My partner and I recently split. We entered into a mortgage for a unit in Brisbane (inner city suburb – Albion) in September last year. I have since moved out and he wants to buy me out (he can afford to do this, I cannot).
He is keen to do this ASAP (as soon as the FHOG year period expires). My feelings are at this point are if I do this, I will probably walk away with nothing, so at first I was not very keen to be "bought" out. However, all the doom and gloom reports I have read don't expect the market to improve for at least 1 year to 18 months, would it really be worth my time sticking it out paying rent, mortagage, body corp, rates, water etc for another year to two years? Or should I just cut my losses and sign it over.
He has assured me that I wont end up owing anything (we have gone 50/50 in everything including the initial $40K deposit) so at worst I would just sign it over and walk away empty handed.
My questions are:
1. What would your advice be for me in this situation, considering the market situation at present and forecast market standing?
2. I am sure others have been in this situation, does being bought out of a property negatively effect your credit rating or standing with the banks?
3. What sort of professional can I talk to about this? Financial planner? Estate agent? Valuer? (obvious choice if he buys me out)
NB- all mortgage payments have always been on time and over the minimum standard so no issues there. We purchased the prop for $339K.
Any help would be greatly appreciated as I dont know where to turn. The banks are not helpful and our broker was even more useless than the banks when we bought so I am stuck!!!
If you contact an agent, they will be all over you like a rash for quite a while – the sniff of doom or dispair will get them rubbing their hands. ;(
You could approach a valuer – give them a proper brief ie property settlement for a break-up etc. They will do the groundwork and provide you with the right information. Then you might seek an agent's appraisal (of course this will paint the rosiest picture out, highest price, not the doom and gloom which exists at present in the Qld market).
Hi Sare,
I am not sure why this should affect your credit rating. If you have paid up every time and there is no defaults.
My question is: Why would you walk away with nothing? If you paid 50-50? You should at least get back the $20K. He gets to get the value of your input PLUS your share of the FHOG PLUS ability to capitalise on future gains.
Yes, I was a real estate agent- Scott is probably right- if you go to an agent- they will smell gloom and doom. It is a good way to get a free appraisal value though. A relationship split is the best type of sale you can have- they usually sell easily and well below market value.
You could tell him to want to sell it and realise the value.
Best place for you to start is not with a planner or broker or real estate agent- contact Legal Aid and get some advice. Dont settle for too little.
You are giving up future gains to start again. Although dont hang on too long- best get going and move on.
Good luck.Of course he's keen to do it ASAP. He'll get your $20K.
Get an appraisal. Take out selling costs and loan and see how much is left. Tell him you want half of that.HE should be paying rent (at market rates). That should be going onto the loan. Then you pay half of the difference, plus half the rates, strata etc.
Don't let him con you. I'm hoping he's not living there for nothing with you paying half of everything. If that is the case tell him you need to rent it out. Sounds like he's trying to force your hand.Yep, sounds like he is trying to screw you over. Bear in mind that because you have already used your FHOG, getting into a new property will also cost you stamp duty. So I think that if he wants to buy you out, you should get a valuation done to determine how much equity is in the property (make sure you are happ with the valuation and it diesnt appear low). Then he should pay you half of the remaining equity, plus half of the stamp duty based on the valuation, plus an extra sum (at least $10k or $20k) to compensate you as you have already done the ground work and purchased the property, plus maintained it for the last few years. This will also mean you won't get ripped off if the valuation is lower than you expected if he tries to order a low valuation behind your back.
If he refuses, then why not just tell him you want to sell the property and get your money that way. After all, it doesnt matter whether you sell it to him or sell it completely to someone else, you still get your money. I think he will give in to your request if you say you want to sell it instead.
I think you should stand your ground and demand a decent return for your share, after all you hold the upper hand in this. Dont cave in!!!
cheers,
LukeSara, i would agree that you need to get as much advice as you can from legal aid and make sure that you are not giving away your hard earned cash. i made the stupid decision to let my ex basically 'run the show' when we divorced and i have regretted it ever since. My understanding is that you don't have children, but you still have a financial stake in this property. If you do sell to your ex partner then there will not be real estate agent's fees to pay. So if you can come to an agreement you will in effect be coming out with more money that if you sold through an agent and split the proceeds 50/50.
Good luck
Yes, that is what I was trying to say as Sonya Luke and catalyst are saying- dont just give it to him. Yes, as Luke says, tell him you want to sell and do the calcs as to how much will be left. Might be nothing as I understand it, you have not held this place long? So after agents fees etc might not be much but he gets same. Stand firm. Hang tough. Better to sell to him in the end but AT FAIR AND REASONABLE PRICE.
Hi everyone,
Thank you so much for all the advice. I have decided now to get legal advice, as much as it pains me to go down that path, it really has to be done.
The property market is so bad in Brisbane at the moment, I have a feeling that when we do get valuations, we may owe more on the mortgage that the actual value of the property…? We bought last September for $346K and currently owe $322K on the mortgage itself.
And this isn't even taking into account compound interest on the loan!!
If this is the case, will I walk away with nothing, still owing money?? Or should I play it safe and refuse the valuations and just sign it over deposit, FHOG and all and walk away?
What if the market bounces back in years time and the value increases and i've signed it over then he makes money ?
You all must be rolling your eyes at how foolish this sounds, I feel like a fool for not thinking this through before and knowing so little about it!! This certainly is a lesson learnt for me.
Your advice is greatly appreciated as I feel like I am treading water right now!!
