Using end of MIR to negotiate a lower price

quad_red

We're currently looking at a house in North Dublin. Asking price is 330k. EA says owner rejected an offer of 298k last summer but has since 'seen sense' and would consider 306/307k.

Now, the fact that we have no competing bidders is counter balanced by the fact that the vendor is in 'no hurry' to sell.

However, had we seen this house last year it would have been one thing. But we come to it with MIR gone which would have been worth over 20k.

So the question is this - is this a reasonable negotiating ploy?

djimi

You can try it, but if the house has been for sale for a while and they are in no hurry to sell then it might not make a difference. Its up to them at the end of the day; if they want to sell they will drop the price, but you cant force their hand.

quad_red

djimi wrote: »

You can try it, but if the house has been for sale for a while and they are in no hurry to sell then it might not make a difference. Its up to them at the end of the day; if they want to sell they will drop the price, but you cant force their hand.

Yeah, there's allot of factors here. There's no way of knowing if the previous offer is real or is them trying to put a floor on offers.

Either way - given the amount of work needed in the house, if they don't come down it isn't a player for us.

davet82

quad_red wrote: »

Yeah, there's allot of factors here. There's no way of knowing if the previous offer is real or is them trying to put a floor on offers.

Either way - given the amount of work needed in the house, if they don't come down it isn't a player for us.

I'd tell them my offer has dropped to 290k and to get with the times, if he is no hurry to sell a house that needs alot of work then he wont mind waiting for the economy and the housing market to pick up sometime in the 20's

MIR gone, economy isn't recovering and a property tax based on the value of the house... i'd hang on in there and wait for something you are in love with and remember its a buyers market out there dont let EAs make you think otherwise!


Best of luck getting a house btw

jimmycrackcorm

Using the property tax argument might be the best bet as the pricing is close to a band change.

quad_red

jimmycrackcorm wrote: »

Using the property tax argument might be the best bet as the pricing is close to a band change.

Really? I didn't realise there were bands.

I thought it was just 0.18% of market value up to €1m, and 0.25% on values above that level?

Are there bands?

davet82

quad_red wrote: »

Really? I didn't realise there were bands.

I thought it was just 0.18% of market value up to €1m, and 0.25% on values above that level?

Are there bands?

you are right it is .18% but there still is an arguement to be made as everyone else in the estate that has no intention of moving will be valuing closer to your estimated value than his

D3PO

I don't see why you would use MIR as a negotiating ploy. You offer what your willing to pay and they accept or the reject or try and negotiate a price somewhere in between your two valuations.

Why anybody feels they need to have an angle is beyond me.

quad_red

D3PO wrote: »

I don't see why you would use MIR as a negotiating ploy. You offer what your willing to pay and they accept or the reject or try and negotiate a price somewhere in between your two valuations.

Why anybody feels they need to have an angle is beyond me.

Well, because since 1 January the available money to service a mortgage has gone down for most potential customers.

davet82

D3PO wrote: »

I don't see why you would use MIR as a negotiating ploy. You offer what your willing to pay and they accept or the reject or try and negotiate a price somewhere in between your two valuations.

Why anybody feels they need to have an angle is beyond me.

its called living in the real world, how anybody can't see that this will have an effect on house prices is beyond me

Glenbhoy

quad_red wrote: »

However, had we seen this house last year it would have been one thing. But we come to it with MIR gone which would have been worth over 20k.

I'd say MIR would only have been worth about 13K at current interest rates, less if you factor in the time value of money. I would agree with you though, the house is worth less to you than it was this time last month because of that.

D3PO

quad_red wrote: »

Well, because since 1 January the available money to service a mortgage has gone down for most potential customers.

And your point is ? You adjust your offer and you make it, why do you think that pointing out the reasons for it makes any difference.

You offer what you offer they accept or they dont. Telling them your reasons for it makes no difference

D3PO

davet82 wrote: »

its called living in the real world, how anybody can't see that this will have an effect on house prices is beyond me

Where the hell did anybody say it doesn't have an effect on house prices ? Try reading what people have posted.

Luca Brasi

Certainly there is a slight move upwards in house prices in the Dublin area. If they are in no hurry to sell they are probably testing the market. There are extra issues like the Property Price registrar and the property tax which are going to impact on prices somewhat. However there are plenty of houses on the market which people want to sell.

davet82

D3PO wrote: »

Where the hell did anybody say it doesn't have an effect on house prices ? Try reading what people have posted.

I have read what you posted, it would have an effect on his previous offer (this house the op is talking about), not a negotiation ploy just a fact that the price has most likely dropped for alot of sellers so aplly same logic to this negotiation, you get it now

hardCopy

D3PO wrote: »

And your point is ? You adjust your offer and you make it, why do you think that pointing out the reasons for it makes any difference.

