Making offer on recently sold house

nutjobb

In the past month we have went mortgage approved but have been keeping an eye on properties the past number of months. One house we like went for auction and sold in Feb 19. I have checked the land owner registry and it has been updated as of april with the new owner.

Would it be madness for me to approach the new owner and make an offer of 15 - 20% above what they bought for and how would I go about doing that? I have their name but don't know who they are. Get a solicitor to do it perhaps? I believe the house is still good value at that price. Located in a rural setting too if that makes any difference.

Dav010

nutjobb wrote: »

In the past month we have went mortgage approved but have been keeping an eye on properties the past number of months. One house we like went for auction and sold in Feb 19. I have checked the land owner registry and it has been updated as of april with the new owner.

Would it be madness for me to approach the new owner and make an offer of 15 - 20% above what they bought for and how would I go about doing that? I have their name but don't know who they are. Get a solicitor to do it perhaps? I believe the house is still good value at that price. Located in a rural setting too if that makes any difference.

When you add in solicitor fees, stamp duty and any CGT on profit paid by the owner, what you are offering probably wouldn’t be enough to tempt the owner to flip it.

nutjobb

Didn't account for CGT, is it 33% incurred on any profit?

Dav010

nutjobb wrote: »

Didn't account for CGT, is it 33% incurred on any profit?

Unless it’s primary residence, which given it has only been bought, is unlikely. Depending on the price of the house, 15-20% above what was paid, is just not worth selling. Obviously if the house was €1m and you are offering €150-200k above is a different matter.

Effects

nutjobb wrote: »

I have their name but don't know who they are.

You know where the house is, so call in.

You are going to have to offer them silly money to convince them to have to start looking again and cover all their costs. Sounds like a stupid idea. You could get a better house rather than having to pay way above what that one is actually worth.

JJJackal

I wouldnt sell my new primary residence for 15-20% above asking (again unless it was 1 million and was getting 200,000 more) - too much hassle.

A 200,000 house for example costs about 207,000 to buy with solicitor fees, engineer fees and stamp duty and other unexpected expenditure. 15-20% more would only be 30,000 to 40,000.

33,000 difference minus CGT (is that 33% on the whole 30,000 to 40,000 or just the difference after stamp duty and solictors fees). Then you have to factor in the new set of solicitors fees for buying another house plus new stamp duty plus moving your stuff from house A to house B (plus the hassle - having recently dipped into the property market 5 or 10 thousand profit (use the term loosely) wouldnt compensate you for the hassle, time and so on associated with selling house A and buying house .

nutjobb

JJJackal wrote: »

I wouldnt sell my new primary residence for 15-20% above asking (again unless it was 1 million and was getting 200,000 more) - too much hassle.

A 200,000 house for example costs about 207,000 to buy with solicitor fees, engineer fees and stamp duty and other unexpected expenditure. 15-20% more would only be 30,000 to 40,000.

33,000 difference minus CGT (is that 33% on the whole 30,000 to 40,000 or just the difference after stamp duty and solictors fees). Then you have to factor in the new set of solicitors fees for buying another house plus new stamp duty plus moving your stuff from house A to house B (plus the hassle - having recently dipped into the property market 5 or 10 thousand profit (use the term loosely) wouldnt compensate you for the hassle, time and so on associated with selling house A and buying house .

Thanks for your reply, I think you are right re the hassle of the whole situation. I am a FTB so I do not truly know the hardship involved in the whole process yet. I think the only way of purchasing it was if it was bought to flip and at that 20% increase may still be too low.

nutjobb

Effects wrote: »

You know where the house is, so call in.

You are going to have to offer them silly money to convince them to have to start looking again and cover all their costs. Sounds like a stupid idea. You could get a better house rather than having to pay way above what that one is actually worth.

How is making an offer on a property a stupid idea? Buyer gets a house they feel is good value and seller makes a profit.

I agree that 20% is probably not be enough after reading other posts in this thread but as I said above I have not been through the process so I cannot put a value on the hassle of the entire process and hence why I am looking for input. Unless it was bought to flip and a quick offer may be tempting.

I would still be willing to pay at 40% above what they paid, with the house still being value for money I believe.

Original price €120000
+20% = €144000
+40% = €170000

house value = €190000

.......

Unless it was crazy money above what was paid I cant see anyone agreeing to this who bought it to live in.

