Cash Buyer Advantage

Returning to Ireland with a plan to buy a house (postcode not that important, but proximity to city centre is). Single, mid-thirties and will have around Eur250k to spend.

Have read a lot of the forum but was wondering was there any advantage in being a cash buyer in the present Dublin property market? It seems there should be some advantage over people needing a mortgage, but in this market, not everything is as it should be.

Have been tracking prices since just before Christmas - they seem to be rising, however, two schools of thought on this:

1. Part of a long-term rise in certain properties due to lack of supply.
2. Dead Cat Bounce - cash buyers inflating prices, but as they dwindle, the property prices will start to slow down again.

I am aware that no one really knows anything when it comes to this, and a house is only worth what someone is willing to pay for it, but would be good to hear any recent experiences.

Thanks!

Sean

Bigcheeze

The only advantage you might have is that you don't have a property to sell which could slow down the transaction for a seller who wants a quick sale.

Oral Surgeon

Bigcheeze wrote: »

The only advantage you might have is that you don't have a property to sell which could slow down the transaction for a seller who wants a quick sale.

Not the only advantage...

There is value in knowing that the buyer can close the sale by just transferring the funds from his account to yours and deal done... banks can hold up approval, look for more information mid deal or pull approval without notice....

riclad

YOU have an advantage, if you are buying an old house, 50 plus,
which might be hard for a couple to buy,
ie it would need a full survey,
Banks might be reluctant to give a mortgage on it,
as it needs say 5k of basic upgrading, modernisation, spent on it,
new windows etc
AND if the seller wants a quick sale , so he can buy another home,
you might have the advantage.
if he knows you are a cash buyer.

handlemaster

Elisabeth Unsightly Kiwi wrote: »

Returning to Ireland with a plan to buy a house (postcode not that important, but proximity to city centre is). Single, mid-thirties and will have around Eur250k to spend.

Have read a lot of the forum but was wondering was there any advantage in being a cash buyer in the present Dublin property market? It seems there should be some advantage over people needing a mortgage, but in this market, not everything is as it should be.

Have been tracking prices since just before Christmas - they seem to be rising, however, two schools of thought on this:

1. Part of a long-term rise in certain properties due to lack of supply.
2. Dead Cat Bounce - cash buyers inflating prices, but as they dwindle, the property prices will start to slow down again.

I am aware that no one really knows anything when it comes to this, and a house is only worth what someone is willing to pay for it, but would be good to hear any recent experiences.

Thanks!

Sean

Your catching the tail now

Roger_007

Lack of supply seem to be the principle driver of prices in the Dublin area. Cash is a definite advantage because it provides more certainty for the vendor that the sale will complete, and quickly. You can get a lot more for your money if you are prepared to buy somewhere a little outside the city. As ever, it's location location etc.

The Spider

Elisabeth Unsightly Kiwi wrote: »

Returning to Ireland with a plan to buy a house (postcode not that important, but proximity to city centre is). Single, mid-thirties and will have around Eur250k to spend.

Have read a lot of the forum but was wondering was there any advantage in being a cash buyer in the present Dublin property market? It seems there should be some advantage over people needing a mortgage, but in this market, not everything is as it should be.

Have been tracking prices since just before Christmas - they seem to be rising, however, two schools of thought on this:

1. Part of a long-term rise in certain properties due to lack of supply.
2. Dead Cat Bounce - cash buyers inflating prices, but as they dwindle, the property prices will start to slow down again.

I am aware that no one really knows anything when it comes to this, and a house is only worth what someone is willing to pay for it, but would be good to hear any recent experiences.

Thanks!

Sean

Well it wont mean that you can get a house priced at 350 for 250, however an apartment should be easy enough, personally I think when you hear cash buyer, you're hearing about people with a lot of reserve cash, but are still getting mortgages on top of it, the banks have no problem lending to anyone who puts up over a third of the price up front, (speaking from experience) the bank isn't as exposed to price fluctuations.

Price rises in Dublin are due to lack of supply, and there doesn't look like there will be any increase supply inside the m50, and certainly none in mature areas, there's nowhere to build.

As has been mentioned above, if you go outside you can buy something pretty decent for the amount of cash you have, but that may not suit.

johnnyskeleton

riclad wrote: »

YOU have an advantage, if you are buying an old house, 50 plus,
which might be hard for a couple to buy,
ie it would need a full survey,
Banks might be reluctant to give a mortgage on it,
as it needs say 5k of basic upgrading, modernisation, spent on it,
new windows etc
AND if the seller wants a quick sale , so he can buy another home,
you might have the advantage.
if he knows you are a cash buyer.

To expand on this point though, is it fair to say that the following are not in dispute:
1) 250k and no debts is a very strong position to be in to buy;
2) cash buyers should be at an advantage to buy, as you say, an older house maybe needing some work in a good area;
3) people looking for mortgages may be able to buy the same property if given a mortgage, but the banks are unwilling to risk it on a doer upper.