Sare, don’t give up or give in. You sound so down about things. Ok, yes, get legal advice, but maybe you need to sit on this a while and see how things go. You sound like you need a pick me up or something. The market might be poor but all is not in vain. Did you buy off the plan? Albion is close to the city, my first purchase was Ascot. Why are you paying mortgage AND rent? Why isn’t he renting your share off you since he is “using” your half? Give yourself some time. Brisbane might be down- but you still have $24K of equity and this does not include any improvements in the market. Don’t be so hard on yourself. Go out, have a good time, forget him- THEN lets think about the mortgage situation! What do you mean compound interest? Are you saying the mortgage is not being paid?
Call my friend Jodie- Broker on 0431229929 and get some feedback on the loan side of things.
Well this is NOT a dear “Dorothy Dicks” web site- but look on the bright side- wait for dust to settle – just don’t be so hard on yourself- he;s only a boy. There are plenty more of those and plenty more property opportunities out there.
But why IS he So keen to get this settled? And what of the end of the FHOG 12months? What has that got to do with it?
Well, YES one thing IS for sure- the market WILL improve- history shows us it always does.
Take your legal advice, Jodie’s advice and weigh everything up.
For my way of thinking – you need to get something out of this- not just walk away from it all.Hi Sare,
How much has he offered to buy you out for?
If he has offered you the original costs you put in (eg. $20k for deposit, half of loan expenses etc) then I would take it.
As you say, the property has most likely dropped in value since you've held it due to the bad market which is why you should let him buy you out (assuming you get your original costs back).
It would still be recommended to get an official valuation done for your own benefit, in case it does come in higher than the original purchase price, in which case you can show that to him to get a better share. If the valuation comes in lower, then don't show it to him and just ask for your original costs back.
Good luck, it's one of those unfortunate situations but personally I wouldn't want to be sharing an investment with someone I no longer wanted to see anymore.
Darren.
Hi Darren,
My issue is that he does not think I am owed anything (my deposit, nothing) because of his perceived "drop in the market" (which we don't know for sure as we have not yet got any vaulations done)!
So yes that is my plan. If he still pushes back i am going to get legal rep or just force the sale, so either way, we both lose out.
I read the BIS Schrapnel reports yesterday that the property market in Brisbane is actually going to improve over the next 3 years which is exactly how long he wants to hold the property for, so I refuse to belive that he wont ever get any capital gain on a property less than 4ks from the heart of Brisbane city.
Sounds vendictive but he is being completely irrational, so tit for tat I say.
Thanks for your help!
Sare,
You definitely need to get some sort of legal advice, look into whether you can get legal aid. or talk hypothetically to both a mortgage broker and some real estate agents to get a better idea of current value of the property etc.
The other thing that I would be putting in place is the need for him to be paying 'rent' to you if he is living in the property and you are not. this should be half the market value to rent the property. Or you should get in writing a 'contract' of some sort showing that you are reducing your loan payments to reflect the half share of the market rental. you should not have to pay the mortgage and pay rent for your own adccommodation.
Good luck
Sonya
Thanks Sonya. He has a roommate as of 2/7 so I will start to get $150 per week (which I think is still well below market value for rents in Brisbane) but it’s a start at least.
Just finished a very painful hour long phone conversation with him. Agreed upon getting our separate valuations and going from there.
Can I ask, in the forum’s experience, if the valuation comes in lower and he still wants to keep the property, am I still in with any chance of recouping at least my part of the deposit and FHOG? (I am not even worried about the odd $13K I contributed to the repayments, just want out with something!!) Very keen to keep solicitors out of this. After speaking with three of them today $375 per hour is just completely out of the question for me at this point!!!
Thanks to everyone who has commented so far!!!
Sare, best thing I can suggest as Sonya has suggested is – call Jodie Baker -Broker- women who knows what to do, has seen it all and been there and done that. As Above: Jodie- Broker on 0431229929.
You should be able to get legal aid of some kind, or legal advice from what we call in Victoria – Consumer Affairs.
Its not about what the “appraisals” say- its about you standing your ground. An appraisal is one thing, but “market value” is what the market is willing to pay. Push him to sell and split the dividend. Not to be nasty or “tit-for tat” but to get a result.
I think I said it before and I will say again: You should not walk away with nothing from this- but it is up to you to understand your rights and stand your ground.sare mcdee wrote:Hi Darren,My issue is that he does not think I am owed anything (my deposit, nothing) because of his perceived "drop in the market" (which we don't know for sure as we have not yet got any vaulations done)!
So yes that is my plan. If he still pushes back i am going to get legal rep or just force the sale, so either way, we both lose out.
I read the BIS Schrapnel reports yesterday that the property market in Brisbane is actually going to improve over the next 3 years which is exactly how long he wants to hold the property for, so I refuse to belive that he wont ever get any capital gain on a property less than 4ks from the heart of Brisbane city.
Sounds vendictive but he is being completely irrational, so tit for tat I say.
Thanks for your help!
It's not vendictive at all, you are just getting what you are rightly owed. My cousin bought a house with a girl years ago, this was just as the property boom was taking off around 2002. Their house went up by $100k in a short period of time and then they split up. The girl, for whatever reason, didn't want to force my cousin out so she just signed over her half to him. She pretty much walked away from at least $50,000 of equity.
However, yours situation is a bit different
I think if the valuation comes in say $40k less than what you paid for the apartment, it may be worth holding for a while because you would end up selling and probably get no money back (or possibly even owing some to the bank). However, if you hold, it could be at least 12 to 24 months before prices start to go up again which means you'll have to deal with your ex a little while longer.
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