How much can you realistically Squeeze out of a Seller

monkeytronics

Hey,

Was looking at a house last Friday down in Wexford. I am a first time buyer with a government job buying on my own. I have mortgage approval and a deposit - combined adds to 240,000

Anywho, house I am looking at (which I just love) was at 270,000 until last wednesday- dropped 20k to 250,000. Its been defo on market since mid jan (irish propertywatch) but I think may have been on the market last June and was taken off and added again.

Anyway 250,000 is 10,000 grand beyond my budget (but I could get it by calling in some favours etc..) However, my folks are telling me to go in at 239,000 and try haggle a price for a max of 244,000. I am a bit sceptical of this considering they recently dropped by 20,000. However the EA has said that the owners are buidling their own place but banks wont give them more money to finish the house until they sell this one.

Any advice appreciated....

Minder

Depends on how desperate they are to sell. Is the estate agent a sole agent for the property? Speak to the agent about making an offer at 235k. If they are properly advised by the seller, it will either be rejected - and the agent will know the minimum, or it will be submitted to the seller. 235k to come up to 240k. They can only say no....but be aware of similar property prices for similar houses in the area - 250k might be a bargain and you stand to lose it if you are off the mark.

That might sound like two sides of the same coin - but it simple really. Check the last price for a similar house, make your offer based on that information. Good luck.

Gurgle

monkeytronics wrote: »

at 270,000 until last wednesday- dropped 20k to 250,000...
my folks are telling me to go in at 239,000 and try haggle a price for a max of 244,000.

If they dropped the price by that much, they've had no interest at all in the house.

Offer €230k, wait a couple of weeks then make a 'final' offer of €235k. If they need to sell, they'll open up negotiations.

They're screwed, take full advantage.

The_Conductor

Gurgle wrote:

If they dropped the price by that much, they've had no interest at all in the house.

Offer €230k, wait a couple of weeks then make a 'final' offer of €235k. If they need to sell, they'll open up negotiations.

They're screwed, take full advantage.

I'd suggest going in even lower- say 215-220, make a lot of the fact that you're a cash purchaser ready to go, and put the ball back in their court. You can't overestimate how much stronger your position has gotten in the past few months. You are in a very strong bargaining position. Its entirely plausible that they may take your offer of 215-220......

adam.number2

smccarrick wrote: »

I'd suggest going in even lower- say 215-220, make a lot of the fact that you're a cash purchaser ready to go, and put the ball back in their court. You can't overestimate how much stronger your position has gotten in the past few months. You are in a very strong bargaining position. Its entirely plausible that they may take your offer of 215-220......

Shane dude, how long have you being giving that dodgey advice... and how many people have we heard come back saying, gosh that was a great idea I got a two for one offer! Indeed weren't you saying you were going around offering 20% less than asking price a couple of months back? How did it fare?

Realistically for those kinds of reductions, if they come (and thats a big if), you will be waiting a couple of years. People don't panic sell, or give things away or for radically, unless, they are really really desperate. OP, if you aren't in a hurry then you could sit back and wait, but be prepared for a couple of years wait. These things take a long time to play out. Those who tell you otherwise are just dreaming of little houses, I wont tell you where!

If you are eager to secure a purchase, then offer 235 and don't be too disappointed if you have to sit on your hands for a little while.

Supercell

Adam, "dude"..,

So in a nutshell you advise to bid high and dont be surprised if they try and squeeze more money out of you?

Heres a little thing you might have forgotten...its 2008 ...the suckers from spring 2006 are long gone.

OP hang tight, it will cost less next month and the month after and the month after...for at least another 24 months imho.
Every month you delay is saving you double money (mortgage paid in the first few years is almost entirely interest only)..just like "investors" used to sit on their houses not even renting them out because they went up so fast the lost of rental income wasnt worth the hassle.

Well the reverse is true now..you can afford to rent as your rent is less than the loss on the "investment" is per year!

