Negative equity :-(

[jasminethecat]

I live in a 2-bed almost new-build (second owner) I bought in 2021 when the market was at its peak. I paid £190k for it.

Anyway, my neighbours on either side have recently sold, both were private sales to friends or family. I just went on the Land Registry and am upset to see one sold for £145k and the other for £130k.

Surely this will massively impact the valuation of my house? Most houses on this estate are 3 or 4 bed, hardly any 2 beds so not many other houses to compare with.

I really want to relocate next year when my mortgage is due for renewal, but I still have a mortgage of £156k and looks like I will be in negative equity.

What can I do? I feel so upset. I am single so just the one income, I was a first time buyer and feel so stupid like I overpaid massively for a house that I am now stuck with. I have a reasonable income, just over the threshold into the higher tax bracket, but not much by way of savings (they all went into my house deposit!) I feel so sad and stupid. I want to move to live near my sister and elderly mother, I am miles away from them and feel so lonely.

And so it starts… why has nobody learned anything from 2007?

What do you mean? I was 15 in 2007, what am I supposed to have learnt?

Sadly the only answer is to stay put- pay down the mortgage and wait for market prices to rise.

It's possible those two sold homes were sold at a lower price as they were private, so lower costs involved and also feeling unable to push family to pay more.

We bought in 2008 at max price, so we just stayed put for 10 years instead of 5. Got a bit cramped in the end, but we bought very young so had time to wait around.

Also, had we hung on a year or two, we wouldn't have even secured a mortgage at all.

Yes that will impact the value of yours but presumably that's what yours is worth now anyway.

TBH if they're private "sales" to F&F they may not necessarily be at market value...

Happened to me years ago, we had to save up the difference to be able to move, plus a deposit on the new place, my sympathies OP negative equity is awful I remember feeling so utterly trapped in my house.

You’re basing this on hypotheticals, why not get a valuation so you can see the facts? Also keep in mind that by next year anything could happen. Try not to borrow worries from tomorrow.

That’s what I’m thinking, no other houses in the area seem to go on sale for that low, there is nothing on Rightmove for under about £170k that doesn’t need a lot of renovation. But will a mortgage company care, or just compare to other similar (near identical) houses in the estate?

Get a valuation and go from there

Most likely they were sold below market value. Explain that to an EA and get them in to value yours. At least you'll know where you stand.

Why not have your house valued and find out?

To get my house valued do I just invite an estate agent over? Does it cost much?

Don't have your house valued now. It'll only add stress.
Most likely other sales will go through at a higher price before you want to sell.
Get a valuation just before you want to sell.
Don't borrow tomorrow's troubles.

Yes just call any estate agent. It costs nothing. They value it in the hope that you will sign up to sell it with them.

Thanks. You’re right I shouldn’t worry about it until I need to. I just had a shock this morning when I saw what they sold for.

Yes: in your shoes I would invite three estate agents to value your property and ask them on what basis they valued it at the value they give.

If you can, include one or two local estate agents (as opposed to branches of chains) in the three. There is usually no charge for an estate agent to value your property, there’s not even a charge for them to market it typically. They take the money when the sale is made.

I would do it so at least you know where you stand.

If they were sold to friends and family members don't panic, they were likely sold below their value. Agree with others to get estate agent valuations then go from there.

You can also check on Zoopla to get an estimated sale price, I don’t know how accurate that is but it’s instant while you’re waiting for estate agent valuations to give you a heads up.

Most people won’t pay and go on to the land registry website to see what next door sold for

So hopefully If the property wasn’t ever listed on rightmove / zoopla they would have no idea what they sold for and have no idea of when it was up for sale

so if the going price is xxx then you should get close to xxx and . Not minus xxx

What starts??

Its free.

Don't waste estate agents' time when you're not even looking to sell now. The market will look very different in a year. And there's nothing you can do about it regardless.

You also don't know the circumstances your neighbours sold in, for example I bought my house well below market rate because I bought it from my dad. They could have been desperate to sell quickly at any price, or sold to a family member.

Unless something significant has happened to the area or the houses themselves, the value shouldn't have dropped that much. House prices generally have been continuing to increase since 2021.

But just so you know in future, you should never buy a house without planning to keep it for at least 7-10 years otherwise you're increasing the likelihood of losing money on it (even if just from legal fees, cost of moving etc.)

Most are available for free on ‘houseprices.io’

The mortgage company/bank valuing the OPs house for their buyer will though, so if they do undervalue the house, the buyer may not want to go ahead or be unable to get a mortgage.