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Sanity checking on house prices

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  • 09-02-2012 2:04pm
    #1
    Tigger
    Closed Accounts Posts: 16,705 ✭✭✭✭


    Ok i used to work for a americian corporation and they had an expression called sanity checking.
    Basically when you had a "mad" idea you ran it by at least one other person in yer field to see if you were being crazy.

    I have blabbed on about the housing market for years.I didn't buy i rented and for many years i rented a tiny sh1thole for 300 a month and saved and invested and worked 60 hour weeks and took money instead of holidays and just basically wanted to be able to strike when the iron is hot.

    Well i'vce just been offered a 3000sq foot 2.5 storey house on 1.7acres in a good location (in the west of ireland ) finished to decent spec witha double garage.

    Seriously now how much should my limit be?

    Three ways of working it out.
    Rent per year X (?)
    Average wage of a person x (?)
    Cost to build today + site + charges?

    help :eek:


«13

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    #2
    TwoShedsJackson
    Closed Accounts Posts: 9,438 ✭✭✭TwoShedsJackson


    Ask them how much they want for it.

    Decide if you are willing to pay that.

    If not, offer less. The house is worth what someone is willing to pay for it, no more and no less. If you are happy to offer €X and feel secure that you will be able to afford it/the mortgage in the forseeable future, then the house is worth €X.


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    #3
    Zamboni
    Registered Users Posts: 4,305 ✭✭✭Zamboni


    This does not count as 2.5 storey.

    pooh44a.jpg


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    #4
    Tigger
    Closed Accounts Posts: 16,705 ✭✭✭✭Tigger


    TwoShedsJackson wrote: »
    Ask them how much they want for it.

    Decide if you are willing to pay that.

    If not, offer less. The house is worth what someone is willing to pay for it, no more and no less. If you are happy to offer €X and feel secure that you will be able to afford it/the mortgage in the forseeable future, then the house is worth €X.

    lol

    i'm trying to use logic
    i like the house (a lot i've admired it over the years)
    and i agree its worth what someone is willing and able to pay but it also must have an inherant value of some form.


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    #5
    TwoShedsJackson
    Closed Accounts Posts: 9,438 ✭✭✭TwoShedsJackson


    Tigger wrote: »
    lol

    i'm trying to use logic
    i like the house (a lot i've admired it over the years)
    and i agree its worth what someone is willing and able to pay but it also must have an inherant value of some form.

    I know the angle you're approaching it at but it gets pretty hazy when you are talking about houses because people tend to get unaccountably emotionally attached to houses.

    Look on it as a purely business transaction. As for it's inherent worth, the closest you're going to get is the actual build/rebuild cost, which you can estimate - the only value it has over that is the amount someone is willing to pay.


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    #6
    Tigger
    Closed Accounts Posts: 16,705 ✭✭✭✭Tigger


    TwoShedsJackson wrote: »
    I know the angle you're approaching it at but it gets pretty hazy when you are talking about houses because people tend to get unaccountably emotionally attached to houses.

    Look on it as a purely business transaction. As for it's inherent worth, the closest you're going to get is the actual build/rebuild cost, which you can estimate - the only value it has over that is the amount someone is willing to pay.

    rebuild costs in the north are listed at €55 a foot finished good spec , cheaper than the south but i think more realistic

    so 3000*55 + 20 (for agriculturial land 1.7 acrea for site) + 10 for development fund + 10 for other + 15 for the double garage is =€220,000

    yes no mabey?


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    #7
    mmc2010
    Registered Users Posts: 145 ✭✭mmc2010


    I think you're talking at least 250k-300k. Build costs are still around 90€ per sq ft, builders finish. A 1.7acre site would probably cost you 70-80k. If its a fabulous house on a nice site, there will be demand for it....


