I am a follower of this forum and would be grateful for some advice.
My husband and I have a house in the Killester (D5) area – a very small mid-terrace house that we have been trying to sell for some time. We now have to make a decision – sell for about 60-80k less than we paid or stay put indefinitely. While the house is ok it does need some investment in the near future (new windows & doors, insulation, new boiler…) and it is much to small for our family (small kids getting bigger).
If we sold we would make enough (just) to clear our mortgage and we would rent while we look for another property. We want to move to the clontarf/raheny area but the 3 beds in these areas don’t seem to have shown much reduction in price of late.
So to sell or not to sell – any/all advice gratefully received.
The problem you will have in terms of future purchase is that as second time buyers you will need up to 20% for a deposit. This will probably be tough to accumulate in the next few years! On the other hand, if predictions on here and elsewhere are right, falling prices will reduce the amount you have to save (the opposite situation to a few years ago where prices rose faster than it was possible to save a deposit).
For the next few years I expect that green energy saving schemes will mean that costs of making energy efficiency changes will be low. Do you have any scope to extend or is there no chance the place will be big enough for you?
You’re in a tough position. Sell and face an extended period of renting or stay put and face possible negative equity. If the house really doesn’t suit and you can’t see any way you could make it, then I guess move and be damned is your choice. No?
We have had a number of people look at our options – extending is not possible (no room at back or in attic space). We could make the space work a little better (this would buy us a few years) but to do this would require investment to the tune of 60k or so and we wouldn’t gain that much space overall. We have some savings which we are loathe to invest in the house as it looks like we could be heading rapidly into negative equity… and these savings could be used for a deposit in the future.
I think we are leaning towards selling, but its good to get an outside perspective.
Yeah, it looks like you’ve run through the scenarios. And, to be honest, if you can find somewhere you are happy to rent, it’s not going to cost you a lot to get out of where you are, and you can sit tight for a while in comfort, it’s probably the safest thing to do.
What is making me cautious is these mad NAMA for negative equity homeowners. Could it be more advantageous to stay? I don’t see that the state would be able to afford it (which makes floating the idea really bad - “here’s some hope, oh sorry, tough luck, we can’t afford it right now”). So at the moment, I don’t see a situation where you won’t be able to buy at least your current house for less in two years time.
But I do see a situation where you might not be able to get a mortgage for anything in two years time, which is what is making me a little cautious. I remember my parents going to the bank manager to get a top-up to put on an extension in 1981 (or 1980). They practically went in on bended knee. There was no credit available. They knew their bank manager personally (everyone did) and had banked at the same branch for the previous ten years. Will it go back to that? I don’t know.
If you are happy to rent longer than you think you might have to, then do it. If you think you are secure in work, the same applies. If either of these are not the case, think about it. Sorry for putting obstacles in the way, but the dynamics are changing somewhat. IMF Mary has me a little spooked (nothing is said by chance…).
Have you taken the price of houses your interested in at face value? Maybe some viewings, asking the EA if the vendor is open to offers, and maybe making a few offers would give you a clearer idea of how far away you are from affording the house you want.
I’ve been looking at Marino, Clontarf, out as far a Raheny, Raheny seems the most sticky pricewise to me, but then asking and getting are two different things.
The other side of it, is your employment situation. You are not going to have a huge deposit by the sound of it, how does the income side of things stack up as far as the banks are concerned? The banks will want a sample of golden pee to give you money these days.
It may mean renting for a few years.
I’m most interested in Marino, not a million miles away, geographically or otherwise, and it’s very clear there that houses with no room to extend are not really selling, whereas their neighbours with extensions/big gardens are going like hotcakes. It might be a good idea for you to go as soon as you can.
Unless the worst is over for the city center (center-ish for Killester). I simply dunno! Not many here would think so though.
so we have an offer - 40k less than what we paid in 2005 60k if count work done on house. We will have enough to clear mortgage and give us a deposit (as we have been overpaying mortgage to reduce principle). On that basis would get a resonable mortgage for bigger house …trying to decide if we should accept?
