Buying a Property: A Walkthrough?

Paddy Fields

I am about to stick in an offer on a house I am interested in. I know my first offer is 4k below the asking price but hopefully over the next few days we can reach agreement on a price.

Question: If for example the house is €75,000 is there a token holding deposit that I can pay to hold it for me as opposed to an official deposit like €250 for example. Reason I ask is if it was a 10% deposit just to hold it then I do not have €7,500 at this point.

Thanks all.

The_Conductor

The 10% is normally the deposit- as it is lodged directly in the vendor's solicitor's account, and it is from this that they draw their fees (for arguments sake just ignore the ethics of this- its not worth it).

The 10% is pretty standard- there is no law anywhere though that says it has to be 10%- it can be literally anything at all.

ted1

Paddy Fields wrote: »

I am about to stick in an offer on a house I am interested in. I know my first offer is 4k below the asking price but hopefully over the next few days we can reach agreement on a price.

Question: If for example the house is €75,000 is there a token holding deposit that I can pay to hold it for me as opposed to an official deposit like €250 for example. Reason I ask is if it was a 10% deposit just to hold it then I do not have €7,500 at this point.

Thanks all.

A deposit can be anything. Lots if people get 92% mortgages so a 10% deposit may not even be possible for them

Rachiee

Also note that the deposit doesn't really hold the property it just shows that the offer is serious enough for both parties to proceed. Both parties can pull out at anytime up til exchange of contracts.

Have you been pre-approved ? Once your offer is accepted you have a few days to go to the bank and get your 10% sorted. If this isn't available are you sure you're ready to make an offer?

Also 4k under the asking price isn't much why not go 10k under then come back up to 4k under in negotiations?

Good luck

Baby01032012

€5,000 is the standard booking deposit which is fully refundable should sale not progress. 10% of sale price is the sum less booking deposit payable on signing of contracts. Booking deposit goes to estate agent not solicitor.

Why do you not have 10%, how will you fund the purchase if you don't have deposit and where will balance come from?

D3PO

as others have said there is no officail booking deposit alrhough 5k is the norm.

Being honest if somebody put in an offer on my house and then offered me €250 booking deposit id immedialty discount their offer and consider them a time waster and look for somebody else to sell to.

If you can only afford 250 quid as a deposit you shouldnt be looking at houses until you sort out for financial situation your going to be seen as a timewaster until you do.

ted1

Baby01032012 wrote: »

€5,000 is the standard booking deposit which is fully refundable should sale not progress. 10% of sale price is the sum less booking deposit payable on signing of contracts. Booking deposit goes to estate agent not solicitor.

Why do you not have 10%, how will you fund the purchase if you don't have deposit and where will balance come from?

As I stated above, if he is getting a 92% mortgage then he'll only have an 8% deposit

whippet

Paddy Fields wrote: »

Reason I ask is if it was a 10% deposit just to hold it then I do not have €7,500 at this point.

if you don't have 10% of the offer price - how could you be looking at completing the purchase?

Even if you get a 92% LTV, you will have Solicitors fees, stamp duty and all the other expenses that come with a house purchase. Also, i'm sure no bank would approve a mortgage with out the funds sitting in the account!!

pwurple

Didn't realise the 92% mortgages were back on the market again, but yes, you'll need the cash saved for fees, duties, searches, engineers etc. The price of the house is not your total outlay.

You will also need evidence of building up savings for lenders. I wouldn't consider putting a bid in on a property until I had the funds saved, and the mortgage approved in principle. You're wasting your own time, and possibly money if you go as far as engineers etc.

riclad

DONT forget stamp duty ,1per cent of the house price.
legal fees average cost is at least 1000 euro.

Paddy Fields

Thank you for the replies... Just to add and I never thought to say I will be a cash buyer. However the sale of my current house is in moving along but at this point I haven't seen a cent. I pulled the €250 out of the air just as an example to sort of set the wheels in motion. However I could come up with a few grand on the condition that my bank would increase my current overdraft but even at that I'm not sure it would stretch to €7,000.+

Henry Ford III

Paddy Fields wrote: »

Thank you for the replies... Just to add and I never thought to say I will be a cash buyer. However the sale of my current house is in moving along but at this point I haven't seen a cent. I pulled the €250 out of the air just as an example to sort of set the wheels in motion. However I could come up with a few grand on the condition that my bank would increase my current overdraft but even at that I'm not sure it would stretch to €7,000.+

Sell your own place first then.

Murphj7

I have been told today that my bid has been accepted for the house. The estate agent is asking for a deposit. Is this normal?

L1011

Murphj7 wrote: »

I have been told today that my bid has been accepted for the house. The estate agent is asking for a deposit. Is this normal?