Bargain hard, your rent is money "invested" in todays housing market.

adam.number2

Supercell, babe,

If you read back, you'll see that I say, if they can hang on a couple of years, it is possible they could get it for less... but don't delude yourself into thinking that someone is going to drop their price that amount in such a short a period of time. Be realistic... oh and read the post.

johnnyskeleton

Negotiation skills:

1) "Know the price of a horse" - a good trader in any commodity will know what the real market value of their stock in trade is. What is the house worth to you, what is it worth to the seller, at what price would someone come in and offer something higher, at what price could you get a similar property from another vendor. Unfortunately this is why no-one here can tell you what sort of offer to put in - 240k might be too much for this property, or it could be a steal. You have not given any details of the property other than it used to be 270k. How do we know that that wasn't ridiculously inflated, even in the boom times.

2) Know your hand - 240k is your maximum. Don't think of it as some sort of poker chips that you can keep raising until you reach your limit and then borrow off your friend because you have a really good hand this time. If you are unwilling to buy for your maximum then avoid it at all costs, and reduce the maximum by a percentage. For example, you might want to take 10% of your savings/potential borrowings so that if interest rates rise or your income decreases (e.g. less overtime), you will have a buffer zone and are not mortgaged up to the hilt with all your savings put in to boot.

3) Be professional and reasonable - negotiators only do the "I offer 30" "No 50", "35" "45", "37.5" "42.5 final offer", "40, and throw in the kitchen sink" "done", type haggling in the movies. State what you are prepared to pay. If they come back saying we want x and you then increase your offer, they will take you to the cleaners. Don't bother with the "239,000 and try to haggle a price to a max of 244,000" because if you do you will end up paying 244k. If 240k seems like a reasonable offer to you then offer it and stick to it. If you go 239 you might gain 1k, but you will more likely lose another 4k. Remember that if you put an offer in on monday, by thursday you will be dying to know if it is accepted, and might panic and increase the offer. To a vendor, they can wait months while hoping to get a better offer.

4) Don't get emotionally involved, or at least don't get emotionally involved with irrelevant things like the curtains and fridge. A house is a house, and it is extremely unlikely that everyone in Ireland has bought their "perfect house", so if you are not getting what you want, move on.

5) All negotiations are final - don't agree a price now that in 6 months you will regret. The price you pay will stay with you for the duration of the mortgage, so don't pay too much to close quickly if a few months' waiting will get the property for a better price. This is the exact opposite of the logic that prevailed over the last 15 years i.e. "just buy now because next month you will be paying more".

adam.number2

Actually, that is all fairly sound advice. And you are right none of us about what the right price to offer is as we know very little about the house. However we do know that they wanted 270 and have already dropped to 250. Its crazy to blindly advise to accept them dropping another 35! offer '20%' less than asking... it's just not realistic.

the_syco

adam.number2 wrote: »

People don't panic sell, or give things away or for radically, unless, they are really really desperate.

monkeytronics wrote: »

However the EA has said that the owners are buidling their own place but banks wont give them more money to finish the house until they sell this one.

I'd call that desperate.

OP: If you want the house, offer the €240,000 but not a cent more.

The_Conductor

adam.number2 wrote: »

Shane dude, how long have you being giving that dodgey advice... and how many people have we heard come back saying, gosh that was a great idea I got a two for one offer! Indeed weren't you saying you were going around offering 20% less than asking price a couple of months back? How did it fare?

I found several properties, all of which are very interesting to me. I offered a range of different prices for them- including up to 30% off the current asking price on one of them (but a lot closer to asking prices on others). One of the properties has been vacant for just under 10 months, the others 4 months and 2 * 3 months respectively. All sellers have advised me that they are actively considering my offer. While I am selling my own property, I am not reliant on it to finance the deal- which the highest priced seller has admitted is worth a couple of percent to him, as he has already gotten burnt waiting for two people to sell (thats the 10 month one).