You offer what you offer they accept or they dont. Telling them your reasons for it makes no difference

Part of negotiating is convincing the other party that they won't get a better offer elsewhere. I.e. all buyers are going to be affected by the change and waiting a few months won't get him any closer to asking price.

D3PO

davet82 wrote: »

I have read what you posted, it would have an effect on his previous offer (this house the op is talking about), not a negotiation ploy just a fact that the price has most likely dropped for alot of sellers so aplly same logic to this negotiation, you get it now

So why did you quote my post as if I was saying otherwise. My point is simple you cant seem to get it.

The OP has a price in mind that are willing to offer taking into consideration a miriad of things including they no longer get MIR the seller has a price they want to achieve.

The OP makes an offer the seller accepts , rejects or negotiates on the offer. The OP saying well now I don't get MIR anymore has zero bearing at all on a negotiation. Its all about a number the seller doesn't give a crap that the OP wants a deduction because hes lost out on MIR or because he thinks he needs to rewire the house or whatever.

Its a numbers game simple as, the same way the OP doesnt care that the seller has a sick wife that needs treatment and needs the extra cash or is in neg equity so needs the extra or whatever.

Nobody cares about the reasons just the number. ergo using MIR as a negotiation tactic is pointless just make your offer.

D3PO

hardCopy wrote: »

Part of negotiating is convincing the other party that they won't get a better offer elsewhere. I.e. all buyers are going to be affected by the change and waiting a few months won't get him any closer to asking price.

I dont disagree but the best way to negotiate is to make your offer if its accepted fine if not either make a counter offer to hold firm and wait for them to make one.

Pointing out that MIR is gone so that's why the offer is down really doesnt hold much credence in the negotiations. Likewise you would laugh off any comment made by a seller who points out interest rates just dropped last month so the offer should be more or something similar.

Its a load of shadow boxing and its pointless and it has no real intrinsic value in getting the seller to accept less.

makeorbrake

To a large extent, what D3PO said. I understand the point that others have made re. convincing the vendor/negotiating - so maybe there is a little value in presenting your rationale for your offer. However, if you're dealing with an intermediary (i.e. an Estate Agent), they are acutely aware of what is impacting or is likely to impact sales prices. I don't think they will be having a long conversation with the client in that regard - most likely they will update them as regards what offers are currently on the table.

The OP has already identified that they have no idea of the integrity of the info that the EA feeds them. Therefore, it's a case of deciding what the property is worth to you - and thats it. One other option open is to time limit your offer. i.e. they have tried to put the pressure back on the buyer by saying "we're in no hurry". You could employ your own tactic ie. our offer is X - and it's good until a specified date - after which we drop all interest. Other options - sit tight and wait OR lower the current offer or threaten to lower it if the vendor won't bite by a specified date.

As regards the way the market is going, I know there were several "good news" stories bounded about in the first week of 2013. However, from what I can see, things are very much unclear as to whether bottom has been reached or not. It could be a minor price bump....not forgetting it seemed to be concentrated not only on Dublin - but on a specific part of Dublin.

davet82

D3PO wrote: »

So why did you quote my post as if I was saying otherwise. My point is simple you cant seem to get it.

The OP has a price in mind that are willing to offer taking into consideration a miriad of things including they no longer get MIR the seller has a price they want to achieve.

The OP makes an offer the seller accepts , rejects or negotiates on the offer. The OP saying well now I don't get MIR anymore has zero bearing at all on a negotiation. Its all about a number the seller doesn't give a crap that the OP wants a deduction because hes lost out on MIR or because he thinks he needs to rewire the house or whatever.

Its a numbers game simple as, the same way the OP doesnt care that the seller has a sick wife that needs treatment and needs the extra cash or is in neg equity so needs the extra or whatever.

Nobody cares about the reasons just the number. ergo using MIR as a negotiation tactic is pointless just make your offer.

we dont get each other lets just leave it at that or we'll be going around in circles... maybe i've got my wires crossed

i'm not suggesting discussing anything like the state of the economy with the seller or EA but it is plain as day MIR impacted on prices, now its gone its going to impact again so it should be reflected in the offer imo and if he wants to give an explanation to why it wouldn't do any harm anyways, might give some food for thought, who knows

D3PO

davet82 wrote: »

we dont get each other lets just leave it at that or we'll be going around in circles... maybe i've got my wires crossed

i'm not suggesting discussing anything like the state of the economy with the seller or EA but it is plain as day MIR impacted on prices, now its gone its going to impact again so it should be reflected in the offer imo and if he wants to give an explanation to why it wouldn't do any harm anyways, might give some food for thought, who knows

