Don’t know how to tackle situation re budget on a possible house swap

[sunnyjayne]

Hi, I’ve never posted here before.

just wanting so advice on this situation:

We are selling our Mother’s house that I live in, we lost her last year and needs to be sold for benefactors.

A nice family are interested. They went on with our agents with the view to buy our property. I have viewed their home and I fell in love with it. It is a bit over budget for me but our joint agents said ours is top end for them too and a deal could maybe be done.

when I viewed it I had more funds in mind which I now know I won’t be getting for a few months so I have to disregard that.

Their property is on for 230k which is already pretty good for what it is. Being a listed cottage. Ours is offers over 300, having come down in September from 325k.

So now I know that my max offer would be 213k if they offered us the 300k but they’re not going to do that with a low offer from me. The lowest we would go is 285k and that would mean me only having 205k to offer on their immaculate 230k cottage.

I’m also not 100% on it yet and I know they’ve now had an offer today. They are viewing our property a 3rd time end of the week.

They know I have been interested. How can I find out before deciding what to do if my amounts would even be considered or not so I can think clearly about it?

i don’t know whether to fund something less money for less stress. I have since been agonising over what to do as I don’t know if I should stretch myself so much - would be 99k mortgage. I have my health to consider and the cottage would be so wonderful for the garden and comfort. But also I wonder if I spend less and have less worry.

also if they have an offer and accept it and offer on here we may get a little more than my ‘swap’ scenario.

Any helpful advice appreciated.

Is going to the agent tomorrow with an openness about my funds so I can rule it in or out the best thing to do?

I don’t understand- if yours is on for higher than theirs, how come you can’t offer asking price? That would be my question if I were them.

@SquishyGloopyBum because OP is not the sole heir of her mother, she needs to split the proceeds of the house

OP, I think you have to forget the “ swap” aspect - not least because you don’t own your current abode, the estate does. I don’t know if you are an executor/sole executor?

The position is: you are hoping to come into an inheritance of x, you have y in savings, you can raise a maximum mortgage of z. That is your budget. I realise that x is slightly dependent on the sale price, but I don’t think you will have x on the day of the sale because estate funds will need to be distributed.

Also, if it's a listed cottage, has it been well looked after and not had any weird alterations made because it could end up being a complete money pit. They can also be expensive to heat.

Make sure you are looking at other properties and putting this cottage in perspective too

I’m joint executor and benefactor so it will be split after the other aspects of the estate are settled.

@SheilaFentiman thanks very much for both your replies.

You are right in that perspective- I will have a certain amount at the end of it all. As joint executor I have calculated all the other funds to settle the estate that will be going out of the sale of this property. But yes the fact remains my budget is 205-213k depending on the final sale price (285-300k).

I think part of the appeal has been the idea of no chain involved if we were to ‘do a deal’ (I use that instead of swap, as that’s more what it would be).

It’s helped to just get that perspective on my budget, thanks. And yes, your other reply is right, about the proceeds being split.

I wouldn't buy a listed cottage.

They are beautiful but also absolute money pits.

My dad lived in one, a replacement window, a normal size, nothing crazy, was £4000. Fortunately my cousin is a carpenter and made one but was still £1500 due to the type of wood it needed to be made from and the way it needed to be made.

You need to be very careful if you are concerned about financing a small mortgage to buy it.

Yeah, I’ve viewed a lot of properties of different ages and locations - flats to more modern terraces and 3 older cottages - so have a fair idea now of what I like and how this compares. It has been beautifully looked after and in excellent condition. In all honesty I have only felt this way about one other place and that’s sold now. But I also am today wondering if I need to be taking on something at top end of my budget. Thanks

@Geneticsbunny yeah, thanks, I’ve considered these things but helps to hear others voice them, and that’s all part of my reticence/ serious thought over it. It is in very good condition, excellent in fact, especially compared to others I’ve seen. I’ve asked for an idea of heating bills. It is 4 rooms plus a bathroom on the side which is immaculate. Central heating plus a log burner. But the walls are very thick so I know it’ll take a bit to heat up. Thanks for your input.

@NutButterOnToast thanks for this helpful example. I thought it could be expensive but not that much, wow. I counted the windows, it has 1 large (equates to normal size window on modern house), 2 medium, 2 small and 1 tiny single pane. They looked in excellent condition and are painted white wood. I was also thinking of the exterior painting and roof etc. all fine now but down the line…so yeah, big things to afford. It’s got 3 rooms plus tiny kitchen and bathroom, but it is detached so more walls and more to heat too.

What size was your Dad’s place? Was it a grade 2?

You would be in a strong position I think because of the attraction of the simplicity of the chain and the lower likelihood of it falling through.

I would just be honest and straightforward with them / the agent - - I really love the house but can offer an absolute maximum of £213k only if the house sells for £300k. (If that is what it is). Lay your cards honestly on the table. Make it clear you would be able to move quickly or at their pace / timing.

Assume you have your MIP lined up?

That also means it will probably hold the heat from the summer for a while. Our house keeps some residual summer heat till about December most years.

