for you to sell up?

For me, that would be over £100K, I reckon. Enough to therefore be able to buy a decent family-sized home (even if smaller/less desirable) outright with no mortgage.

Of course you make profit. Sell your home and if you get an extra £40k you can get a house worth an extra £40k.

I put down £35k. So now I can approach the bank with £75k deposit and ask for a mortgage. I see no reason why I won’t get a £200k house.

^ how else do people upsell?

There is no profit to take unless you move to a cheaper/less desirable area, and you could have done that anytime...

Most people who move up the property ladder either

a) have increased their salaries and can therefore borrow more, or
b) have bought a property which needed renovations, managed them well, and therefore added more to the value of the property than house prices have gone up otherwise.

Let's say that your income stays the same, for ease.

You buy property 1. Property 1 costs £150k, you buy it with a 30k deposit, 120k mortgage. The next house up the ladder would have been £200k.

By the time you come to sell, a few years down the line, house prices in the area have risen by 1/3rd. Your house is now worth £200k. Nice. You sell it. Let's say, for ease, that in the time you own it you've reduced the outstanding mortgage by £10k, so you owe £110k. So you repay the mortgage, and you now have £90k as a deposit.

Your income has stayed the same, so you can once again borrow the same as last time, £120k. Add that to your deposit and you've got a max of £210k to spend (note, I've ignored buying and selling costs here for ease but these would eat in to your cash)

The next house up, the one that was £200k, now costs £266k. So it's still out of reach.

You can buy another house for a max of £210 (minus all your costs) - which is basically going to end up being a property worth the same as the one you were already in. There's nothing wrong with doing a sideways step, we did one ourselves recently because we wanted something totally different. But we didn't end up any better off, we ended up with an asset worth about the same as the asset we previously owned!

The money you have "made" on your house doesn't really do you much good unless you downsize or move somewhere cheaper. It helps people be able to move up because they are generally increasing their earnings, generally paying down their mortgage, and they have an asset which is rising at roughly the same rate (all being well) as the next step up which makes it easier than if they haven't bought in the first place. If they didn't own property they would only have "earned" whatever rate of return they were able to get on their deposit.

If you are moving to a bigger house in a similar priced area (ie so you want to move to a more expensive house) then price rises are actually a bad thing. If your house was bought for £200k and prices have increased by 10a% then you have made £20k “profit”. But the house up the road which used to be 300k is now £330k so you still have to find even more cash to move than you did previously. Plus all the fees etc.

People usually up sell by either making a profit via renovations etc or by increasing their mortgage due to salary rises etc. Or by remortgaging for a higher amount and increasing the LTV.

Of course you make profit. Sell your home and if you get an extra £40k you can get a house worth an extra £40k.

I put down £35k. So now I can approach the bank with £75k deposit and ask for a mortgage. I see no reason why I won’t get a £200k house.

Yes, but it’s illiquid.

You can only exchange this profit for the sane asset class.

So it’s basically irrelevant in the short term because you cannot realise your ‘profit’ - you can only plough it into a new property.

I’m still not really sure what you’re asking. You said

Realistically what’s a good “profit” to sell?

And most people have said - it’s not that simple. There is no ‘good profit’ because it depends on where you need to get housed next…

Got it valued and it “may” sell for £50k more than I purchased it for. Thats good because I don’t want to loose money.

I also know It I wanted to buy “up” it won’t be likely because I’m old and single.

So for the time being I’m staying and being content in what I have.