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    #8
    the_syco
    Registered Users Posts: 37,299 ✭✭✭✭the_syco


    Tigger wrote: »
    (in the west of ireland )
    How far west, and how near is the nearest city?
    Tigger wrote: »
    Three ways of working it out.
    Rent per year X (?)
    Average wage of a person x (?)
    Cost to build today + site + charges?
    Rent per year = how far is it from places?


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    #9
    Tigger
    Closed Accounts Posts: 16,705 ✭✭✭✭Tigger


    the_syco wrote: »
    How far west, and how near is the nearest city?


    Rent per year = how far is it from places?

    its not in crazytown
    25mins/miles from a county town
    35mins/45miles from a different county town

    the only city in the west is galway


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    #10
    fergiesfolly
    Registered Users Posts: 3,371 ✭✭✭fergiesfolly


    Your vagueness is testing my sanity.
    Wheres the house and how much do they want for it?
    If the house is as great as you think, the cat will already be out of the bag and there will ,more than likely, be someone else looking at it, so being secretive here is pointless.
    As Twosheds mentioned,buy with your head, not your heart. You've done the hard part by working hard and saving towards your home.
    Theres no point getting sucked into buying something priced above its actual value now.


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    #11
    nicol
    Registered Users Posts: 385 ✭✭nicol


    Given where I think you are located and your description of the house I wouldn't buy for any more than 250,000 at the very, very max. I wouldn't use building cost as an indicator as I think labour prices are still too high, rent in the area might be a good indicator. You say you've been offered the house, did someone approach you? If so I'd be inclined to go in with a much lower offer.

    As an afterthought, you also need to consider possible taxes the property may incur in the future because of it's size / location.


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    #12
    Tigger
    Closed Accounts Posts: 16,705 ✭✭✭✭Tigger


    nicol wrote: »
    Given where I think you are located and your description of the house I wouldn't buy for any more than 250,000 at the very, very max. I wouldn't use building cost as an indicator as I think labour prices are still too high, rent in the area might be a good indicator. You say you've been offered the house, did someone approach you? If so I'd be inclined to go in with a much lower offer.

    As an afterthought, you also need to consider possible taxes the property may incur in the future because of it's size / location.

    lol @ location mayo

    no i've made my intentions clear to anyone in the house selling game
    i'm looking for value; this is one that interests me

    taxes are a good point at the moment they seem to be on the owner


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    #13
    Tigger
    Closed Accounts Posts: 16,705 ✭✭✭✭Tigger


    fergiesfolly wrote: »
    Your vagueness is testing my sanity.
    sorry
    Wheres the house and how much do they want for it?

    its in the west and they want lots

    If the house is as great as you think, the cat will already be out of the bag and there will ,more than likely, be someone else looking at it, so being secretive here is pointless.

    i disagree. sorry but i do
    As Twosheds mentioned,buy with your head, not your heart. You've done the hard part by working hard and saving towards your home.
    Theres no point getting sucked into buying something priced above its actual value now.

    i agree but its very hard to value stuff


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    #14
    El Weirdo
    Registered Users Posts: 11,647 ✭✭✭✭El Weirdo


    Tigger wrote: »
    i agree but its very hard to value stuff
    It's even harder when you haven't given enough information for people to help you.


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    #15
    the_syco
    Registered Users Posts: 37,299 ✭✭✭✭the_syco


    Tigger wrote: »
    its not in crazytown
    25mins/miles from a county town
    35mins/45miles from a different county town

    the only city in the west is galway
    That's my point. You mention rent, so I assume you're thinking of renting it. If it's a fair bit away from anywhere, why would someone pick that house to stay in?

    With limited info on the house, we can only give you vague answers back. If they want lots, give them little, and put a time frame on it, such as "€225k, take it or leave it, the offer expires on the 27th February". On the 27th tell them that the offer is €220k, take it or leave it, the offer expires on the 15th March", etc.


