Are there rules about the price to sell your house?
The question about whether you can sell your house for any price you want is a double edged sword. The two sides to this sword are: On the one side the property market and supply vs demand. And on the other side is the buyer and what they are prepared to pay.
But can you sell your house for any price you want? The answer is yes you can sell your house for any price. But the top end price is governed by the market. There’s nothing to stop you from selling your house for any price that a willing buyer is prepared to pay for it. This is true even if that price is either above or below your home’s fair market value.
However, in selling your home at below market value, you need to be sure you have sufficient proceeds to satisfy any outstanding mortgage.
There are two sides to this question. The first is about selling your house for under market value. The second is attempting to sell your house at over market value.
So let’s take a look at both of these in turn.
Selling your house for under market value
There’s absolutely nothing to stop you from selling your house for any price that a willing buyer is prepared to pay for it. After all, any home will sell at a price where there’s a willing buyer and a willing seller.
With your home in the UK, there’s no law that restricts you from selling your house at any price below market value. In other words, at any price you want.
There are many reasons why you might want to sell your home at under value. But at the end of day, the choice is yours to make.
Mortgage needs to be paid off when you sell your house
When you sell your house, and where you have an outstanding mortgage secured on your home, you need to repay the mortgage in full before you can sell it (but see property lease options). The amount outstanding on your mortgage is your restriction on the bottom line figure for what you can sell for.
In order to transfer ownership, your mortgage needs to be repaid in full.
However, lease options are another way of selling your house. Lease options are particularly helpful if you are in negative equity. Alternatively, a lease option also works well if you have very little equity left. See ‘More Reading’ below on lease options.
Unless you have additional savings to pay any balance left over, you can’t really sell your house for less than the mortgage amount.
If however you no longer have a mortgage, selling your house at below market value is no longer restricted at all. If the mortgage has already been paid off, you can sell your home for whatever value you like.
More Reading: What Is Negative Equity (Negative Equity Example)
Can I sell my house for 1?
Yes you can sell your house for just £1. But £1 is the absolute minimum amount the consideration needs to be in order to create a binding contract. One method to arrange a house purchase for just £1 is to use a lease options arrangement where the option fee is just £1.
In other words, for the contract to work, money needs to change hands. With the minimum being £1.
If the circumstances are such that both parties agree for the option fee to be just £1, the transaction can go ahead.
But if we’re not talking about a lease option transaction, the only way in which you could sell your house for just £1, is if you don’t have an outstanding mortgage secured on the property.
Can you sell a house to a family member for cheap?
There’s nothing preventing you in the UK from you selling your home to a family member for less than the fair market value. This can be to one of your sons or daughters or indeed any other family member.
The under valued element will be treated as a gift. You may need to look into the Inheritance Tax rules of gifts of this nature.
The only thing that could prevent a transaction with a family member at under market value is any outstanding mortgage. Before any transfer of a property to a family member on the cheap, the mortgage needs to be cleared first.
Attempting to sell your house at over market value
On the other side of the above coin is attempting to sell your house at over market value. With this scenario, it’s unlikely to work. It’s very unlikely that anyone would want to pay an over market value price for your home.
However, there are circumstances where this can and does happen. In an extremely buoyant market and particularly where there’s a shortage of property that are in demand, properties can easily go for over asking price. But is this actually selling at over market value?
Really this is market forces at play, where the market is trying to find the right market value. It’s about supply and demand. Where demand outstrips supply, prices go up.
Can you choose who you sell your house to?
You can sell your house to whomever you want. In making your choice of buyer you should not necessarily agreed to the buyer with the highest offer.
Consider instead whether they are a cash buyer or in a sales chain, whether or not the buyer has found a buyer for their property and how long their conveyancing chain is.
How much money do you keep when you sell your house?
How much money you keep when you sell your house depends on how much you owe on your mortgage and how much your selling costs will be. Selling costs include estate agent’s fees and legal fees.
But you may not get to keep any of your money if you are buying another house, as your money will be put towards this purchase.
To read more about how much money do you keep when you sell your house, please take a read of this article: How much money do you keep when you sell your house?
Please don’t forget to read this before you leave…
Please don’t forget to also read this article to discover how you could save £71,475 on your next mortgage if you sell your house and rent before buying again. As I said earlier, even I was amazed when I did the calculations!
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