Yes, booking deposit. Doesn't assure you of actually getting the house, something to take account of.

riclad

BID is accepted ,you pay deposit, to show you seriously intend to buy house.
if deal does not go thru,
you get the deposit back.
in theory the buyer,or seller ,
CAN stop the transaction,
anytime , until the day the contract to buy are signed .

Mizenly

Hi, I hope it's ok to jump in here - I had an offer accepted on a piece of land and paid a booking deposit 9 months ago, and have heard nothing since. My solicitor says he has never seen anything like it, and I have no experience of buying property, so I am totally at sea! On my solicitors suggestion I sent the estate agent an email yesterday morning (he was out of the office when I called) to ask what the story was, but have heard nothing yet. Can they really keep me waiting forever ( in terms of progressing the sale)? I believe if I got the property at the price I offered it would be a bargain, I'd hate to lose it! Thanks for any advice.

marie rosanna

Mizenly wrote: »

Hi, I hope it's ok to jump in here - I had an offer accepted on a piece of land and paid a booking deposit 9 months ago, and have heard nothing since. My solicitor says he has never seen anything like it, and I have no experience of buying property, so I am totally at sea! On my solicitors suggestion I sent the estate agent an email yesterday morning (he was out of the office when I called) to ask what the story was, but have heard nothing yet. Can they really keep me waiting forever ( in terms of progressing the sale)? I believe if I got the property at the price I offered it would be a bargain, I'd hate to lose it! Thanks for any advice.

9 months without hearing a thing is amazingly and dreadful. Your solicitor is seriously at fault here. I would have been onto them on a forthnightly if not weekly basis wanting to know how the sale was progressing. I would have real issues with your solicitor and really cant understand that you waited that length of time before checking with the EA. it should have taken at most, a couple of months give or take a week or two. best of luck and keep on at EA and solicitor....

Mizenly

Thanks Marie, I definitely have some doubts about the solicitor, but he says he has been making regular contact with the estate agent, or trying to. When he does make contact they told him that the seller's bank had mislaid the deeds (it is being sold by a receiver). I am kind of worried about making waves because as I said I think it is a great price, and I couldn't afford higher! I 'joked' to my solicitor that I was afraid they were waiting for a better price, and he basically said yeah, maybe - but I can't believe they can string me along, with my deposit in their account, for as long as they like? Anyway, good to vent a little

marie rosanna

Mizenly wrote: »

Thanks Marie, I definitely have some doubts about the solicitor, but he says he has been making regular contact with the estate agent, or trying to. When he does make contact they told him that the seller's bank had mislaid the deeds (it is being sold by a receiver). I am kind of worried about making waves because as I said I think it is a great price, and I couldn't afford higher! I 'joked' to my solicitor that I was afraid they were waiting for a better price, and he basically said yeah, maybe - but I can't believe they can string me along, with my deposit in their account, for as long as they like? Anyway, good to vent a little

the same happened to me with a house purchase, it tooks 4 months for the bank to give permission to the vendor to sell, and after another two months I still had not received any paperwork. I had a deposit on the property all that time, and I could have been gazumped at any time. Your deposit is a refundable deposit. there is nothing contractual at this stage and I am sorry to say to you that he could take a higher offer if he so wishes, sorry to pass on the bad news, but all the best on it nonetheless

OREGATO

Hey guys,

I've been lurking on here for a long while but thought I'd share my own experience and something I wrote up on another forum to do with buying a house as there were some good questions raised around the process.

Here is a post I put up on a separate forum, hopefully it'll be of use to some of you in the same boat. Before November last year, I knew nothing only the high level of whats expected, having gone through the cycle, I decided to put together some of the insight I gained from my own experience on buying a house. It goes through the steps (we took) and some risks we identified along the way

Some details about me:

First Time buyer with OH, no dependencies, no loans etc. Buying in SCD (I know, I know)

I feel that the information below should give most people in a similar position some idea of what to expect..

Just for some more information, here are some risks we identified with each step that could have or could still potentially affect the sale. Some will not apply but it might just give you an insight of some of the stuff you might encounter. Some didn't apply for us but these are generic things that I think would be useful for someone close to our position. I'm by no means an expert or working in the field so please do update or chime in with something constructive that may help others.

Hope this is helpful to some of you.

1. Do the math, have your savings in place, solicitor fees, stamp duty and statements etc ready (online banking is a godsend). A further step we took was to have a surveyor, valuer, solicitor, builders, electricians all lined up. Trust me, it's a lot easier to be able to pick up a phone to any of these guys sooner and ask them a question than cold calling when you have a query when you're sale agreed.

- You may realise that the cost of builders/electricians etc will all mount up into costs that you weren't expecting.
- Things like permanent employment for less than 6 months, outstanding loans etc may affect or limit your borrowing power.
- Do the math on costs of commuting, schools and other factors as well. Factor in contingency as you never know what'll happen.

