Some advice please

loopy83

Hi folks, have my eye on this house and am wondering how much below the asking price i should offer http://www.daft.ie/1447786

AARRRGH

If you don't want to have to deal with negative equity, anything over €120,000 is a no no.

stepbar

Very nice house indeed, but 305k is off the wall.

The way I value a house is based on rental yield. Now I'm guessing that you probably would rent that house for c550eur to 650 eur.

So basically plug in the rent into this formula

((Monthly rent x 12) x 0.9*) x 16**

* = the value used if you discount 10% of rent for expenses associated with the upkeep of a property.
**= a rent yield of 6% if divided by 100.

If I plug in 600eur into the formula the value you get is €103,680, 650eur = €112,320 and so on.

Now what I suggest you do is ask your estate agent how did they arrive at a value of 305k and we'll compare notes when you do.

loopy83

I think i'd be laughed out of the estate agents if i offered a figure like that. Would love to get the house i want for under 200k, but it's looking highly unlikely.
I was think more in the lines of offering 30% below asking price, which is €213500, and going from there. It's gas cause a lot of my friends have bought in the last 5 years and when i say i'm going to put in an offer 30% below the asking price they laugh and say "well i wouldn't accept that, my house is worth way more than that". I've to bite my tongue and not ask them where they've been for the last two years!

stepbar

loopy83 wrote: »

I think i'd be laughed out of the estate agents if i offered a figure like that. Would love to get the house i want for under 200k, but it's looking highly unlikely.
I was think more in the lines of offering 30% below asking price, which is €213500, and going from there. It's gas cause a lot of my friends have bought in the last 5 years and when i say i'm going to put in an offer 30% below the asking price they laugh and say "well i wouldn't accept that, my house is worth way more than that". I've to bite my tongue and not ask them where they've been for the last two years!

You see there lies the problem. If you're not prepared to take a cold view on the suitation at present you will be ripped off. If there was demand for rental property in the area it would rent for a higher price. I would just walk away and let the vendor hold on to their overpriced house. A yr of mortgage repayments on an empty house might make some see sence.

The problem years ago was that investors were prepared to accept a lower yield because property was thought to be a one way bet. In other words they would accept the lower yield, flip the property on and bag the profit which would make the transaction worth while. Otherwise why would you bother? You might as well stick your money on deposit. Im serious OP, any more than the price I've said and you will be ripped off. Remember estate agents are sales people, and in truth most don't possess any real knowledge / qualifications to be trusted to give a fair price. I mean FFS anyone can put up 12k odd and purchase an auctioneers licence without possessing any qualifications at all - I believe Shane Ross (of the Sunday Indo) did so a few years ago to prove a point.

population

I would say that if you offer 30% less you will definatley get it, but if you want it for 200k then bid it and don't be afraid of the outcome. Worst they can do is say "no", but there are plenty of decent houses out there. If 200k is your budget then I do not see a point in offering over it tbh

marmalade3

just got laid off from an auctioneer's firm, was working there for 10 years. My advice, take the asking price and halve it - make this your opening offer and they'll be lucky to get it if you want my professional advice.

Its HELL out there.

Good luck.:)

The_Conductor

Keep in mind- its a compact semi-d with only a very small garden in Ratoath, Co. Meath....... 305k is cloud cuckoo land- Personally I think anything around the 150-160k mark would be reasonable.

dblennon

That price is outrageous!! I mean even presumeing thats a bubble price the Interest alone (4%) midterm view, thats more than 12k a year for a small semi in meath.

it just seems laughable that they would even put the offering price so high.

AARRRGH

dblennon wrote: »

it just seems laughable that they would even put the offering price so high.

This recession has taught me how powerful delusion is. I already understood it was a coping mechanism people use, but I never realised just how effective (?) it can be.

stepbar

marmalade3 wrote: »

just got laid off from an auctioneer's firm, was working there for 10 years. My advice, take the asking price and halve it - make this your opening offer and they'll be lucky to get it if you want my professional advice.

Its HELL out there.