All these things make sense objectively. The theory is that I as a cash buyer but a good house in say drumcondra for 200k which requires 50k work. A purchaser who needs a mortgage would probably pay 250k for the house as is and 350k fully done up. But the banks won't lend on a doer upper.

Thus, in theory, cash buyer buys the gaff for 50k and can potentially add 100k value for 50k worth of works. Sounds good to me.

But now let's look at the reality. People, ostensibly cash buyers, are buying 3 bed semis in places like drumcondra for in excess of 400, 500k and then putting another 100k into it. If they have the cash and want to spend it, then bully for them. However, I can't see the mortgage buyer wanting / being able to buy the house at that price, nevermind at a greater price.

So, barring massive inflation in the next few years, I don't think cash buyers have an advantage on price at the moment. Their only advantage is that they can buy property now while mortgage(d) people find it very difficult.

I find it difficult to understand dublin prices now, and the idea that they will rise to greater heights when mortgage approvals increase seems crazy to me, in the absence of inflation.

lolosaur

your a year too late. all the bargains are gone chum.

handlemaster

lolosaur wrote: »

your a year too late. all the bargains are gone chum.

so true.. the train has left the station, best race to the next station or wait for another train.... no timetable on that one showing just yet

lolosaur

Jan-July 2012 was reayy the time to buy.

stopped dropping then, tailed off to xmas 2012 when they took away the mortgage interest relief so big jump before that went on 31 december. jan 2013 saw a little bit of increase followed by quite a jump heading into feb march and april, when things just exploded back into life, houses were being mopped up left right and center in the lower end of the markets. the middle end between 230-300000 is growing at much the steadier pace now, leading into anything you look at being near minimum 220000, even in a **** hole.

So Dublin is back with a boom.

talk of nama flooding the market is pants. supply and demand are askew.

my advice is, see something you liek and go for it if it is something you are prepared to live in for the next few years, if not. rent.

Heisenberg1

lolosaur wrote: »

Jan-July 2012 was reayy the time to buy.

stopped dropping then, tailed off to xmas 2012 when they took away the mortgage interest relief so big jump before that went on 31 december. jan 2013 saw a little bit of increase followed by quite a jump heading into feb march and april, when things just exploded back into life, houses were being mopped up left right and center in the lower end of the markets. the middle end between 230-300000 is growing at much the steadier pace now, leading into anything you look at being near minimum 220000, even in a **** hole.

So Dublin is back with a boom.

talk of nama flooding the market is pants. supply and demand are askew.

my advice is, see something you liek and go for it if it is something you are prepared to live in for the next few years, if not. rent.

Spot on early 2012 was when the market was at its lowest all theses repossessions that people think are going to happen are not in the desirable areas of Dublin that so many people want. The difference in what we are seeing now compared to the tiger years is there is very little credit available and the lack of supply is causing the increase prices.

TheDriver

But only in dub and parts of cork. In towns the 100-150k market is steady but not jumping whilst 200k upwards is very slow.
any house i viewed had ZERO interest in cash and most had no idea of possible advantages...

riclad

I Think most of the property nama owns in dublin,is apartments,and some ghost estates.
so they cant flood the market.
The older cheap houses are gone ,in the dublin area.
When i say work, i mean new windows,doors,basic repairs, maybe 10k plus ,
a house that has almost no insulation, with a low ber rating.
ie a old house that needs a structural survey.
NOT a typical semi d thats 20 years old.
I dont recommend buying a house that needs 50k, worth of repairs.
Unless its selling for a low price.

lolosaur

btw, in case you are looking at older houses.

Things to consider

Does it need rewiring? 2k
new front door? 800-1.5k depending on specs
new windows? averaging 3-5k depending on what you get
does it have radiators/boiler. new boiler maybe 2k, rads extra, looking anything like another 2-3k


Thats on top of your basic needs. fridge/cooker/washing machine/ dishwasher - 2.5k minimum.

skip hire is a cost alot of people dont take into account either, looking at 500 quid for a big skip.

Then your solicitor fees. adding up all the bollockology, your looking at the guts of 3-4k including stamp duty.

It all adds up chum.


to even get a place barely livable, you are looking at about 10k minimum without being lavish.

Im sure ive forgotten a few things from main requirements but if i remember rightly, those were the main things i was looking at.

Rob8

Yes there is an advantage - agents reporting up to half of all sales in Dublin currently are to cash buyers. they are quicker to complete (mortgage approvals taking a while) and also some would be buyers finding problems with mortgages still. One agent told me that even when a cash buyer was offering a little less, most sellers were opting to sell to cash buyers

Thanks for the replies - very interesting. Yes, figured I have missed the boat somewhat - even since Christmas, there have been significant price rises. Have a few places in mind for when I get back at the start of April - not going to buy an apartment - looking to buy a house, close to town and its somewhere to live, so if needs be (which it will) do it up slowly.

I am not going to rent and hope for some increase in supply/drop in prices, as I think that might be wishful thinking. Have factored in moving costs which are extra to the 250 - so have another 20k in reserve. Will see what happens when I get back and check out the areas.