How much can you realistically Squeeze out of a Seller

monkeytronics

Well I put in 239,000 - they came back with 245k yesterday. Didnt ring

Phone call from them today wondering had I considered the offer

Said I was bidding on another property when they came back to me and I wanted to see what the situation was with that before I made a decision. But I said I was open minded to increase my original offer but I wouldn't go to 245K. The EA said

well the vendor phoned me back after and were not even happy to go as low as 245k (apparently the wife made the decision without consulting the husband and he wasn't impressed), therfore there is no flexibility on the 245K.

So I said, cool thats their decision, I'll let u know what happens with other house but I wouldn't be going to 245K. Thanks,

Calina

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.

But you cannot say that for sure. In fact, because of the way that the Irish market played out, I suspect that a Japanese style long term deflation is not beyond the realms of possibility.

In most cases, you're economically better off in the short to medium term renting if renting costs less than the interest portion of your mortgage repayment and saving the difference, particularly in a falling market. If you're not buying a future-ish proofed house (ie, a property with at least three bedrooms in it) then current purchase prices say there is no good economic reason to buy, even now.

I rent. I resent it on occasion but having seen the asking prices for starter homes in the estate where I live in go from 350K to 285K. I also know that for the past four years, the rent on a 3 bedroomed house close to where I work has been less than the interest on a 30 year mortgage for a 2 bedroomed apartment in the same area.

In that respect, you would have to have very, very good practical reasons for wanting to buy because the economic case has been utterly against purchase and in favour of renting.

johnnyskeleton

monkeytronics wrote: »

So I said, cool thats their decision, I'll let u know what happens with other house but I wouldn't be going to 245K. Thanks,

Good for you. I don't know whether they will come back to you in a few weeks/months or not, but you set your maximum and stuck to it.

The vendors will be trying to squeeze every penny out of you too, and I wouldn't be surprized if everything that was said to you was a complete bluff.

If they do come back to you, then you will have the upper hand.

Senna

monkeytronics wrote: »

Well I put in 239,000 - they came back with 245k yesterday. Didnt ring

Phone call from them today wondering had I considered the offer

Said I was bidding on another property when they came back to me and I wanted to see what the situation was with that before I made a decision. But I said I was open minded to increase my original offer but I wouldn't go to 245K. The EA said

well the vendor phoned me back after and were not even happy to go as low as 245k (apparently the wife made the decision without consulting the husband and he wasn't impressed), therfore there is no flexibility on the 245K.

So I said, cool thats their decision, I'll let u know what happens with other house but I wouldn't be going to 245K. Thanks,

I'd say you played that well and the whole 'wife made decision' is just a bluff to make you think that thats as low as they will go.

I'd say they will be phoning you soon enough. (i'll eat my hat if they dont )

Duckjob

Senna wrote: »

I'd say you played that well and the whole 'wife made decision' is just a bluff to make you think that thats as low as they will go.

I'd say they will be phoning you soon enough. (i'll eat my hat if they dont )

I agree - I'd be sure its a bluff too. Some EAs are real "Seanchaís", and I wouldn't be surprised if they had a repository of 'yarns' like this to trick the buyer into offering higher.

tHE vAGGABOND

To be fair I know several blokes who are married to ladies who would take the bull by the horns and do something like that on the spur of the moment. It could be a real wife just trying to get her house sold...

Anyway, monkeytronics, well played - stay cool

Gurgle

monkeytronics wrote: »

Well I put in 239,000 - they came back with 245k yesterday....
So I said, cool thats their decision, I'll let u know what happens with other house but I wouldn't be going to 245K. Thanks,

Hold tight there, your offer was only 4.4% below asking price.

Unless by some miracle another buyer shows up now offering asking price, its yours.

I think you went in too high, but its only a few €k in the difference.

pencil

Been following this with interest..... in the current market they got a GREAT offer (I think you went too high)... hang tight & go to 239.5k & give the EA the sob story about being a FTB... banks and all that, increases of 500euro will show them your at your max (worked for me 2 years ago)

monkeytronics

thanks for all the advice and encouragement.

i will let you know if/when i have any updates..

Not too sure what to expect to be honest... really like the house though!!!

DJDC

Something that is often overlooked in the Rent v Buying arguement is the loss of mobility induced in buying a house. While this may not have been a problem at the height of the boom, when the house could be quickly sold at a higher price, now the mobility issue is a serious factor to consider.Personally I wouldn't recommend people buying until they are 30 because:

First of all its a bad career move. Most top jobs now require significant international travel and to be successful, it is advantageous to spend your early years abroad. For finance this means NYC and London but the analogy can be used across every industry sector e.g IT,engineering,fashion etc.You can always come back to Dublin later when you have the expertise and networks to get over the fact you are living in a regional hub.A lot of successful people in Ireland (outside the construction/property sector) have spent periods living and working in the UK, Europe or the US.

