Advice on whether to buy

jen_23

Hey all,

I went to see a house last night which myself and partner really liked. It's in a nice location about a 10minute drive outside of the city. Which would mean if we wanted to go out it would be 30eueo taxi home.

Now the house is a lovely detached house with 3 decent size bedrooms. It's been extremely well maintained so very little work would have to be done on moving in. The back garden was lovely with a nice little decking area. All in all we were impressed.

Now it's had a price drop of 100k in the last few months. There are semis in the same estate going for more than this detached.

What i'm wondering is does this sound like a good deal? Personally I think it is but i'd like opinions as I don't want to turn around after christmas and realise uh oh!!

I spoke to my dad (who knows everything :rolleyes:) and basically I got a lecture on 'the prices are still dropping, we've seen nothing yet, NAMA is coming into effect and pressure will be put on in the next month, more nama nama nama, you'l never be able to sell it , you'l lose the value, youre wasting money if you buy'

Now some of these things have stuck in my head and are after making me nervous to buy which is why i'd like peoples advice here please

Thanks!

robd

Fair bit of recent opinion in this thread
http://www.boards.ie/vbulletin/showthread.php?t=2055698903

66% of people believe that the market will not stabilize and grow by 2011.

At the end of the date, it's a personal decision really. You should just know what you're getting yourself into.

Just remember that interest rates are at an all time low and the market is continuing to drop. Think about what will happen when interest rates start to rise again next year. You need to factor mortgage repayments of 6% into any of you calculations. As they go up prices will go down considering who soft things currently are.

Look at what you could rent a property in the estate for. Multiply the monthly rent by 12 and then by 14 which will give you a long term economic value of properties in that area. At present most properties seem to be asking double that value.

Look at unemployment rate. Still steadily rising. Less income, more expenditure for government. Higher taxes and less service. Less money in everyones pocket. More downward pressure.

How safe is you job? Can you cover replyments if you're out of work for 12 months?

I sold a number of years back. Still sitting on sidelines. Would like to buy again as I'm at that time of life where I really need a place but I just can't. I'm looking at higher value properties and there is just no point in buying. Ask prices are just stupid. No negotiating yet with the EA's. The floor is always 10% under the asking.

...

AARRRGH

I can't see any reason why the market won't continue to drop for a number of years. Personally I can see house prices dropping by another 40 - 50%.

jen_23

robd wrote: »

Look at what you could rent a property in the estate for. Multiply the monthly rent by 12 and then by 14 which will give you a long term economic value of properties in that area. At present most properties seem to be asking double that value.

Wow it's excatly double the figure that they are asking!

robd wrote: »

How safe is you job? Can you cover replyments if you're out of work for 12 months?


...

Both our jobs are good. We are both probably in the same boat as most people in the current economic crisis.
Though with the mortgage repayments that we worked out 1 person could pay the mortgage and we would still survive.


To be honest we are thinking of putting an opening bid on the property.
Both of us are going crazy living at home right now:(.
We looked at renting but as I have a dog it's really difficult to find somewhere. We looked at a few places and the people letting it were put off by the size of my dog. (he's a husky)

So what do ye think would be a reasonable opening bid for example if the property asking price is 260k?

AARRRGH

jen_23 wrote: »

So what do ye think would be a reasonable opening bid for example if the property asking price is 260k?

Without knowing the exact property it's hard to say, but if you say it is currently double the rent*14*12 valuation guideline, I would offer 120k.

I know you will think this is nuts, but that's only because you are comparing it to bubble prices. You need to forget about bubble prices, they are not reality.

I actually think rent*14*12 is optimistic for Ireland, as we are a small economy with a tiny population and too many houses, and with mass emigration starting to happen, your house is only going to go down in value.

HOWEVER, if you plan on staying in the house for 20 years or whatever, then negative equity is fairly insignificant.

