Advice - Think I have messed up

RadiantGirl

Hi All

I am new to all this house purchasing and am a FTB. I have received approval and have my heart set on a property that has dropped from €289,000 and is currently on the market for around €210,000.

I have put in 2 offers, with the last offer being relatively close to the asking price. The EA came back and said the vendors declined and gave me the minimum they would be prepared to go to. Im not great at all this poker game stuff when dealing with EA's, as I am doing this on my own and have no experience dealing with such things.

I then showed my hand (and trust me am kicking myself now) and told him that under no circumstances could I go to the price they are willing to come down to but could meet them half way and gave another offer. I told him that this is my final final offer and there is no way even at a push could I go any higher.

He said he will speak with the vendor. The reason I am kicking myself is that I gave an offer this morning of X amount, he came back said no, and then nearly straight away I said I could meet half way and offer X amount.

What should I have done, I know it's a little late now, but just some advice would be great as if I do not get this property it could come in useful for anything else that I may look at. There was a €5000 difference between my first offer today and my 2nd.

My gut is now telling me that I did that in spur of the moment and should have stuck with my original offer even though he said no.

Is there anyway I can retract that extra €5,000 in the hope no one else puts in an offer.

Thanks for any advice you may have for me.

Kindest regards
RG

am i bovvered

Yes you can retract the offer.
Ring the estate agent ASAP and explain that your heart ruled the head, your original offer stands and that is as far as you can go, it is best to give a time limit on the offer, for example close of business on Friday.
You always should be prepared to walk away.
I won't go into all the "why are you buying now, it will only be worth 100k in 2 years" etc, I'm sure other posters will be queuing up with all that.
Good Luck, you are in a strong position, take advantage of that !!

RasTa

RadiantGirl wrote: »

Hi All

I am new to all this house purchasing and am a FTB. I have received approval and have my heart set on a property that has dropped from €289,000 and is currently on the market for around €210,000.

I'm coming in with it anyway, how long has the house being on the market? To answer your orginal question, yes ring the EA and tell him the offer you upped was in the heat of the moment etc.

amiable

Agreed with the other posters here and you should contact the EA asap and explain that you've had time to consider and you wish to retract the offer and give the amount you really want to offer. If i was you i'd be patient. Its all about supply and demand. There's so much supply out there and so little demand. Use your position to your advantage.
Make sure they know you are all approved and ready to move if they meet the price you are willing to go to.
Best of Luck

amiable

Just another thought, eatate agents love telling you about how much the house was and how much it is now. All BULL. A house is only worth what somebody is willing to pay for it. Just cos its dropped say eg100k doesn't automatically make it a good bargain.
In saying all that we don't have all the info on the property.
Best of Luck again

noclue1

ring up the estate agent, tell them house prices are dropping around 1% every month and that your first offer stands and the offer will be reduced by 1% by the end of sept, 1% by the end of oct..............

RadiantGirl

Hi All

firstly thank you all for replies. This house has been in the market for just over a year. To be honest it ticks all the boxes location etc. I don't know if I can wait 2 years as I think it's time I moved out of home. I looked at the rent option but I would not have the money to rent and save for deposit. I have been saving the past 2 years. I will retract my last offer but think that if I do get it for the previous one I will go for it.

I don't know if I can take the chance they will go down. I'm nearly 30 and need a place of my own. Am I foolish?

noclue1

RadiantGirl wrote: »

Am I foolish?

YES the house will be cheaper next month, in six months, in a year and in two years time. Sit it out. For the amount your gonna spend now you could probably get an extra bedroom, go from terraced to a semi-d, from a semi-d to detached

Your living at home, great save more cash. Suck it up its hard living at home but half the country has moved back in with mammy and daddy

Treehouse72

As others have said, your offer is absolutely not binding. Nor does it stop you making a lower offer tomorrow, next week, or next year.

..............

But I am concerned about something else you said in your OP. You said you had your heart set on this property. It is one of the most common mistakes people make when buying a house to become too emotionally attached to it. This can cloud the most important part of the transaction: making sure you are getting the best deal you can. This is the biggest purchase you will make in your life and the consequences of getting it wrong, as I'm sure you know, could be very large.

If you need proof of how dangerous this emotion can be, just look at how you committed several more thousands of € today almost without thinking. If I were you I would look myself in the mirror and ask: "If I am capable of making a dodgy decision because of my emotions like this, is it possible my entire approach to this purchase is similarly clouded?".

That is a very hard thing to do. Very hard, but you need to do it. I would implore you, please try to remove all the emotion you can from this - you can pour all that emotion and love into the house when you have it. For now, the question is primarily a financial one. If you can detach yourself from this situation, I think the whole decision to proceed is questionable.

To start, house asking prices are down 9% since April:

http://www.rte.ie/business/2010/0917/housing.html

If that were directly applied to your property (and I'm not necessarily saying it is directly applicable) the current asking of €210,000 would have been c.€220,000 back in April, and if it continues will be €190,000 in January. I note you are stressing about €5,000 today...and we're talking over €30,000 there over 8 months (minus rent if you have to pay that in the intervening period). You need to give those figures serious thought because that's a lot of money .