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    #16
    Tigger
    Closed Accounts Posts: 16,705 ✭✭✭✭Tigger


    the_syco wrote: »
    That's my point. You mention rent, so I assume you're thinking of renting it. If it's a fair bit away from anywhere, why would someone pick that house to stay in?

    With limited info on the house, we can only give you vague answers back. If they want lots, give them little, and put a time frame on it, such as "€225k, take it or leave it, the offer expires on the 27th February". On the 27th tell them that the offer is €220k, take it or leave it, the offer expires on the 15th March", etc.

    by rent x (?)
    i ment rent of that year multiplied by ? years as a gauge of worth sorry i wasnt clear

    everything in the west is a fair bit away from things


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    #17
    Tigger
    Closed Accounts Posts: 16,705 ✭✭✭✭Tigger


    El Weirdo wrote: »
    It's even harder when you haven't given enough information for people to help you.

    what info do you need ?


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    #18
    the_syco
    Registered Users Posts: 37,299 ✭✭✭✭the_syco


    I have a piece of string. It's in the corner. I will not tell you how long it is, what coulour it is, how old it is, or any info at all, but I want a clear answer of how much I should sell it.

    We can only give advice based on info. Without info, why don't you low ball them at €150,000 with a date, and see if they take it.


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    #19
    Diddler1977
    Registered Users Posts: 3,765 ✭✭✭Diddler1977


    the_syco wrote: »
    I have a piece of string. It's in the corner. I will not tell you how long it is, what coulour it is, how old it is, or any info at all, but I want a clear answer of how much I should sell it.

    We can only give advice based on info. Without info, why don't you low ball them at €150,000 with a date, and see if they take it.

    I'd offer 80,000 as a starting point.


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    #20
    Tigger
    Closed Accounts Posts: 16,705 ✭✭✭✭Tigger


    3000 sq feet for 150k or 80k
    thanks people


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    #21
    gigino
    Closed Accounts Posts: 2,350 ✭✭✭gigino


    Tigger wrote: »
    Well i'vce just been offered a 3000sq foot 2.5 storey house on 1.7acres in a good location (in the west of ireland ) finished to decent spec witha double garage.

    The property tax on that could be 5,000 a year in a few years time.

    If its in the back of beyonds not many people may want to pay that, esp. if petrol/diesel goes up in the next few years as much as it has in the past few.

    Keep your powder dry for another year or 2....it will be much cheaper then....but even you may not want it then.


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    #22
    zac8
    Registered Users Posts: 530 ✭✭✭zac8


    Tigger wrote: »
    its very hard to value stuff

    It's not that difficult to value property. Investors are looking for at least 10% in this market.

    So, realistically, what monthly rent could this property achieve? Have a look on daft for similar properties for rent. Include "let agreed" properties in your search. Multiply that monthly rent estimate by 120 and that's the maximum you should pay.


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    #23
    Zamboni
    Registered Users Posts: 4,305 ✭✭✭Zamboni


    I like this game :)

    Can you tell us the difference between the maximum that you would pay for it and what they are currently asking? Either value or percentage would do...


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    #24
    Tigger
    Closed Accounts Posts: 16,705 ✭✭✭✭Tigger


    Zamboni wrote: »
    I like this game :)

    Can you tell us the difference between the maximum that you would pay for it and what they are currently asking? Either value or percentage would do...
    I'd pay 55% of what it's advertised for on daft now, not the peak figure
    The ea says I can have it for 64%.

    Or I'd pay 30% of original asking and the ea is looking for 35%


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    #25
    Zamboni
    Registered Users Posts: 4,305 ✭✭✭Zamboni


    Tigger wrote: »
    I'd pay 55% of what it's advertised for on daft now, not the peak figure
    The ea says I can have it for 64%.

    There is your answer so.
    The property is worth exactly 55% of the curent asking on Daft
    assuming you can get the vendor to sell at that price
    assuming nobody else values it at a higher price and is ready to buy.

    So either get him to sell at 55% or less and if not walk away.