There is a huge non financial investment in buying a new house, you spend ages looking, you go through the struggle of bidding, missing out, finding somewhere else, getting mortgage approval, getting all your ducks in a row, and then finally you find somewhere that you manage to be the winning bidder on.

And only then do you start going through the pain of packing up to move, moving is hugely stressful (unless its your first place and you just have your clothes and a few personal effects), you spend money on furniture to fit the new place etc...

By the time you have moved in you have probably spent thousands on the move, plus invested a lot of time and effort in it.

There is no way someone wants to go through all of that less than a year after theyve just done it.

Unless they bought it for a reason other than being their home (ie, to flip to rent out)

cruizer101

It Really depends on the person who bought it. They may have been looking for ages found their dream home and got it in which case 50% over may not buy it from them.
Or they may have been planning to fix the house up a bit and flip it, whats the condition of house?
There is no way of knowing without approaching them, and no harm in doing so, but I wouldn't get your hopes up tbh.

Samuel T. Cogley

Nothing ventured, nothing gained.

Interested Observer

Samuel T. Cogley wrote: »

Nothing ventured, nothing gained.

Pretty much. It's unlikely to work but there is absolutely nothing to lose.

Askthe EA

Dav010 wrote: »

Unless it’s primary residence, which given it has only been bought, is unlikely.

Why would you assume it isnt?

JeffKenna

20% is probably a bit low. Depending on the initial purchase price I would approach them and offer 40% above what they paid for it. Nothing to loose.

Dav010

Askthe EA wrote: »

Why would you assume it isnt?

Sorry my post was poorly worded. What I meant to say that it could not be claimed to be a PR to avoid GCT a couple of weeks after being bought. The new owner is likely to have to pay CGT if it is sold to the op.

https://www.maneelymccann.ie/factsheets/capital-taxes/capital-gains-tax-and-the-family-home

“'Occupying' as a residence requires a degree of permanence so that living in a property for say, just two weeks with a view to benefiting from the exemption is unlikely to work.“


https://www.paylesstax.ie/capital-gains-tax-disposal-of-your-principal-private-residence/#.XNmsvRbhSEc

JJJackal

nutjobb wrote: »

How is making an offer on a property a stupid idea? Buyer gets a house they feel is good value and seller makes a profit.

I agree that 20% is probably not be enough after reading other posts in this thread but as I said above I have not been through the process so I cannot put a value on the hassle of the entire process and hence why I am looking for input. Unless it was bought to flip and a quick offer may be tempting.

I would still be willing to pay at 40% above what they paid, with the house still being value for money I believe.

Original price €120000
+20% = €144000
+40% = €170000

house value = €190000

if you think its worth 190000 the new owners might appreciate that too though

Muahahaha

OP check the RTB registers and find out if it is currently rented out. If it is rented then a landlord in the game for profit would likely be more interested in your proposal than someone who has bought it as their home.

3DataModem

Dav010 wrote: »

Sorry my post was poorly worded. What I meant to say that it could not be claimed to be a PR to avoid GCT a couple of weeks after being bought.

It depends on intent, and that is what the revenue will also look at. There have been plenty of people who have purchased residences and sold quickly due to some regret, or change in circumstances, etc.

(this is not intended to be definitive, but intent means a lot when it comes to taxation)

Askthe EA

“'Occupying' as a residence requires a degree of permanence so that living in a property for say, just two weeks with a view to benefiting from the exemption is unlikely to work.“

There will be months between the two sales in the fist instance and secondly, peoples circumstances change all the time.

I cant possibly see there being a CGT liability on it.

Caranica

My concern would be why it went for auction rather than private sale. Might be something else going on, issues with title etc

Dav010

Askthe EA wrote: »

There will be months between the two sales in the fist instance and secondly, peoples circumstances change all the time.

I cant possibly see there being a CGT liability on it.

Taking into account the advice from the accountancy firms above, I’m assuming the sales they refer to don’t happen in 2 weeks either. With all due respect, when seeking tax advice on a house sale, I don’t ask an EA, I ask an accountant, they tend to know a bit about these things, I wouldn’t like an EA telling me one thing about taxation, and Revenue telling me another, no matter how well intentioned the EAs assumptions are.

mocata

Dav010 wrote: »

When you add in solicitor fees, stamp duty and any CGT on profit paid by the owner, what you are offering probably wouldn’t be enough to tempt the owner to flip it.

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