2. Get Mortgage approval in principal - go through a broker or go to a few banks, see what's on offer and do the math again

- The bank may not offer you what you expect depending on your own financial situation. They were very tough after the crash but have seemed to loosen up a little (this is from talking to others in a similar position to us) - for example, if you have an existing mortgage and want to take out a second, back in the good dsays, they would have taken rental income into account, they don't any more.

3. When approval in principal is sought, we went a step further here as I have a close relationship with the bank and was told to put in a house that we'd be interested in. We filled out all the forms, got the salary certificates signed, P60's lined up, statements lined up, utility bills, passports and driving licenses etc and submitted it to make sure that we were fully approved and didn't just have the in principal approval.

- All quite straight forward, one thing to note is, for your salary, be sure that you put down your basic pay and not factor in bonuses or overtime (if it isn't guaranteed) We were fine for this but a few contacts I have did mention that some applicants got approval in principle by stating they were earning €70k PA and when the time came for the actual mortgage application, they were declined because the figure of €70k was made up of €25k basic and €45k potential bonus/commission.

4. Go and look at houses - by far the most daunting and frustrating part - but a necessity all the same

- Your biggest risk with this is dealing with idiotic estate agents. Take a look at boards.ie and other property related websites for some insights into some of them. We're dealing with some very professional and decent crowd and have had no issues. Emails/phone calls answered promptly etc.

5. When you've found a house or houses that you're interested in, make an offer if you are ready. This process can take a while depending on other bidders, the seller etc.

- Biggest risk is being outbid or getting caught up in the whole process and going above and beyond what you can afford in a bidding war.

6. If your offer has been accepted, you will then need a booking deposit, typically €5,000 which is payable to the estate agent. You are now officially sale agreed. The estate agent will take the house off the market and issue instruction letters to both parties' solicitors.

- No big risk here, just make sure you have the booking deposit - forgot to mention, the booking deposit comes off your 10% deposit. So if you are buying a house for €100k, have a deposit of €10k and require a booking deposit of €3k, it'll mean that you pay €3k to the estate agent when you go sale agreed, €7k will be given to your solicitor (which is the rest of the 10%) and you'll be paying back the €90k mortgage (and the interest of course)

- Booking deposits are also refundable by law, up until the point that the contracts have been signed.

7. In the mean time, you should get the valuation and the survey done on the house - Valuations will depend on bank and each bank will have their own form that they want filled in. Just make sure you notify the company as to which bank requires the valuation.

- Like a used car check, you may find that there are some substantial issues with your house which may make the purchase implausible - that's the worst case scenario. Most of the time, the surveyor will find some - relatively small items that need doing.

8. Receive the survey report and if you have anything, raise it with your solicitor for further clarification or the estate agent - in the case that you need a builder in or some other professional to look at a certain aspect of the house

- See point 7, I'd recommend that you get any points on the survey report you're unsure of, checked out prior to signing.

9. Your solicitor (make sure you get a good one) will inform you when contracts have been received by the vendors side, (when the vendor gets the letter of instruction, their solicitor will go about getting the deeds if not already in their possession, doing checks on same and then drafting up and sending a contract to the buyers side) In the letter, you will be advised of a closing date, by which the contracts should be signed and you will hopefully get your keys. Inform your bank - they will issue a letter of offer to your solicitor - this is the document they fill out with you when you go in to sign the contract.

- From what I gather, once you go sale agreed, there isn't really any driving force in the process, so sit on your solicitors if required.
- Letter of offer is the form your solicitor will fill out and send to the bank, if you got mortgage approval six months ago, you may find that the bank will not offer you the same amount as 6 months ago, based upon your current situation and their thresholds.

10. Sort out your life assurance and home insurance - your bank will be able to advise and get this in place for you.

- Life assurance may require a medical, if you are in ill health or receiving treatment for something, this may delay you/hike up your preimum

11. The next step will involve your solicitor going through the contract and making sure all is in order - there may be delays if there are questions over different points within the contract. Your solicitor will also do their own check on the property in terms of deed and title checks

- Lost title deeds, delays in if it's a repossessed house, judgments against the property etc can cause delays here.
- With regards to a house that is occupied - discussions may arise from the contents of the house and if you'd like to purchase these with the house etc. Something to factor in as well is what will be left and what will be taken. Simple things like curtains and basic furniture like bed frames and white goods should be taken into consideration.

12. Once your solicitor is happy with the contract, they will get you in to sign, normally, the days leading up, you will be able to go into the house to take a look, potentially meeting the sellers.

- No real risk here.. I don't think.

13. Once you sign, then the contract goes back to the sellers side and they will go through the same exercise with their solicitor.

- If you're buying from someone who is also going sale agreed on another property, they have up until this point to pull out and they could well do if the house they're purchasing falls through for whatever reason.

14. If all goes well, you will get your keys (the date will be determined by the closing date but could be before or after depending on delays etc

From here, the risk is you can't afford your mortgage!