Secondly, you only live once. See the world for god sake. Renting gives you the mobility to take a 6 months/1/2 year career break without being crippled by mortgage repayments. See the Taj Mahal, swim the great barrier reef, walk through the foothills of the Himalayas, party in Phi Phi.

It's your life, don't ruin it.

johnnyskeleton

Minder wrote: »

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?

To give two examples from Spencer Dock in the IFSC (i.e. a property which will have strong interest from potential purchasors and potential tenants):

Rent €1600 per month

Purchase €475,000

To purchase it, there are the following options:

100% Mortgage (475,000) over 40 years €2337.82 (NIB offset)

90% Mortgage (427,500) over 35 years €2116.82 (PTSB variable)

75% Mortgage (356,250) over 35 years €1,738 (at AIB tracker rate 4.84%)

If you wanted to get it over 20 years, you could only borrow €239,500 to come in at €1600 (NIB)

Add to that the regular payments of annual service charges, water & waste charges, repairs, replacing soft furnishings etc, and the once off payments of legal fees, bank fees, surveyor's fees, stamp duty and furnishings, all of which increase the cost of owing, as opposed to renting, a property.

If you were to buy that property at what I would consider to be the normal terms (92% 20 years variable or tracker rate) it would have a monthly installment of about 2800. If you factor into this the deposit and all the other fees and charges as outlined above, it seems to cost roughly double to buy than to rent. [edit: as per smccarrick]

What has happend in Ireland in the late 1990s was that credit suddenly became very cheap due to the ECB, and rents became very high (due to sudden influx of immigrants) and people realised (correctly at the time) that they could buy for the same cost as renting. However, without checking their figures since then, they have assumed this will always be the case, and now are in serious trouble.

To be honest with you, if I had the 3k per month and deposit etc needed to buy the above apartment, I wouldn't. I would rent the other apartment for €1600 and save the other €1400 per month so that in 3 years time I would still have my deposit, a whopping 50k from saving the 1400 per month, interest on this (probably another couple of grand, maybe as much as 4-5k). Meanwhile, if property prices drop (most likely) during that period, if they stay the same (unlikely) or if they increase (so highly improbable it makes my head spin), I will be able to buy the same apartment on much better terms and at a lower ltv.

But the greatest advantage of renting over buying is that if in 3 years time the apartments have gone downhill (they are no longer so shiny and new, there are a lot of local authority flats) or if your circumstances have changed and you now want to buy a family home, you can (and keep your ftb status).

So renting is a better option than buying at the moment, especially if you are a cash strapped first time buyer and the only homes within your budget are "starter homes" i.e. small flats in the city or small houses out in the commuter belt.

The_Conductor

monkeytronics wrote: »

Not too sure what to expect to be honest... really like the house though!!!

To be 100% honest- you cannot afford to get emotionally attached to particular houses when you are house hunting- as an estate agent or a seller will smell it like a shark smells blood in the water and know that you can be manipulated in the worst possible way.

As a rule when I am house hunting (I'm actively looking for a house with my wife at the moment, but my brother and sister are also looking too), I make a point of not viewing just one house with any estate agent in particular, and once I find a house that we like- we make sure that we view several similar ones, and make sure that the estate agent is fully aware that we are also viewing similar properties with his/her competitors (occasionally we view the same property with more than one estate agent too- to check that the information we are being fed is consistent).

Even if you really like a property- you cannot afford to allow it to become known that you are emotionally attached to it- it will not work in your favour.

The_Conductor

johnnyskeleton wrote: »

If you were to buy that property at what I would consider to be the normal terms (92% 20 years variable or tracker rate) it would have a monthly installment of about 2800. If you factor into this the deposit and all the other fees and charges as outlined above, it seems to cost roughly double to rent than to buy.

+ 1 to everything you said there Johnny- with the minor exception that I assume you meant to say "it seems to cost roughtly double to buy than to rent"......

There are going to be an awful lot of very unhappy people out there in their starter homes, when they figure that their starter home may in actual fact end up being a lot more long term than they imagined.......

adam.number2

johnnyskeleton wrote: »

To give two examples from Spencer Dock in the IFSC (i.e. a property which will have strong interest from potential purchasors and potential tenants):

Rent €1600 per month

Purchase €475,000

But the link you gave, lists "Fully Let @ €2000 per month at the moment" as a feature.