Good luck.:)

And what about rent yield? Are auctioneers / estate agents continuing to ignore this basic concept?

marmalade3

stepbar wrote: »

And what about rent yield? Are auctioneers / estate agents continuing to ignore this basic concept?

Hi stepbar, short answer is yes, they are.

stepbar

I had a look at a gaff today which is on the market at 165k - the existing owners are holding it as an investment property.

I offered 115k based on a rent yield of 6% (mgt fees are 1.2k!!! and wouldn't cover the 10% I allow for expenses vs yearly rent). I don't think it will be accepted. I might go another 5-7k but that's it.

What I found shocking was that the property was first offered @ 295k back in Jan 09'!!! :rolleyes:

loopy83

Ok went to look at the house. It's immaculate, the downstairs is perfect, but the upstairs is very small. One decent size bedroom, 2nd bedroom not too bad, but the box room, you'd be hard pushed to fit a single bed in there. The driveway would just about fit two cars in it (not two big cars mind you)
Back to searching for my perfect house i think..... so what do you folks reckon would be a reasonable offer on a new build asking €360,000 (reduced from €460,000) Are builders desperate to sell their over-priced houses at a knock down price.
http://www.daft.ie/1388749

stepbar

loopy83 wrote: »

Ok went to look at the house. It's immaculate, the downstairs is perfect, but the upstairs is very small. One decent size bedroom, 2nd bedroom not too bad, but the box room, you'd be hard pushed to fit a single bed in there. The driveway would just about fit two cars in it (not two big cars mind you)
Back to searching for my perfect house i think..... so what do you folks reckon would be a reasonable offer on a new build asking €360,000 (reduced from €460,000) Are builders desperate to sell their over-priced houses at a knock down price.
http://www.daft.ie/1388749

((Monthly rent x 12) x 0.9) x 16

No ifs or buts. That's the price.

The_Conductor

loopy83 wrote: »

Ok went to look at the house. It's immaculate, the downstairs is perfect, but the upstairs is very small. One decent size bedroom, 2nd bedroom not too bad, but the box room, you'd be hard pushed to fit a single bed in there. The driveway would just about fit two cars in it (not two big cars mind you)
Back to searching for my perfect house i think..... so what do you folks reckon would be a reasonable offer on a new build asking €360,000 (reduced from €460,000) Are builders desperate to sell their over-priced houses at a knock down price.
http://www.daft.ie/1388749

Go have a look- the rooms are really small, and 1300 sq feet for a 4 bed is *not* big, no matter what they say. Also- despite the fact that they imply these are on a 1/4 acre each- keep in mind this includes the open space in the estate- so its quite misleading.

Its not a bad house- currently these are renting for EUR850-900 so I think 175-190 would be a good indicative range.

johndaman66

marmalade3 wrote: »

just got laid off from an auctioneer's firm, was working there for 10 years. My advice, take the asking price and halve it - make this your opening offer and they'll be lucky to get it if you want my professional advice.

Its HELL out there.

Is this really happening though or is it just pub talk? I find it hard to believe that any seller would advertise their house at X and accept anywhere near the half of X.

marmalade3

johndaman66 wrote: »

Is this really happening though or is it just pub talk? I find it hard to believe that any seller would advertise their house at X and accept anywhere near the half of X.

After a wait of 12 months of trying to sell their house with 2 or 3 viewings if they are lucky, and a couple of silly offers, most people - if they are serious about selling their house - will accept almost anything within reason.

An auctioneer can only advise a seller on what his opinion of the value is - most people do not listen to this advice and pick their own figure to put on the sales details. There are those who still believe property prices have not HALVED in this country - these people are deluded.

:rolleyes:

DJDC

Good to see finally even EA's are starting to realise that bubble prices will only lead to the destruction of their industry. No transactions = No EA's fees. Simple logic really but the majority of the EA's only have themselves to blame after failing to adjust when the bubble popped. The majority kept prices high in an effort to maintain a larger cut when instead they should have realised the revised market value.

