Buy now or wait?

Colonel Sanders

kmick wrote: »

You are going to be paying interest whether or not you buy now or later. You can never reclaim rent paid.

By all means rent its just not for me. I prefer the security of co-owning my own patch (allbeit the bank owns 1/2 of it).

lets take an example of a person who wants to buy a 500,000 house but feels prices will drop 10% over the course of 2008. Trusting excel to calculate annuity functions (please correct me if I have done this incorrectly) at a rate of 5.4% one would pay 2,767.46 per month over 30 years on a 500,000 loan (a total of 996,285).

Assuming this person is correct and prices fall 10% and instead borrows 450,000 in january 2009 over 29 years (to ensure both mortgages are paid back by 2038). He now pays 2,526.20 per month over 29 years (a total of 879,118).

Therefore by waiting for houses to drop 10% (and assuming the buyer's forecast is correct) they will have saved 117,167 over the course of the mortgage by waiting and renting for a while. Even if 10% is a bit far fetched and prices drop 'only' 5% the same person will save 68,328 over the course of the mortgage.

astrofool

You have to remember that if the asking price is €500,000 most offers will be at least 15-20% below that, i.e. 400-425k

It seems a lot of people aren't dropping the asking price as they know people will go in at least 10% below the reduced price.

Of course, the only way you can guarantee the bottom has been reached, is when prices start moving up.

sarahhurray

Hi, there, just want to butt in and ask - are people really offering that much less or is this hearsay? i know there was one guy featured in the papers but I didn't think he was the norm. I'm wondering as I'm looking at houses priced arond €500k as I like the area but can't afford it so I'm hoping asking prices will drop. Are people having offers 15% - 20% below the asking accepted? I'm looking in a popular Dublin location, not in the commuter misery belt where I could imagine demand has almost dissappeared.

astrofool

If you read the property section yesterday in the Irish Times, (http://www.ireland.com/newspaper/property/2008/0124/index.html) most advice seems to be based on that for a buyer, it is a buyer's market now.

I'd say there's a lot of people sticking with the asking price just so they don't get offers that undercut that level too much, as soon as they drop, everybody will still be discounting the same amount. You'd be crazy to go Sale Agreed within 5% of the asking price, imo, in the current market, just means the EA has had the better of you.

If people don't accept a fair offer in a falling market, then they'll just end up losing out a few months down the road when the market's dropped even further.

Also, EA's will never tell you the price it actually sold at, there will always be another bidder (even if the property has been on the market for 6+ months), and the market will always be about to "turn" .

I was told a place went within 10k of the asking price just days after viewing and they had no offers on it......

sarahhurray

well we're going to sell our one bed apartment it was valued at 260k last june and we were thinking of putting it on at 230k but it sounds we should put it on higher an assume people will offer a good deal less than any asking price. Myself I wouldn't have the nerve to go to a seller and offer 20% below the asking I woul just walk away from that property.

Afuera

sarahhurray wrote: »

well we're going to sell our one bed apartment it was valued at 260k last june and we were thinking of putting it on at 230k but it sounds we should put it on higher an assume people will offer a good deal less than any asking price. Myself I wouldn't have the nerve to go to a seller and offer 20% below the asking I woul just walk away from that property.

What are other people in the same area trying to sell their 1-bed apartments for? Those are the people you need to undercut to attract buyers attention.

sarahhurray

they range up an down, I'll go with what an experienced estate agent suggests, I just think it's simplistic to suggest that no one can expect the get their asking price when it might be very realistically priced for the current market.

astrofool

The current market is that the asking prices are not being met, the only chance of getting above asking are if the property is unique in some way (i.e. no comparable other property on the market) and more than one party is interested.