The way I am approaching this is not getting fixated on a single house, keeping my options open, and making the sellers and their agents aware that 1) I have the finances in order to bid on their property and 2) While I like their property and would be happy to buy it, I am not emotionally attached to it and am actively looking at other property (I am making a point of ensuring that each estate agent I am going through is showing me at least 2 properties that I may be interested in). One house I would like to buy was originally 700k, its now been reduced to 640. I have advised that I am interested but not to contact me again until its been reduced below 550. The original estate agent has since advised a further reduction in asking price is imminent and that he will keep me posted.

Re: my own house- there are 2 for sale here with "offers in excess of 410" on them. I am factoring in that I may have to go as low as 350, which I'm happy enough to do. It was valued by 2 local agents at 500k in August 2006. Mine is in a much better condition than either of the other 2 in here, and far better situated. I will nonetheless price at 20k below their prices, and be prepared to sit down and negotiate with any serious bidders- unlike the other 2.

adam.number2 wrote: »

Realistically for those kinds of reductions, if they come (and thats a big if), you will be waiting a couple of years. People don't panic sell, or give things away or for radically, unless, they are really really desperate. OP, if you aren't in a hurry then you could sit back and wait, but be prepared for a couple of years wait. These things take a long time to play out. Those who tell you otherwise are just dreaming of little houses, I wont tell you where!

There are panic sales everywhere. One of the estate agent is offering me a nice new 4 bed on a good site at 20% less than the current guide price (which is itself a 180k reduction on the original price) as the developer needs the funds and knows that I'm in a position to proceed, should I decide to do so. I'm not interested in that property nonetheless (for various reasons which I'm not going into here). Of the properties that I am openly looking at- one has been vacant for 10 months as the seller took a job offer in the UK and moved his family over lock stock and barrel. Its sitting there vacant, falling in value on a daily basis. My offer may be considered low ball, but he knows its a genuine offer that I am in a position to proceed with- unlike some other parties who wasted his time. Hes not happy with the offer- but similar properties in the area have recently come on the market, not a million miles from my offer price. His estate agent is now actively encouraging him to reconsider his guideprice, and while he has reduced it, given the state of the market, he will most probably be inside my target area within 2-3 months. If not- well, there are other lovely possibilities that I'll move onto instead.

adam.number2 wrote: »

If you are eager to secure a purchase, then offer 235 and don't be too disappointed if you have to sit on your hands for a little while.

I stand by what I suggested. Having the finances together and being in a position to proceed, are very strong bargaining tools, particularly in a falling market. It may not be the price that the seller wants- but if he/she has to sit on the property for a few months- market price may very well have fallen further to a point below what you are now offering.

Talk to mortgage brokers or have a word with banks. Conditions are seriously changed. Its a lot more difficult to raise funds. Even those in the most secure government jobs are only able to get 5 times gross combined earnings, exclusive of any overtime, or earnings from elsewhere (including rent-a-room etc). 3 years ago- the multiple was in the region of 8-9 times, and they were willing to make incredible allowances for renting out rooms, or overtime, regardless of whether you really wanted to do that or not.......

Adam- it really is a new reality. If you accept the changes and work with them- you will both buy and sell. What you have to accept is that if someone has money at the table, regardless of how much money that is, it does make sense to seriously sit down and evaluate their offer, regardless of how lowball it might be. I'm quite happy to sit down and look at offers considerably below current guideprices in the complex- if the figures add up and the cash is available immediately. If they don't- and the buyer doesn't appear to be in a position to proceed in a prompt fashion- I'll move on. I expect nothing less from any sellers that I approach.

monkeytronics

Thanks for the various advice...

If its helpful the house is a 3 Bed Semi located bout 5 mins from Enniscorthy.

Its in a 7 year old development of 30 houses. The last house to sell in the estate was actually the one next door - 275K in Dec 2006. I think the seller of the house I am looking at was expecting a similar sale price.

The EA is a local (not affiliated to any of the larger companies) - only in operation for 2 years - Hoping his company is strapped for cashflow and will push any offer I make to the seller to get his fee ASAP.