As for the EA blaming people on having unrealistic expectations. Well thats what 10 years of being constantly barraged with property porn that your house was worth €5million etc. in newspapers, radio, TV does to people. YOUR industry has spent millions of euros advertising/creating one of the biggest housing bubbles in the history of modern capitalism.

ALFIET

Being a person who lives in ratoath, it is an area which for some reason has not experienced the same devastating free fall in prices as other areas. Dont ask me why though

It has always been and remains to be overpriced.

That is not to say that house prices are not falling but just not to the same extent as other areas.

A house is only worth what someone is willing to pay for it and the vendors are willing to sell it for.

A vendor can be unwilling to acknowledge that there has been a huge drop in their beloved home. they have not emotionally detached themselves from the process.
or
a vendor may be financially unable to sell a house for the price that is on display
or
more than likely the vendor knows that someone is going to come in way under what ever asking price is posted so they are afraid to have the price listed too low.

But do check out other houses in ratoath and you will notice that while they have dropped they havent dropped in line with the rest of the country.

Also dont be in a rush to move to Ratoath OP. It is not the nicest place in the world and it has HUGE probs with teenagers, drinking, drugs, anti social behaviour. The village atmosphere while lovely belies the truth of living there!

loopy83

Thanks for all the replys folks, i'm gonna sit tight for a while, i'm aiming for a bigger house now so will have to keep saving. OP i'm from the area so that's why i want buy either there or ashbourne. Close to the mammy so she can still mind me!

stepbar

ALFIET wrote: »

Being a person who lives in ratoath, it is an area which for some reason has not experienced the same devastating free fall in prices as other areas. Dont ask me why though

It has always been and remains to be overpriced.

That is not to say that house prices are not falling but just not to the same extent as other areas.

A house is only worth what someone is willing to pay for it and the vendors are willing to sell it for.

......

But do check out other houses in ratoath and you will notice that while they have dropped they havent dropped in line with the rest of the country.

Maybe there's a higher proportion of deluded people up in Ratoath? It's the only explanation I can give.

marmalade3

DJDC wrote: »

Good to see finally even EA's are starting to realise that bubble prices will only lead to the destruction of their industry. No transactions = No EA's fees. Simple logic really but the majority of the EA's only have themselves to blame after failing to adjust when the bubble popped. The majority kept prices high in an effort to maintain a larger cut when instead they should have realised the revised market value.

As for the EA blaming people on having unrealistic expectations. Well thats what 10 years of being constantly barraged with property porn that your house was worth €5million etc. in newspapers, radio, TV does to people. YOUR industry has spent millions of euros advertising/creating one of the biggest housing bubbles in the history of modern capitalism.

Hi DJDC
I worked in the admin area - I am not an auctioneer. My salary remained more or less the same before and during the boom era.

You sound slightly bitter and a tad angry :eek:- so I'm assuming you got burned (who didn't) - and you can blame auctioneers if you wish, but each of us who took part in the splurge is responsible for our own decisions at the end of the day.

DJDC

Nah only graduated in 2007 and have since left Ireland so was too young/fortunate enough never to go near the Irish property market. I agree all the unfortunates who bought property from 2004-2008 cannot blame the EA's and banks when they are in NE now. However the mindless frenzy around the Irish property bubble was certainly fed by the property industry.

AARRRGH

DJDC wrote: »

However the mindless frenzy around the Irish property bubble was certainly fed by the property industry.

I don't blame the EA's for that - we do live in a capitalist country. The thing which bothers/worries me is the public in general are totally unaware of the concept of "vested interest". They believe whatever crap they hear, regardless of whether the person doing the talking relies on or makes money from whatever they're saying.

I see this everywhere, from the health industry (no one questions health "experts") to the green industry to the EAs.

If people took responsibility for their actions and researched things themselves instead of believing the vested interests, we wouldn't be in this mess.

useurename

offer 195k but dont go furter than 230-240.its a nice house.:cool:

stepbar

useurename wrote: »

offer 195k but dont go furter than 230-240.its a nice house.:cool:

I see what you done there... Pulled a rabbit out of a hat....