Think about it. Owning a house you will never stay in is very risky. It is an investment (gamble?) in an asset that is very likely going to drop in value. Why are you putting yourself in financial risk by owning this risky asset when you can sell it and be free again? Many many things can go wrong over the next few years in Ireland and having the option to emigrate is worth an awful lot. Owning a house is just going to enslave you for decades until you pay it off.
Have you considered what will happen if/when interest rates rise again? If your rent is not covering your mortgage payments right now then are you able to fund the shortfall every month? If rates jumped to 8% right now how would that leave you financially?
It is simply too risky to own a house you don’t need - especially in an economy that is going to collapse, and when interest rates could easily jump. Why expose yourself to such a huge amount of risk?
The only reason to not sell is to keep access to your mortgage with the intention of transferring it somehow to a new place. But access to mortgages would only become a factor to get in an economic crash - and where you would be in deep negative equity and probably would be unable to sell the house anyway.
Take the offer and sell now. If you don’t you risk being stuck in a house that you clearly don’t want to live in long term. It sounds like you have some flexibilty regarding location and this will give you options . prices are still going down so think of renting short term and using your deposit to buy in early 2010.
Take your time to think about things.
You have children to think about!
Two key posts so far are :
Clearly you are taking advice and that is a good thing; a very good thing.
What would be useful to know is the percentage that 60-80k represents of the original and current selling price.
I understand that this is personal and perhaps confidential information but it would help greatly in Pinsters analysis. We work in percentages, you see.
If you are selling for 10% less then you should jump with both hands!
If you are sellng for 60% less then perhaps you should just sit tight?
Ask yourself some of the questions above:
Are our jobs secure?
Would we be prepared to rent for 8 years?
Would we be prepared to move rental accomodation ever 18 months if our landlords are repossessed?
Is this house really too small for the kids? Could they get by for another 2-3 years?
And the biggie - what fucking stunt will the govt pull next? Will I profit or gain from it?
I dont envy your situation.
I sold our properties in the UK ~2 years ago and made a nice profit, but now we are renting (very cheaply) from a guy who is up to his nuts in debt. We’ve had warrants served on our car (thinking it was the LLs) and repo orders and baliffs coming through/to the door almost constantly.
Personally I dont give a shit, but the prospect of having to move the kids and deal with rental agents again is a major pain in the ass.
If I could offer some personal advice I’d say ‘Count your blessings’.
In spite of everything you are in a forunate position - make the most of it.
% of original price = 25%; % of offer = 29%.
The big issue re sitting tight (which is tempting) is lack of space family wise.
Both jobs are secure (well in as much as anyone can say that these days). No problem with renting - at the moment bigger houses in nicer areas nearby are available for pretty reasonable rents. A related question - why do you say 8 years?
Firstly, Yogi mentioned ‘renting for longer than you think’.
I’m guessing from your reply that 8 years is ‘longer than you thought’.
Secondly, mortgage availability/LTV.
If you dont get a lump sum from a sale you will have to get a deposit together for a new place.
Assuming banks are willing to give a mortgage, how long would it take you to save a 20% deposit on a bigger house? Eight-ish years?
In the current situation, minimising your losses is as important as maximising your gain.
Selling gives us more options re moving - both jobs allow movement within Ireland and outside and we are seriously looking at all options. Renting for 8 years is doable certainly. Have some savings so lump sum is there for a deposit.
appreciate all the comments - very helpful. We may have made the mistake of not selling in 2007 but at least have never gone the route of high LTV mortgages. Dont intend to either.
Take your time on this, 3 bed semis dont have much to go in SOME areas, but I dont know anything about area you live or are working.
Have you looked at renting your house and renting somewhere else bigger for your family ?
Yes we had thought about that but in the area rent would not cover mortgage and in the next 2 years there is some essential work that would need to be done on house - would cost approx up to 15k. Rents are also falling alot in the area (killester).
Reasons to sell:
Your house is too small
You will still be in a good position to buy
You can afford to rent where you want to live
It’s pretty much a dead cert your house is going to fall further in the medium term
Current house is going to need investment.
You can afford the “loss”
You will be much more mobile from a career perspective
Reasons to hold
You will make a loss
The Gov might produce some magic wand to wipe out negative equity.