The_Conductor

December 06 was pretty much the peak of the market- it has dropped considerably since. The fact that the last house sold at this price, means precisely nothing. I stand over what I said previously- 215-220 is a reasonable offer in the current market (particularly given the location- as you are no doubt aware there are quite a few unsold developments in the greater Wexford area).

S.

Minder

OP - I wouldn't try to second guess the market. If the house is a beauty and you really want it and you could be happy there for ten years or more, then don't wait for the market direction to resolve itself. Buy the place now by starting low and bidding up. Otherwise you run the risk of losing it.

Short term negative equity risk is immaterial if the housing market continues to grow over the next decade.

jackal

I am always surprised to see the thought "The seller has already dropped 20%, so I cannot ask for more off" in these threads.

What the seller has done with the price is irrelevant to a purchaser. The asking price is x, who gives a **** if it was x + 20% last week. It was obviously overpriced. Just because something has been discounted, it does not make it a bargain.

Thats not to say that the seller/agent wont come back and say "we have already dropped the price" and wont budge. Sure that may happen, and probably will happen in some cases. If as pointed out above the price you are offering is close to what you consider the worth of the property is, then feel free to make the offer and walk away if the seller has unrealistic expectations about the price.

jackal

Minder wrote: »

OP - I wouldn't try to second guess the market. If the house is a beauty and you really want it and you could be happy there for ten years or more, then don't wait for the market direction to resolve itself. Buy the place now by starting low and bidding up. Otherwise you run the risk of losing it.

Short term negative equity risk is immaterial if the housing market continues to grow over the next decade.

You mean if the house market begins to grow over the next decade dont you... because it has been falling since Autumn 2006, and there is nothing on the horizon to suggest thats gonna change soon. Apart from desperate hope.

Advice so terrible it reeks of trolling.

sadie9

Also if you are banking on being moved into the house by a certain time, forget about that. You may end up having to rent for a while anyway (didn't you post a while back about starting a new job down there?). The current owners if they are building their own house may well stall for a few weeks on the contract exchanges so they don't have to rent themselves for so long. Even if you get an offer accepted next week, it could be Sept before you are moved in. What I'm really saying is don't be so hasty to buy somewhere - listen to the advice, rent and take your time buying when you get to know the different areas of the town. You'll be living there for a long time so don't rush into anything and pay over the odds.

rockbeer

OP, it's often the case that sellers have unrealistic expectations of how quickly their property will sell, rather than (or as well as) an unrealistic valuation. In most of Europe it's not uncommon for properties to be on the market for a year before they sell. This doesn't mean they're necessarily overvalued, just that mature markets tend to move slowly.

People have got so used to the ridiculous speed of the market here over the last decade that they expect to put a sign outside one day and find a buyer the next. When it doesn't happen they start to panic and drop the price, even though the price might be fine. Whether your buyer will drop the price again may depend on how much they're panicking and what sort of advice they're getting from their agent. If they're patient people who are fairly confident of getting close to the asking if they wait, then they might not budge again. This is what you'll have to judge if you're hunting for a bargain.

Some posters on this thread seem to advocate trying to exploit the extreme panic that's going along with the mad collapse in confidence we're currently witnessing. Whether you want to follow suit, or whether you'd rather make a sensible and informed decision about whether to pay a reasonable price that works for both you and the seller for a house you like, is your call.

jackal

rockbeer wrote: »

OP, it's often the case that sellers have unrealistic expectations of how quickly their property will sell, rather than (or as well as) an unrealistic valuation. In most of Europe it's not uncommon for properties to be on the market for a year before they sell. This doesn't mean they're necessarily overvalued, just that mature markets tend to move slowly.

People have got so used to the ridiculous speed of the market here over the last decade that they expect to put a sign outside one day and find a buyer the next. When it doesn't happen they start to panic and drop the price, even though the price might be fine. Whether your buyer will drop the price again may depend on how much they're panicking and what sort of advice they're getting from their agent. If they're patient people who are fairly confident of getting close to the asking if they wait, then they might not budge again. This is what you'll have to judge if you're hunting for a bargain.