Wooden windows, if looked after (ie painted regularly to stop them rotting) will literally last hundreds of years. Take a good look at them for sure but you don't need to budget to replace them unless there is actually anything wrong with them. Often if they are rotten, and it's localised, an area of the wood can bet cut out and replaced.

Will you need a bridging loan (for this or any other property) to cover the period between the sale of your mum's house and the money flowing to the beneficiaries? Or can you take a larger 'normal' mortgage and then pay down a lump?

Ok I hadn’t thought of this. I assumed the sale would be handled by the solicitors who would disperse funds (two of us plus small gifts to 3 grandchildren and a charity) then my share would go to the vendors or whatever I buy? We have probate granted as the executors (in case that’s a question). So is there something else I need to understand here? If you can explain it would be helpful.

@Chewbecca thanks so much for this, that’s what I was wondering - the ease of it being a plus. I’ve made contact with the agent to discuss this and lay my cards on the table budget wise! Not heard back yet. They are quite slow and I’ll call them again if I don’t hear. Just need to know if it’s even an option based on what I could offer. Thanks again

I am not a lawyer, so if you have one helping with the probate/executor process, ask them.

But - if you have a grant of probate then you are at the "months 6 to 9" point of the flow below, I think (which I took from coop legal). You may have made some interim distributions, but you cannot make final distributions until you know that all costs etc have been covered off. I believe that the money from the sale would flow to the estate account for your mum and not proportionately to the beneficiaries on the day.

Month 1 – starting your probate case
On receipt of your probate case, your case manager will carry out a detailed legal review of the estate to clarify the issues that will need addressing in order to apply for the grant of representation. They'll let you know if they need anything else from you before we start valuing assets and liabilities in the estate.

Months 3 to 6 – applying for the grant of representation
To apply for the grant of representation it is necessary to have:
contacted all identifiable financial institutions in order to accurately verify and value the estate
completed the relevant Inheritance Tax forms and finalised the Inheritance Tax position with HMRC (whether there is Inheritance Tax to pay or not)
completed all documentation necessary for the court application, including checking the validity of the will or accurately applying the rules of intestacy where no valid will exists
Typically, it takes 3 to 6 months to complete all the necessary legal, tax and administration work, submit the application and receive the grant of representation from the court.

Months 6 to 9 – interim distributions to the beneficiaries
Once the grant of representation has been received it can be sent to the bank. After the bank has received all the necessary documents, the money in the accounts will usually be released within 10 to 15 working days.
Once the grant of representation has been received, adverts are placed in the London Gazette and a local paper. These adverts have a 2 month notice period within which creditors of the estate can claim for any debts. This significantly reduces the risk of future claims by creditors against the estate. Alternatively, we can help you with protecting yourself and the beneficiaries through insurance cover.
After this period, provided we have funds available and no outstanding debts, it is usually possible to distribute some of the estate to the beneficiaries.

Months 9 to 12 – final distributions to the beneficiaries
Claims can still be made against the estate in the 6 months after receiving the grant of representation by anyone who believes they are entitled to benefit. It is important to ensure that all potential claims on the estate are resolved before the final distributions are made.
Assuming that there are no claims and everything goes smoothly, we can usually finalise all the legal, tax and administration work and distribute the rest of the estate to the beneficiaries within 9 to 12 months. This will complete the probate process.

Update: the vendors accepted an offer on the cottage yesterday and our joint agents didn’t bother to let me know, so I’ve been agonising over it for nothing. But all your advice and help has been appreciated.

I feel like they don’t take me seriously. Or maybe that’s just estate agents.

In defence of the agents, they may have to wait for those who have expressed an interest to follow up rather than proactively calling you

Yes I understand that. It’s just the fact I spoke to them yesterday when they told me an offer had been received, but not accepted yet. I then asked for clarity on my best next steps and also chased some questions I had sent to them last Friday for the vendors after they told me to put them in an email. They didn’t acknowledge the email so I chased that up. Yesterday they said they hadn’t got a response so probably best to wait until I get that and view the property again. They said the owners know you’re interested and implied there was no rush.

From the call I made today I was told they had accepted it yesterday and they thought someone had called me.

I had also phoned late yesterday to ask about available times to view it tomorrow and no mention was made then.

I think this is also about the lack of communication from them throughout.

regarding all the legal elements, thanks for what you copied onto here. I think I read the same kind of thing on doing some googling. I’ve called for some free advice. We did probate application ourselves without a solicitor and the Estate is quite simple. But I am like I say waiting for some clarity on those last few steps :) thanks for bringing it to my attention!

Ah, ok - sounds like the EA were crap about updating their call notes etc, which is rather shit!!

At least you and your family will now be able to consider any offer from the cottage owners on its own and hopefully push it (or another offer) as high as you can!

Thanks, yes that’s really the upside here! Hoping they do offer. Another person viewing tomorrow too has sold so that’s a good possible as well!

it’s been 4 months of viewings so hopefully we’re nearly there and although I have been heartbroken to be selling our family home, there is no other way to settle the estate. Also so grateful to our Mum 🙏🏻