A one bed apartment is a dime a dozen, you're going to have to have a good price to attract viewings, and be willing to accept lower offers to actually sell, otherwise, someone else will accept the price. A good EA will probably get a bit more for the property by bringing in phantom bidders, but be realistic about it, at the moment, the sooner you sell the better, as the price on apartments is only heading one way (down).

sarahhurray

I'm aware of all those factors. I'm saying if you price your property say 20% below the 2006 valuation you maybe can expect to reach your asking price.

astrofool

Only if a whole bunch of other properties haven't gone lower, also, your property is second hand, so no stamp duty examption for a non first time buyer, and a lot of developments have been taking €100,000 off the asking price in the last few months, which would be more than 20%. I'm sure you'll find out either way soon

However, you'll be buying into the same market, so the falls are all relative, just don't be afraid to low-ball the bids you make, and when viewing, narrow your selection by your maximum + 20%.

sarahhurray

yep, should know in the next few months - I'll keep you posted.

PullMyFinger!

The poll is closed but I would sit it out for a year. All the factors point to further drops in the market. I think it wont really stabalise till 2012.

theo3004

myself and my girlfriend are thinking about buying at the moment, we viewed a place in balbriggan, advertised for 270k, 3 year old, wooden floors, carpets, back garden with patio, 2 bed with seperate kitchen. to be honest exactly wat we are looking for. this is our first time trying to buy. we offered 255k just to get the ball rolling. refused (surprise surprise). the estate agent said he will only start looking at offers of 270k and no lower. dont get me wrong it is priced to sell, but i dont want to jump in and offer 270k straight away. i have never done this before so any help would be greatfully appreciated

astrofool

If they reject a low bid, the next thing to ask is what kind of offer would the vendor accept. Now if he's come back and said 270k and no lower, then I'd just emphasise the point that it's a buyer's market and he'll have to accept lower in a few months time, at which point you might have moved on. At most you could "sweeten" it, by raising your offer to 257k, and saying that's as much as we can afford. The EA can then say he tried his best to get something out of you, and it'll be enough for the vendor to buy a new plasma screen TV.

Is there other interested parties? How long has it been on the market? Any price drops so far?

You may even have gone a little high with your first offer, you'll always be expected to haggle, if not meet the vendor half way.

gurramok

Had a quick look at 2bed houses in Balbriggan on Daft. 35 available in all price ranges mostly from 270-290k, plenty of choice to shop around
http://www.daft.ie/searchsale.daft?s%5Bcc_id%5D=ct1&s%5Ba_id%5D%5B%5D=2827&s%5Baddress%5D=&s%5Btxt%5D=&s%5Bmnb%5D=2&s%5Bmxb%5D=2&s%5Bmnp%5D=&s%5Bmxp%5D=300000&s%5Bpt_id%5D=1&s%5Bhouse_type%5D=&s%5Bmna%5D=&s%5Bmxa%5D=&s%5Bdays_old%5D=&s%5Bnew%5D=&s%5Bagreed%5D=&search=Search+%BB&more=&tab=2&s%5Bsearch_type%5D=sale&s%5Btransport%5D=&s%5Badvanced%5D=true&s%5Bprice_per_room%5D=

Haggle, its a buyers market. Don't be afraid to walk away to the next house on the list if you feel it costs too much.

harlem

theo3004 wrote: »

myself and my girlfriend are thinking about buying at the moment, we viewed a place in balbriggan, advertised for 270k, 3 year old, wooden floors, carpets, back garden with patio, 2 bed with seperate kitchen. to be honest exactly wat we are looking for. this is our first time trying to buy. we offered 255k just to get the ball rolling. refused (surprise surprise). the estate agent said he will only start looking at offers of 270k and no lower. dont get me wrong it is priced to sell, but i dont want to jump in and offer 270k straight away. i have never done this before so any help would be greatfully appreciated

I'd definitely haggle, don't go in and offer anywhere near the full asking.
A relative of mine recently sold a property in Balbriggan - 3 bed semi d, nice area, decent house - he had to drop nearly 30k on the asking price to get a sale, that was after having it on the market 6+ months.
The original asking price he had on it had been reasonable & relative to other properties in the same area, he also used 3 EA's.

I recently bought a property in Kilkenny and was able to knock 15k off the original asking price - its finally a buyers market out there!

Best of luck with the house hunting

theo3004

we were the first ones to view and that was last tues, there has been other viewings but no offers. the ea just called my girlfriend there asking her if she wanted to put another offer in which tells me there is not much interest in it

Sleepy

theo3004 - if I were you I'd make a lower offer than your initial one.