Some posters on this thread seem to advocate trying to exploit the extreme panic that's going along with the mad collapse in confidence we're currently witnessing. Whether you want to follow suit, or whether you'd rather make a sensible and informed decision about whether to pay a reasonable price that works for both you and the seller for a house you like, is your call.

I don't think we have seen anything like extreme panic in Ireland yet. Have a read of some of the stories from America: Detroit, South California, Florida, Phoenix to see what real panic is.

Our market is about as far from mature as its possible to get, values here shot up, overshot affordability by a country mile, and are on the way down. They will probably bottom out below what they are worth (due to actual, real panic) before stabilising and rising in line with inflation.

Whether you want to follow suit, or whether you'd rather make a sensible and informed decision about whether to pay a reasonable price that works for both you and the seller for a house you like, is your call.

Any chance you are bringing out a self help book on negotiation in once off business transactions. You could call it "How to drive a soft bargain and leave your supplier, whom you will never do buisiness with again, happy".

OMG, wont somebody think of the poor beleaguered house seller. I can see it now on Joe Duffy... "Mary (not her real name) thought her 3 Bed semi-d in Blanchardstown would fetch just shy of 1 million euro, she was shocked when the best offer she recieved was just 255,000".

jmayo

rockbeer wrote: »

...
Some posters on this thread seem to advocate trying to exploit the extreme panic that's going along with the mad collapse in confidence we're currently witnessing. Whether you want to follow suit, or whether you'd rather make a sensible and informed decision about whether to pay a reasonable price that works for both you and the seller for a house you like, is your call.

The aim for the buyer is to pay a price that works for them not what is just and equitable for the seller.
What is wrong with exploiting a collapse in confidence in the housing market ?
Sellers may have bought at the peak of the market using a 40 year low interest 100% mortgage, but alternatively they may have paid shag all for their house back in 1985 using a short term high interest mortgage.
That is their problem not the buyers and the buyer owes them nothing.
In this case I believe it is the former.

As an aside, I bet we will start hearing rumblings, similar to those after the Eircom floatation, complaining that people were misled and lured into buying cra* shoeboxes that are worth orders of magnitude less and can't be sold.
People are responsible for their own decisions.

The_Conductor

jmayo wrote: »

I bet we will start hearing rumblings, similar to those after the Eircom floatation, complaining that people were misled and lured into buying cra* shoeboxes that are worth orders of magnitude less and can't be sold. People are responsible for their own decisions.

While that may be the case- I can point at hundreds of pronouncements from politicians, of all persuasions, extolling the virtues of getting on the property ladder. Ditto from 2 politicians in particular about how selling Telecom Eireann would enable the Irish public to take charge of their own futures, by investing in a rock solid utility company that was a guaranteed winner.

Ps- am I the only one who sold my Eircom shares by 1PM on their first day of trading, locking in the gains of the morning? Then again, it wasn't my own money I was gambling with at the time......

Minder

jackal wrote: »

You mean if the house market begins to grow over the next decade dont you... because it has been falling since Autumn 2006, and there is nothing on the horizon to suggest thats gonna change soon. Apart from desperate hope.

Advice so terrible it reeks of trolling.

jackal wrote: »

Our market is about as far from mature as its possible to get, values here shot up, overshot affordability by a country mile, and are on the way down. They will probably bottom out below what they are worth (due to actual, real panic) before stabilising and rising in line with inflation.

House prices will rise in line with inflation? Pinch yourself, you're dreaming.

Not everyone wants to live in rented accommodation all their lives. The OP is asking for advice regarding making an affordable offer for a property that was recently reduced.

In the last decade, house prices have grown considerably, will house prices be much higher in ten years than they are today? Almost certainly. So if the OP can buy an affordable home that they will be happy in for the next ten years - your advice is don't? Wait for the bottom in the housing market and buy then? Live in someone elses property and pay their mortgage?

The_Conductor

Minder wrote: »

House prices will rise in line with inflation? Pinch yourself, you're dreaming.

Not everyone wants to live in rented accommodation all their lives. The OP is asking for advice regarding making an affordable offer for a property that was recently reduced.