The_Conductor

adam.number2 wrote: »

But the link you gave, lists "Fully Let @ €2000 per month at the moment" as a feature.

Thats on the guaranteed rental feature- which you can be certain is built into the original sale price.......

If you do a quick check on daft (here for example)- there are 38 properties currently vacant in the Spencers Dock area- ranging from 1,400 to 2,000 per month (with a mean asking price of 1,620)

S.

johnnyskeleton

adam.number2 wrote: »

But the link you gave, lists "Fully Let @ €2000 per month at the moment" as a feature.

1) As smccarrick states, that rental price is most likely artificial.

2) I picked those two as examples because there are a lot of apartments in the IFSC for sale or rent at the moment and they are not complete turkeys like many of the properties in the commuter belt are. If you do the same calculations for another two properties of the same or similar type you will get a similar conclusion.

3) Even at €2,000 you would be need to buy at around 85% LTV for 35 years and pay all the additional costs.

utick

I think you may have made a bit of a mistake saying that you would be willing to pay more than 239k, (you wouldnt go into a car dealership and offer less than the sticker price but say you would be willing to pay more because they will automatically ask for more) if they already took 30k off im sure the thought of taking 40k off crossed there minds too.

Tom123

It just my opinion but I think 239k on a property with a 250k asking price is far too high.

lomb

a mortgage helps the average person who is incapable of saving to save. the difference bwtween renting and owning is the interest+the principle. rent is a use cost and as such whether you own it or use it you pay either interest or rent.
the bottom line is in a falling market one would only sensibly buy either when prices bottom out or if one gets it at a furthur 10-15% discount to current market.
in the long term property will increase with inflation which is running at a compound 3-4% per annum. therfore within 15years it will have doubled. but only after they have been marked to true market value. money as in cash depreciates at 4% per annum and even i n a high interest account at 4% is wacked with 20% tax leaving 3.2% which is still losing money relative to inflation. and lets face it hw many people are savvy enough to get 4% consistantly without any effort?

beeno67

johnnyskeleton wrote: »

To give two examples from Spencer Dock in the IFSC (i.e. a property which will have strong interest from potential purchasors and potential tenants):

Rent €1600 per month

Purchase €475,000

To purchase it, there are the following options:

100% Mortgage (475,000) over 40 years €2337.82 (NIB offset)

90% Mortgage (427,500) over 35 years €2116.82 (PTSB variable)

75% Mortgage (356,250) over 35 years €1,738 (at AIB tracker rate 4.84%)

If you wanted to get it over 20 years, you could only borrow €239,500 to come in at €1600 (NIB)

Add to that the regular payments of annual service charges, water & waste charges, repairs, replacing soft furnishings etc, and the once off payments of legal fees, bank fees, surveyor's fees, stamp duty and furnishings, all of which increase the cost of owing, as opposed to renting, a property.

If you were to buy that property at what I would consider to be the normal terms (92% 20 years variable or tracker rate) it would have a monthly installment of about 2800. If you factor into this the deposit and all the other fees and charges as outlined above, it seems to cost roughly double to buy than to rent. [edit: as per smccarrick]

What has happend in Ireland in the late 1990s was that credit suddenly became very cheap due to the ECB, and rents became very high (due to sudden influx of immigrants) and people realised (correctly at the time) that they could buy for the same cost as renting. However, without checking their figures since then, they have assumed this will always be the case, and now are in serious trouble.

To be honest with you, if I had the 3k per month and deposit etc needed to buy the above apartment, I wouldn't. I would rent the other apartment for €1600 and save the other €1400 per month so that in 3 years time I would still have my deposit, a whopping 50k from saving the 1400 per month, interest on this (probably another couple of grand, maybe as much as 4-5k). Meanwhile, if property prices drop (most likely) during that period, if they stay the same (unlikely) or if they increase (so highly improbable it makes my head spin), I will be able to buy the same apartment on much better terms and at a lower ltv.

But the greatest advantage of renting over buying is that if in 3 years time the apartments have gone downhill (they are no longer so shiny and new, there are a lot of local authority flats) or if your circumstances have changed and you now want to buy a family home, you can (and keep your ftb status).

So renting is a better option than buying at the moment, especially if you are a cash strapped first time buyer and the only homes within your budget are "starter homes" i.e. small flats in the city or small houses out in the commuter belt.