So the question then becomes: will that pattern of 9% falls seen between April and September be repeated in period September to January? What about the 5 months after that? Another €20K? After that again?

You will have to come to a conclusion on that yourself. My view is that the pattern will continue because I don't know how the next 5 months will be better than the last 5 months. Indeed it might be worse.

We have the Budget to come in December - likely tax rises, possibly pay cuts and cutbacks in general that will suck money out of the economy. In addition, there is a house price database coming at that time too that will improve transparency which might further stall the market as people wait to see which way prices in their favoured area are going:

http://www.boards.ie/vbulletin/showthread.php?t=2056034700&page=2

Also consider demand. The immigrants that were here in such numbers are thinnig. Irish people are emigrating. It is exceedingly difficult to get mortgage approval:

There are effectively only three lenders left providing mortgages – and most are lending only to highly credit-worthy first-time buyers and trader-uppers

IN JUST four years the mortgage market has been turned on its head. Gone are the speculative purchasers and buy-to-let borrowers. Now the country’s banks and building societies are largely only lending to borrowers who are buying their first home or trading up or down in the market.
In early 2008 first-time buyers and mover-purchasers accounted for 40 per cent of the market; figures published by the Irish Banking Federation (IBF) last week showed that three out of every four mortgages (in value terms) provided in the second quarter of this year were to borrowers purchasing a home.

http://www.irishtimes.com/newspaper/property/2010/0902/1224278044621.html

So people are leaving the country and those still here can't get mortgages, and that situation is probably getting worse if anything. And more people are being squeezed out by rising interest rates:

Irish Nationwide is to become the sixth lender to increase the mortgage interest rate it charges existing and new customers.And EBS and Haven have also hiked the rates charged to those who opt to take out fixed-rate mortgages.
Irish Nationwide's rate on standard variable mortgages will rise by 0.54pc tomorrow, the Irish Independent has learned. The increase will add around €30 to the monthly repayments for every €100,000 borrowed. Over a full year this amounts to €360.

http://www.independent.ie/business/personal-finance/homeowners-hit-again-as-irish-nationwide-to-hike-mortgages-2317967.html

If people can't get mortgages - either because rates are rising or banks are being too risk-averse - where will the demand for houses come from? And without demand prices drop.

Meanwhile there are a lot of people in trouble with their mortgage:

THE NUMBER of residential mortgage holders who are more than 90 days in arrears on their loan repayments continues to rise. Figures from the Central Bank and the Financial Regulator for the second quarter to June show that one in every 20 mortgages are in some difficulty: 36,348 were in arrears out of the 789,814 mortgage loans outstanding. The Central Bank data may well understate the problem as the collection of mortgage arrears statistics only began a year ago.

By then borrowers already in financial distress may have agreed new repayment arrangements with their lenders.

A particular concern is that by June two-thirds of all mortgage loans in arrears were held by borrowers who were more than 180 days behind in their repayments. Since June all the main mortgage lenders have increased interest rates on their loans, which has put more pressure on holders of standard variable rate mortgages already experiencing financial difficulties.

http://www.irishtimes.com/newspaper/opinion/2010/0906/1224278288505.html

What happens if banks start foreclosing on these people and all their properties come on the market? To go along with the possible sales it looks like NAMA might be doing soon:

The chief executive of Nama said today that the agency is prepared to move against defaulting property developers in the coming months if necessary.

Brendan McDonagh said that Nama has also made significant progress towards selling off €500m worth of properties.

http://www.breakingnews.ie/ireland/nama-could-move-against-defaulting-property-developers-this-year-473005.html

That sounds like a lot of potential supply that could be slushing around soon.

Please note all of those links are from the last few weeks. I think the oldest is from August 31 2010. This is what is happening now.
..........

In the interests of balance, I would like to present some contrary reasons as to why prices might stabilise or rise. Honestly, sitting here as God is my judge, I cannot think of a single reason. If anyone can present even one single reason why this might happen I'd love to hear it.

So what on earth am I crapping on about here? I'm crapping on about that €20,000 I mentioned earlier. And maybe several more grand in the months after that. Nothing else. If you love the house so much that this €20,000+ (it'll be a lot more than that in 3 years IMO) doesn't matter, that's cool. I am merely putting it to you that that €20,000 is almost certainly like bidding €230,000 for this property today. And you are concerned about the €5,000? It really is something to think about.

........

NB: Please accept this as amateur advice, and from someone who is far more pessimistic on house prices than most. Not everyone would agree with me. I think they'd be wrong in that, but I am probably in a minority in being this stridently bearish.

who_ru

i agree with you Treehouse72, the economy will get worse in the next 5 months, no question about it because as you said the Govt has no choice but to slash spending. and with the cost of servicing the national debt climbing higher, taxes will almost certainly go up.

the net effect will be less disposable income all round next year.

to the OP simply & calmly contact the EA - remember you are the one with all the aces here - inform him/her you wish to retract the increased offer - bet it happens all the time - don't worry about it.

and as Treehouse72 said house prices will continue to fall.

also you can look at the 'property pin' website for more info.

gurramok

Never let your heart overtake sensibilities in a financial decision whether its for a house or a car. Simple as, do retract your offer, you have no obligation to follow through on it as you signed no contract

mrgaa1

as with everyone else retract and re-offer. You are obviously the only one interested. Up until you sign your contract you have no obligation.