In the last decade, house prices have grown considerably, will house prices be much higher in ten years than they are today? Almost certainly. So if the OP can buy an affordable home that they will be happy in for the next ten years - your advice is don't? Wait for the bottom in the housing market and buy then? Live in someone elses property and pay their mortgage?

I'm sorry- but its this attitude which contributed to the property bubble in the first instance. There are very very few instances of property purchased in the last 3-4 years in which its possible to service even an interest-only element of a mortgage. For the most part renting is in fact being subsidised by 1) mortgage interest payments being considered a fully deductable expense before determination of tax for landlords and 2) the hitherto expectation of capital appreciation. In the case of 1) the recent OECD report has advised on structural reforms of tax incentives for landlords and TRS for owners- which will really throw the cat among the pidgeons. In the case of 2) that capital appreciation simply no longer exists.

Its the whole theory of renting is deadmoney- and why pay someone else's mortgage which gave rise to the property boom and subsequent bust, in the first instance.

The OP is not only looking to make an affordable offer, he/she is seeking advice on what would likely constitute an acceptable offer. Without going into the ins and outs of chasing the market up and down, I was suggesting a significant discount to the current guideprice, along with notification of the cash offer, as a manner of minimising the upfront outlay.

Re: happy living there for 10 years- that doesn't mean that its necessarily a good purchase. Mortgage interest payments are very much front loaded- within the first 10 years you will likely pay off less than 15% of the capital on a typical 25 year mortgage. If property prices continue to fall, and subsequently fail to keep pace with inflation- its entirely possible that in 10 years time were you to sell the property and sit down and do your sums, that it may have been cheaper to rent the place, than to buy it (particularly when you factor in other things, such as preferable stamp duty entitlements, which will also have expired).

Sorry- saying renting is dead money and why pay someone else's mortgage are both highly misplaced philosophies in my eyes.

Minder

smccarrick wrote: »

I'm sorry- but its this attitude which contributed to the property bubble in the first instance.

You've lost me. Am I supposed to stay in rented accommodation until the direction of the housing market is resolved? for the greater good?

Similarly, am I supposed to avoid buying a home while the housing market corrects? Does my decision to buy now sustain a housing market that you believe is unsustainable? Again, for the greater good?

Market correction or long term decline? You have suggested a long term decline could happen, under what scenario?

Is there no value in owning you own home? We can run situations all day long where it might be cheaper to rent, but ownership and the security that comes with it must have some value.

jmayo

smccarrick wrote: »

While that may be the case- I can point at hundreds of pronouncements from politicians, of all persuasions, extolling the virtues of getting on the property ladder. Ditto from 2 politicians in particular about how selling Telecom Eireann would enable the Irish public to take charge of their own futures, by investing in a rock solid utility company that was a guaranteed winner.

Ps- am I the only one who sold my Eircom shares by 1PM on their first day of trading, locking in the gains of the morning? Then again, it wasn't my own money I was gambling with at the time......

There is the first problem - believing politicans.
As the Indians say in all the westerns they "speak with forked tongues".
(A big reason to vote NO to Lisbon but that's a different story)

A lot of people got greedy and there is nothing like seeing your friends and neighbours making huge gains, on paper at least, to convince people that they deserve the same.
There developed a herd mentallity where people remortgaged, took out 100% mortgages, interest only mortgages etc to get more property.
Sadly there were also the FTB who just saw prices increasing and fell for the myth that if they somehow did not get on that they would be left behind.
Sadly some FTBs had to buy for family reasons and those are the only ones I would have any pity for in this whole mess.
The investors and spectulators deserve everything they get if they were foolish enough to invest on overpriced cra* based on perceived future capital apreciation with low rental returns that aren't enough to cover your expenditure.

PS I got out of Eircom about 8p short of their top price. I was happy I had made a profit so decided a good time to sell.
Don't get too greedy is also good motto IMHO.

jackal

Minder wrote: »

House prices will rise in line with inflation? Pinch yourself, you're dreaming.