While I agree with your sentiment, that renting can often be superior to buying, your figures are misleading as you include mortgage repayments rather than interest payments. So the €475,000 at 4.8% interst rate gives a repayment of €1900 per month. Add to that costs such as insurance, management charges etc and you are probably at €2300 or so. Still better to rent at 2000 but the difference is not as dramatic as you make out

Calina

Your figures are over what period, beeno67?

beeno67

Calina wrote: »

Your figures are over what period, beeno67?

Any period you want. I am talking about the interest rate. The example given by jonnyskeleton quoted a rate of 4.8%. So 4.8% of 475,000 equals €1900 per month. It mkes no sense to include anything except the interest as the rest of money in a mortgage repayment is used to pay off the principle.

lomb

beeno67 wrote: »

While I agree with your sentiment, that renting can often be superior to buying, your figures are misleading as you include mortgage repayments rather than interest payments. So the €475,000 at 4.8% interst rate gives a repayment of €1900 per month. Add to that costs such as insurance, management charges etc and you are probably at €2300 or so. Still better to rent at 2000 but the difference is not as dramatic as you make out

precisely. however that apartment isnt worth more than 400k market value, and i wouldnt give even 325 for it considering the yield and risk. imho it is worth 300 although the market will value it higher.
in a falling or static market investment type property should be no dearer than in that the rent should be equal at least to the interest only payment with a suitable margin for interest rate increases.
in the UK values of some 'luxury'apartments in leeds, liverpool and manchester and even ipswich in the south have halved from their sale prices in 2005/2006

http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=540108&in_page_id=1770

beeno67

lomb wrote: »

precisely. however that apartment isnt worth more than 400k market value, and i wouldnt give even 325 for it considering the yield and risk. imho it is worth 300.

300k represents a yield of 8% based on 2000 per month rent. That is some return.

lomb

yes but is 2000 euro for rent market value. i think realistically rent will be sustainable long term at 1500 euro pm. remember there is oversupply of property and rents will fall imho and then level out.
take into account service charge and maintaince/void periods as = 2000-2500 pa then 300k doesnt seem to far away from having a realistic yield. like i said the market would value it higher probably circa 400 , i personally would be happy to buy at 300 as i have no use for it other than to rent it and factoring in the above that is all it would be worth to me. also afaik investors dont get as good an interest rate as owners.

johnnyskeleton

beeno67 wrote: »

While I agree with your sentiment, that renting can often be superior to buying, your figures are misleading as you include mortgage repayments rather than interest payments. So the €475,000 at 4.8% interst rate gives a repayment of €1900 per month. Add to that costs such as insurance, management charges etc and you are probably at €2300 or so. Still better to rent at 2000 but the difference is not as dramatic as you make out

Where would you get a 4.8% rate on a 100% mortgage? At 5.35% it would be €2117 pm but I take your point. The reason I used interest and principle repayment figures was because that is what the mortgage calculators offer, and it's also what you're likely to get for a residential purchase, so I was trying to make the point that you could either (a) pay 2x as much to buy than to rent for a few years, and at the end of it still end up in negative equity or (b) pay 1/2 as much to rent as to buy, then buy cheaper. The difference is more dramatic when you add the interest you could be earning on the difference which you put into a savings account during this time.

I also neglected to mention that it is highly likely that rents as well as house prices are coming down, so if you rent for a few years and then buy you save money coming and going.

But just as a simple model, I think it is correct in that someone who rents instead of buying now will (a) pay less per month (b) gain on interest on savings and on not paying the utilities that homeoners pay (c) be able to purchase on better terms with a large deposit saved rather than a smaller one and (d) will benefit from price drops (or even from price stability) over the next few years.

ambro25

beeno67 wrote: »

300k represents a yield of 8% based on 2000 per month rent. That is some return.

Historically, that's a "normal" return on the Continent, and the kind of return (7 to 13% net) I used to get for years in France, until revenue taxation changed overnight specifically for emigrated taxpayers in early 00s.

Most investors I knew and still know in FR, LUX and DE won't get out of bed unless they can get that kind of figure for sure.

Which is why I could never understand people B-T-L here when I came over in 2004, as the ratios were already so shockingly poor!

Gurgle

ambro25 wrote: »

Which is why I could never understand people B-T-L here when I came over in 2004, as the ratios were already so shockingly poor!

In 2004 it was people clinging to the back of the bandwagon.
The people up the front were (and still are) making a killing.

SkepticOne

ambro25 wrote: »

Which is why I could never understand people B-T-L here when I came over in 2004, as the ratios were already so shockingly poor!

That is easy. Capital appreciation. What matter that yields were low when your property was going up by 10 to 15% a year.

Calina

Only worked if you sold it before a) everyone else tried to and b) it started sliding at 10-15% a year.