TheFairy

Walk away! Houses still have a way to fall, even if vendors havent realised that yet. Its only bricks and mortar at the end of the day, buying now, getting into negative equity and ending up hating the place because of this is not the way to go. Less of the heart and more of the head if you can!

who_ru

TheFairy wrote: »

even if vendors havent realised that yet.

that's the trouble with the housing market in ireland. vendors have realised that prices are on a downward curve but are not willing to acknowledge that when pricing their property. that's why the vast majority of properties are still way over priced here.

i took a casual look at houses for sale in a specific part of dublin on daft last night. some crazy prices out there, and even more frustrating for the potential buyer is the fact that the same house, on the same street, can be listed by different EA's at wildly varying prices, sometimes the price can differ by 100,000 for the exact same house.

under these circumstances how can anybody be expected to make a serious bid?

sambuka41

Hey OP i understand your feeling the need to escape home!! But I would wait till after Christmas. Im nearly the same age as you and can understand no wanting to wait forever to buy cause the years are ticking by and I for sure would like to have my house paid off before retirement!! But a few months wont make a massive difference but it may on the price you get it for.

Good luck:D

mathie

Treehouse72 wrote: »

In the interests of balance, I would like to present some contrary reasons as to why prices might stabilise or rise. Honestly, sitting here as God is my judge, I cannot think of a single reason. If anyone can present even one single reason why this might happen I'd love to hear it.

Let me preface by saying I fully agree with you Treehouse72 let's just consider this devils advocate.

Just before the peak everyone was getting into an absolute frenzy about buying. Prices could only go up.
The man on the street knew that property was where it's at.
If you asked them same man on the street what would they say now?

I'm a great believer in the wisdom as crowds. As in - go the other way.

But that's about the only thing that would make me think that maybe I'm wrong on being so bearish.
'Never let the facts get in the way' and all that

Treehouse72

In fairness Mathie you make a good point - groupthink is a real danger whether on the way up or way down.

But I think there is a very good argument that this is not what is happening with all the current negative sentiment: and it is that the doom mongers now have very solid evidence to back up what they say - I mentioned a load of them in my post: rising IR's, falling credit availability, rising unemployment, tax rises, increasing supply, falling demand, increasing arrears, rising emigration etc.

By contrast, the boom mongers during the bubble had no such solid evidence: instead they had junk science, voodoo economics and irrational exuberance.

Some examples:

> Credit availability: The bulls' argument and their projections for future prosperity was predicated on 1% interest rates continuing in perpetuity. Given 4% or 5% has been the long term IR for centuries, this argument about credit was bogus from the get-go, and it is amplified even more today because there are several banks no longer even lending (INBS and AI).
> Full employment: this argument was bogus too because it was dependent on the property bubble continuing. It was a tautological justification for continued property boominess: if the property boom continues so will full employment therefore that will reinforce property prices! Such utter nonsense.
> Rising wages: Rising wages were also by definition only around during a period of low taxation, full employment and economic buoyancy. Again, this required a never ending property bubble to perpetuate itself.
> Immigration: Again and again we were told that immigrants would boost long-term demand as they settled and bought in Ireland. Once again, a nonsense argument that assumed these people would never go home! Or, indeed, that none of our own citizens would leave. Again, this was predicated on things never turning bad....what kind of BS argument is that for making future economic forecasts?
> Shortage of supply: That this argument was not correct either is bourne out by some incredibly strong evidence today: we have 300,000 empty properties in the state! If the supply argument had been correct then we never would have ended up in that situation.
> Sentiment: All this was reinforced by the national mania that house prices would only ever rise. This was a feedback loop of self-justification that proved just as nonsensical as all the points above.

I could go on, but you get the point. The optimism then was irrational, the pessimism now very rational. That's the key thing that differentiates the nature of our sentiment then and now IMO.

Mr. Loverman

RadiantGirl wrote: »

I looked at the rent option but I would not have the money to rent and save for deposit.

This has me really confused.

Surely you already have enough money for the deposit, etc. now, hence why you're making offers to buy a house...?

the GALL

Just a thought OP
1 do you like the house?
2 can you see yourself livin there and setting up a home?
3 can you afford the mortgage?
Put an offer in at the price it's worth to you.
In 2/3 months it may be lower but then again someone else may have already bought it.
The main thing is IF YOU LIKE IT AND YOU CAN AFFORD IT THEN BUY IT

fontanalis

Mr. Loverman wrote: »

This has me really confused.

Surely you already have enough money for the deposit, etc. now, hence why you're making offers to buy a house...?

Confused me too.