Not everyone wants to live in rented accommodation all their lives. The OP is asking for advice regarding making an affordable offer for a property that was recently reduced.

In the last decade, house prices have grown considerably, will house prices be much higher in ten years than they are today? Almost certainly. So if the OP can buy an affordable home that they will be happy in for the next ten years - your advice is don't? Wait for the bottom in the housing market and buy then? Live in someone elses property and pay their mortgage?

Why am I dreaming? You are basing your opinion on what you have seen here over the last decade I take it? Do you really think that if property does properly crash that when they bottom out we will be back to ladder mania? Do you not think that a huge amount of people, having been stung/bankrupted/trapped in negative equity by property will revert to seeing property as a utility - a roof over your head - or a *long* term investment justified by the yeild and not on quick capital gains?

Properties are not money trees. The property market is not normally like it has been in Ireland in the last decade.

In the last decade, house prices have grown considerably, will house prices be much higher in ten years than they are today? Almost certainly. So if the OP can buy an affordable home that they will be happy in for the next ten years - your advice is don't? Wait for the bottom in the housing market and buy then? Live in someone elses property and pay their mortgage?

They will almost certainly be higher. By how much is impossible for anyone to predict. Look at any post-crash market as a reference and form your own opinion rather that basing it on what happened here.

My advice is indeed dont buy. You are guaranteeing yourself negative equity if you do. Prices are going down. There is nothing to suggest this will change. Based on the facts at hand, buying now is a bad choice, and if it can be avoided then my guess - and thats all it is - is that holding off for another 2-3 years could make a huge difference to the amount of money you owe to the bank for the next 25-35 years.

The only arguments you are offering are "Prices always go up" and "Rent is dead money" which have both been proven to be fallacys many times.

Good luck to the OP with their purchase if they go ahead. Drive as hard a bargain as possible to mitigate your potential losses.

jmayo

Minder wrote: »

You've lost me. Am I supposed to stay in rented accommodation until the direction of the housing market is resolved? for the greater good?

Similarly, am I supposed to avoid buying a home while the housing market corrects? Does my decision to buy now sustain a housing market that you believe is unsustainable? Again, for the greater good?

Market correction or long term decline? You have suggested a long term decline could happen, under what scenario?

Is there no value in owning you own home? We can run situations all day long where it might be cheaper to rent, but ownership and the security that comes with it must have some value.

There is no problem with buying but you could be saddled with somewhere and you are probably going to get the same or similar property much cheaper down the line.
Now if you are happy with that, fine.
But I know I would be more than a little p***ed off to be sitting somewhere seeing the my porperty which I bought for €400,000 is now effectively valued at €300,000 and I have to work my ass off over next 30 plus years to pay off that extra €100,000 plus interest. The guy next door may have same house but only paid €300,000.
That is what will eat away at people.
Also I may be stuck there since the capital appreciation isn't there to allow me sell and move up the ladder.

You have suggested a long term decline could happen, under what scenario?
Well have you watched the news recently, the wheels are falling off the economy.
Unemployment numbers are on the increase and have increased drastically over the last few months.
There are no more huge Stamp Duty and VAT revenues coming from our huge construction industry.
Eventually Income Taxes will have to increase to meet the huge inflated public sector and it's wage bills.
There are shag all manufacturing jobs left in the country and a few more banking service or insurance service jobs in the IFSC are not going to keep our small towns ticking over.
The great mythical service industry.
The EU trade commissioner is about to sellout Irish agriculture at the WTO talks.
Our supposed great IT industry and how we are huge exporter of Software and computers is really a bit of red herring.
The exports are from a few companies (e.g Dell, Microsoft) that are actually US multinationals that are here for tax reasons.
They have been moving to India and Far East steadily over the last few years.
Yeah I can see a decline.

The_Conductor

No- what I am saying is there are plenty of good reasons to rent instead of buying. Renting a property for a fair price, is purchasing a service, and in no manner is dead money or paying off someone elses mortgage. If you really like a property and can afford to buy it- do so, but don't view it as your pension fund in the manner that a lot of Irish people seem to see property as a never ending cash cow. People tend to view others who have not purchased property as "left behind" and view them with scorn and pity. This is ridiculous in the extreme.

