Buy/Wait-Reduction in price question.

FT buyer looking at properties in the Artane/Donaghmede/Raheny area.

Viewed a 4 bed 2 bath listed at €X. Vendor has now reduced to €X – 10%. Property originally listed in Feb at €X +1%. There were then a few €5000 incremental drops before this reduction.

Reason for reduction is that quick sale (move abroad) required.

Without courting controversy, what are people’s views? We are, as everyone is keen to point out, in a falling market. However, is it possible that with a legitimate (?) reason for quick sale, we could be getting the property at “next year’s prices today”? Should we engage a valuer to value the property pre-offer? However, there is some truth in saying that it is only worth what someone will pay for it, and the house has been on the market 5+ months.

Also, we are currently paying about 4% annually of the purchase prince in rent. So if the property is offered at 12% below the original purchase price (in Feb) today, and it drops 4% in value in the coming year, I still end up on top right?

And in the event that your advice is to go in with an offer-what offer?

Why not tell us the price? I don’t get that. A lot of people on this site are v knowledgable about prices and can point you in the right direction.

Perhaps the poster doesn’t want the particular property easily identified? You might be surprised who might be reading these threads.

Apologies, am after getting in trouble over on AAM for discussing prices so was being deliberately value as opposed to price oriented.

Edited to remove prices

I would say… hmm…

independent.ie/business/pers … 33768.html

Asking minus 40% should be ok?

I suppose technically, if you’re basing it on Jim Power’s comments, then it’ll be 40% below whatever the property would have gone for in 2005, rather than 40% below the current asking price.

Minus 40% of the 2005 peak value? I would say that is close to half a mill, meaning 300 would be the appropriate offer by your estimation?

I think we posted at the same time. :wink:

Ok so, besides ‘property watch’, are there any means of finding out what similar properties went for in 2005?

Try looking up the property section of the Irish Times digital archive. You can access it for free from your local library.

Thanks for that.

That would be true only if your monthly mortgage payment was €0. Assuming it isn’t, you have to take into account the mortgage interest you’ve paid (just as “dead” as rent) and as well as that any equity repayments which don’t exceed that 4% loss (in your first year, probably all of them) are “dead money” as well.

Apologies, my reasoning was very muddled.

If the value remains even, then I have 4% equity?

If the value drops 4% or less I am even/slighly ahead?

Yeah, sounds good. Look, you can pay the 400+ approx now, or wait and pay 300 approx. Time marches on.

Only if you’re paying 0% mortgage interest. You accumulate equity very slowly in the first few years of your mortgage; play around with jeacle.ie/mortgage to see how it works.

No, you’re probably paying off 1-2% or maybe even less equity in year 1.

Ok so, on a house offered to the market at 380 today, is it even worth putting an offer in of 300?

Yes

To be honest, I’m not sure anyone here can give you a direct answer to that question. Only you know the exact details of your own personal and financial circumstances. All that I can say is, given the current climate, do not put yourself in a position where you endure any kind of unnecessary financial strain due to this purchase. Apart from that, it’s quite possible that the whole point is moot - the vendor and/or agent might scoff at an “offensive” offer of 300 - and you may decide to watch and wait for a little longer.

Hi Helsinki,

My wife and I are the process of buying at the moment. I’ve posted on the pin and got some helpful feedback which was much appreciated. We are paying 280,000 for a 6 bed house on an acre when the the asking price for the same house last year was 400,000. If you are happy that you can afford it it really depends on whether the house is suitable for your needs. We’re buying in the countryside and are adamant that that was what we wanted. We didn’t want to live in an estate in a town but thats just a personal choice. If you’re buying in an estate I’d be inclined to offer even less than 300,000 as even if they say no there are surely other similar houses in the area that you could purchase in a year or two for less? The next most suitable house in our area is priced at over 40% more than what we are paying so we are thinking that we’re getting good value. I know a lot of pinsters may disagree and say that if we waited for another two years we’d get a house for less. That may well be true but we almost definitely would not get one like this.
Best of luck whatever you decide.