Moonbeam

If you like it and it is for long term then go for it:)

robd

jen_23 wrote: »

Though with the mortgage repayments that we worked out 1 person could pay the mortgage and we would still survive.

At what rate though? Check at 6% not current rates.

jen_23 wrote: »

So what do ye think would be a reasonable opening bid for example if the property asking price is 260k?

Well, based on my previous post value is prob 130k but no one will sell for that at the moment so provided you're will to pay a premium to get it now rather than later here you go. Discounts of 50-60k off asking are typical. So start at 200-210k. Don't be too enthusiastic as this will just push up the price. Expect to be insulted and told your bid is too low. This is part of the game. Take a few days even a week before you even think of upping a bid, using excuses like having to talk to you partner, need to re-run figures as its tight, need to check with bank. You should be able to easily get it for 220k, 230k at worst. Up in ever decreasing amounts if you do up at all. Say 5k first, then 2k, then 1k,then 500. Get mortgage approval before you bid as EA's don't generally accept bids without. Expect to be told a mystery bidder has appeared out of the blue and suddenly made a higher offer when of course they haven't. Keep bid the same, out of money.

AARRRGH

robd wrote: »

Well, based on my previous post value is prob 130k but no one will sell for that at the moment so provided you're will to pay a premium to get it now rather than later here you go.

That's it really. If you want to buy now, be prepared to pay a premium. If you're happy with that, go for it.

I know I pay a premium myself by taking taxis instead of buses. Most people think I'm mad but it's worth it to me...

johndaman66

Jen 23 I too am very eager to buy and in that sense am in the same boat as you but there is not a hope I would buy at the moment. Pretty much all the economic indicators are pointing to further price drops in houses.

Aside from this in your situation I think you and your partner need to ask each other and oneself if this is really what ye both want. Buying a house together is a very very serious commitment but I'm sure ye already know this. And I don't mean to cast aspersions on yer relationship but what if things don't work out between ye. I know many couples who you would imagine are rock solid together and are broke up six months later. If ye do buy and later break up things could get very very messy.

As other posters are suggesting and if ye have not already I would also stress test the mortgage. What if interest rates went up to 6% or more and/ or one partner lost their job etc. Also if ye haven't lately I would seek mortgage approval before house hunting. Yer deposit which was once sufficient to borrow x amount may no loger be as things are changing quickly at the moment.

spockety

Your dad sounds like a wise man. Most people's parents (for some bizarre reason) try to push them into buying a property. Your dad has your true interests at heart though.

jen_23

So.... we put an offer down about 50K under the asking price last Thursday and we havn't heard back yet... Wondering if that's good or bad...

Sconsey

jen_23 wrote: »

So.... we put an offer down about 50K under the asking price last Thursday and we havn't heard back yet... Wondering if that's good or bad...

If you are mad keen you could ring up the auctioneer and tell them you have seen one or two other places and that your offer is only going to be in place for two more weeks. This will put the pressure on the vendor to react.

By the way, I think you should not budge from your offer price, you went 50K below asking which is less than 20% below an asking of 260K, I don' think you have left yourself much room to negociate.

mathie

Sconsey wrote: »

If you are mad keen you could ring up the auctioneer and tell them you have seen one or two other places and that your offer is only going to be in place for two more weeks. This will put the pressure on the vendor to react.

By the way, I think you should not budge from your offer price, you went 50K below asking which is less than 20% below an asking of 260K, I don' think you have left yourself much room to negociate.

Exactly.
A main rule in bargaining - don't adjust your offer until the vendors adjusted theres.
If you bid and then outbid yourself then the vendors have you in the bag

Gurgle

jen_23 wrote: »

Now it's had a price drop of 100k in the last few months. There are semis in the same estate going for more than this detached.

Same thing I always say:
If you plan to live there for at least a decade, and you can comfortably afford the payments (at e.g. +3% interest rates) then theres no reason not to.

Nama, price drops, other houses asking price etc etc are irrelevant.