There is never a perfect time to buy or sell- it is all relative to each individual purchaser (or seller). You may purchase an identical property a year or two years down the road at a massive reduction to its current price- then again, its entirely possible that this may not come to pass. Do you view the intervening two year period as lost time though? Of course not.

We Irish have a strange fascination with owning property- probably as a result of our history, but its a mindset that is nearly sinking half the population.

What scenarios do I envisage a longterm decline in market conditions happening? Rising unemployment. rapidly deteriorating public finances, loss of control over taxation policy (cue the Lisbon treaty here), severe tightening of credit and lending policies by financial institutions, a return to regular prices expressed as a multiple of earnings (the average being 4.8-5 times the average industrial wage), contraction in upstream industries and the services sector........ need I go on? We may not have all of those conditions (yet) but we are getting scarily close to have optimal conditions for a massive longterm depression.

Minder

jackal wrote: »

Why am I dreaming? You are basing your opinion on what you have seen here over the last decade I take it? Do you really think that if property does properly crash that when they bottom out we will be back to ladder mania?

Absolutely, previous house price crashes have resolved in four years, followed by up to fourteen years of expotential growth until the market can no longer be serviced. That model is playing out right now in the UK. In Ireland, prices have been in decline for two years, it may take another two years to finally bottom out, before beginning another up leg.

smccarrick wrote: »

What scenarios do I envisage a longterm decline in market conditions happening?....We may not have all of those conditions (yet) but we are getting scarily close to have optimal conditions for a massive longterm depression.

In a long term deflationary environment, all bets are off, but I would (perhaps optimistically) prefer to view the current situation as a recession which will take several years to resolve.

The_Conductor

Minder wrote: »

Absolutely, previous house price crashes have resolved in four years, followed by up to fourteen years of expotential growth until the market can no longer be serviced. That model is playing out right now in the UK. In Ireland, prices have been in decline for two years, it may take another two years to finally bottom out, before beginning another up leg.

I think thats optimistic in the extreme.
The only similar situation to our massive bubble, is the property boom in Tokyo in the 1980s. Prices there have now once again reached their levels of 1988 (in absolute terms), 20 years later. As for inflation- it could be argued that prices there did in fact keep pace with inflation- as they had to endure 12 years of deflation, after that little party.......

beeno67

smccarrick wrote: »

No- what I am saying is there are plenty of good reasons to rent instead of buying. Renting a property for a fair price, is purchasing a service, and in no manner is dead money or paying off someone elses mortgage. If you really like a property and can afford to buy it- do so, but don't view it as your pension fund in the manner that a lot of Irish people seem to see property as a never ending cash cow. People tend to view others who have not purchased property as "left behind" and view them with scorn and pity. This is ridiculous in the extreme.

There is never a perfect time to buy or sell- it is all relative to each individual purchaser (or seller). You may purchase an identical property a year or two years down the road at a massive reduction to its current price- then again, its entirely possible that this may not come to pass. Do you view the intervening two year period as lost time though? Of course not.

We Irish have a strange fascination with owning property- probably as a result of our history, but its a mindset that is nearly sinking half the population.

What scenarios do I envisage a longterm decline in market conditions happening? Rising unemployment. rapidly deteriorating public finances, loss of control over taxation policy (cue the Lisbon treaty here), severe tightening of credit and lending policies by financial institutions, a return to regular prices expressed as a multiple of earnings (the average being 4.8-5 times the average industrial wage), contraction in upstream industries and the services sector........ need I go on? We may not have all of those conditions (yet) but we are getting scarily close to have optimal conditions for a massive longterm depression.

Strange days indeed. I find myself agreeing with most of what you say about renting over buying. However why do people refer to house prices and "average industrial wages" We live in a post industrial society. Wouldn't it be more appropiate to refer to say average Civil Service wages or average wages in services industry