I agree. Im just putting myself in the sellers shoes or any sellers shoes. I want a certain amount Im aware of the impacts on buyers but doesnt stop me wanting what I want. Tell me your reasons all you like once you tell me the figure I want to hear at the end of it

davet82

D3PO wrote: »

I agree. Im just putting myself in the sellers shoes or any sellers shoes. I want a certain amount Im aware of the impacts on buyers but doesnt stop me wanting what I want. Tell me your reasons all you like once you tell me the figure I want to hear at the end of it

you go high, i go low and we'll meet somewhere in the middle

D3PO

davet82 wrote: »

you go high, i go low and we'll meet somewhere in the middle

So true

bidiots

D3PO wrote: »

I agree. Im just putting myself in the sellers shoes or any sellers shoes. I want a certain amount Im aware of the impacts on buyers but doesnt stop me wanting what I want. Tell me your reasons all you like once you tell me the figure I want to hear at the end of it

I think the point is that the figure you want, will be harder to reach because a buyers dwindling budget, is even less now due to lack of MIR.

D3PO

bidiots wrote: »

I think the point is that the figure you want, will be harder to reach because a buyers dwindling budget, is even less now due to lack of MIR.

Given that MIR income isnt factored into mortgage approval by a bank thats not technically true. The buyer may want to play less for this reason but in terms of affordability of the price you want to achieve it actually has no impact

its still strying from my point. the seller doesnt care about your reasons for your offer just what your offer is.

bidiots

Thats true, didnt think of it like that.

But the buyer will care when the offers are a lot lower now:p

flintash

D3PO wrote: »

Given that MIR income isnt factored into mortgage approval by a bank thats not technically true. The buyer may want to play less for this reason but in terms of affordability of the price you want to achieve it actually has no impact

its still strying from my point. the seller doesnt care about your reasons for your offer just what your offer is.

Well thats is your point of view, and so of many other vendors. Thats why we see houses sitting on the market for years. good stuff gets sold quickly.;)
To answer OP, I'd say price is subjective thing. There are many houses that go sold in 6 month, then I say they were priced reasonably. Now, we see many many houses next to not selling for years. Because there is no fool to pay that price.
Its bit weird when people selling apples all their life were given few month to buy/sell the rest of their lifes. What kind of desision they gona make?:eek:
dont pay that price unless you dying to live in that house.

D3PO

flintash wrote: »

Well thats is your point of view, and so of many other vendors. Thats why we see houses sitting on the market for years. good stuff gets sold quickly.;)
To answer OP, I'd say price is subjective thing. There are many houses that go sold in 6 month, then I say they were priced reasonably. Now, we see many many houses next to not selling for years. Because there is no fool to pay that price.
Its bit weird when people selling apples all their life were given few month to buy/sell the rest of their lifes. What kind of desision they gona make?:eek:
dont pay that price unless you dying to live in that house.

Dont confuse unrealistic asking prices with caring about the reasons for an offer. They are totally different.

If your property has a reasonable asking price then you will get offers, if the offer is below you either accept, reject or negotiate the reasons the offer is below what you want has no bearing on the process.

flintash

Well, fair enough. But i feel myself I need to justify the drop in offer (OP case). I dont go just throwing offers. I need judgement on my offer, even if it is just for myself.
Like OP said, there was offer last year, and to bring it down this year he use MIR exccuse , which is obviously has financial value. Maybe you dont care about it , but it might work in OP case, so why not to try.

quad_red

Thanks for all the advice folks.

As Flintash said, I don't see why giving a reasoned explanation of a bid would be outrageous or superfluous.

It makes absolute sense to me. It would seem to be overly confrontational just rocking it with a low offer without giving some sort of explanation.

Of course I'm not expecting the EA or vendor to agree but that's negotiation.

EricPraline

quad_red wrote: »

As Flintash said, I don't see why giving a reasoned explanation of a bid would be outrageous or superfluous.

Making the point is certainly not outrageous or inappropriate in any way.

But it's likely superfluous because (a) the EA will be well-aware of the MIR situation as stated above, (b) the EA has probably already had people make the same or similar arguments in relation to other properties and frankly doesn't care.

I can completely understand your reasoning and perhaps it's worth a try. But in reality, your message is likely to be filtered by the EA before it reaches the vendor.

If the EA is competent, hopefully he/she will have already explained the to the vendor the possible impact that MIR & property tax will have on the value of their property in their particular part of the market. Unfortunately that's a big "if".