Many Homes Sell at a Loss.

by Mark Johnston

Many Homes Sell at a Loss.

For most home owners, when they sell their home is entirely up to them. For instance if they have a growing family they can still put up with the same home for awhile or if they need to move for work they could choose to rent out their home and rent another one until prices pick up.

So it would seem that there is no reason home owners would choose to sell up if it meant do so at a loss, nobody likes to make any kind of loss especially on such a major purchase like a home.

Adrian Anderson, director of mortgage broker Anderson Harris, says “sometimes people simply have to move so are forced to do so at a loss”.

Analysis has shown that  between 1995 and 2006 over 95 per cent of houses sold were at a profit as house prices rose across the UK.

Nevertheless, more home owners are now selling at a loss these days. While they do not want to, many of them feel they do not really have a choice.

However, when the financial crisis began in 2008, figures show that one in ten sellers made a loss on their home in 2009 this figure rose to 23 per cent. In 2012 four in ten homes were sold at a loss in England and Wales.

A study of Land Registry figures found that 41 per cent of houses bought after 2007 were sold at a loss, with an average shortfall of 11 per cent which equates to around £24,430.

Castle trust, a shared equity firm, reported that over 130,000 families have made a loss on their home placing them under enormous financial and emotional pressures.

Experts feel that these figures show how easy it is to lose money on a house and that home ownership is risky, much more risky than almost everyone appreciates.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered surveyors (RICS), said “it is tragic for people who bought when the market is high and then had to sell when the market is lower but as the report highlights, a number of people did so in order to get a better deal”.

A recent survey has revealed that 13 per cent of home owners say that they may be forced to sell their current home for less than the purchase price.

It appears that it is not just home owners that have sold at a loss……according to a new report almost 90 per cent of all properties that have been reposed since the start of the financial crisis are sold at a loss. This means that most of these properties are sold at a price that is well below the balance of the remaining mortgage.

In many experts opinions UK market lenders accept lower prices in order to sell properties in possession more quickly.

Although while it is clearly painful for those sitting on losses, the low prices have provided opportunities for first time buyers.



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