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    #26
    gigino
    Closed Accounts Posts: 2,350 ✭✭✭gigino


    zac8 wrote: »
    It's not that difficult to value property. Investors are looking for at least 10% in this market.

    So, realistically, what monthly rent could this property achieve? Have a look on daft for similar properties for rent. Include "let agreed" properties in your search. Multiply that monthly rent estimate by 120 and that's the maximum you should pay.

    There are lots of empty houses in the west. Not many high flying people in top jobs in remote areas wanting to rent, so rents are far from Dublin levels. On daft you can rent big houses in remote areas for 600 /800 /1000 a month. Even at a thousand a month the price of the house would be 120,000.
    They will be cheaper in a year or 2 once property taxes etc are increased and more austerity kicks in and probably the CPA is scrapped and possibly interest rates increase and oil rises.


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    #27
    finisklin
    Registered Users Posts: 1,524 ✭✭✭finisklin


    Its on a fair large site 1.7 acres.....opportunity to fence some off and buy the house portion?

    What are other houses selling for in the area? Any idea of recent sales, if any? Perhaps someone in the local bank can help?Probably not.....

    Best way to test this is to make a low ball offer and see what happens. Don't forget that you don't know the circumstances of why they are selling. Perhaps they are under financial pressure and need a cash buyer meaning that closing the sale quickly is important.

    Shop around as there is value out there in the west of Ireland esp if you have cash to go.


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    #28
    jmayo
    Registered Users Posts: 13,186 ✭✭✭✭jmayo


    Tigger wrote: »
    Well i'vce just been offered a 3000sq foot 2.5 storey house on 1.7acres in a good location (in the west of ireland ) finished to decent spec witha double garage.

    Has to be in Mayo ;)
    Tigger wrote: »
    Seriously now how much should my limit be?

    Three ways of working it out.
    Rent per year X (?)
    Average wage of a person x (?)
    Cost to build today + site + charges?

    I would actually discount the last one since the cost of building means nothing since there is such over supply.
    Houses are and will sell below what it did take and probably would today take to build them.

    Also if this is out in the country or just beside a village, then that lowers the price again as the probable rental value would be much less.
    As some else said put in low offer and see how it goes.
    Tigger wrote: »
    its not in crazytown
    25mins/miles from a county town
    35mins/45miles from a different county town

    the only city in the west is galway

    How far is it from a third county town ? ;)

    I am not allowed discuss …



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    #29
    Tigger
    Closed Accounts Posts: 16,705 ✭✭✭✭Tigger


    jmayo wrote: »
    Has to be in Mayo ;)
    yup


    I would actually discount the last one since the cost of building means nothing since there is such over supply.
    Houses are and will sell below what it did take and probably would today take to build them.

    i'll be bidding below the price i think it would cost me to build and i'll only be giving (in my calculations ) a bit for the site and garage

    Also if this is out in the country or just beside a village, then that lowers the price again as the probable rental value would be much less.
    As some else said put in low offer and see how it goes.

    will do/was doing


    How far is it from a third county town ? ;)

    no triangulation please

    :)


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    #30
    Tigger
    Closed Accounts Posts: 16,705 ✭✭✭✭Tigger


    So this is the house

    http://daft.ie/searchsale.daft?id=602810

    Nice but too cluttered a layout
    Still think its good value at 220 tho

    Opinions?


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    #31
    nicol
    Registered Users Posts: 385 ✭✭nicol


    Tigger wrote: »
    So this is the house

    http://daft.ie/searchsale.daft?id=602810

    Nice but too cluttered a layout
    Still think its good value at 220 tho

    Opinions?

    Nice house, pity it's in charlestown ;)

    See what you mean about the layout. I' say 220 would be around the max I'd be willing to pay.

    I'd be cautious about the heating costs; living in a similarly sized house at the moment and it's costly enough to heat. Wonder what the BER is?


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