Chances of selling in current market?

I have a mate who wants to sell up his three bed in Monkstown due to the fact that if you tried to swing a cat in it, it would be dead before you had got through a quarter rotation. Some places in his development were on the market in the last couple of years for in the region of 850-925k…he had an evaluation last week by a snake oil merchant, sorry, EA, who said that he would get 695, 675 min.

He hasn’t really thought through what to do with the proceeds of any possible sale, but wants to try and sell now to avoid going into negative equity.

Any thoughts or advice that I could pass on to the poor chap? The only piece of advice I could give him so far was that I thought he was mental if he thought he would get 695k for it.

Hi Peroni. Welcome. Is it an apartment or a house? Does he have a family he will be uprooting in order to release the equity? Is there a lot of equity in it?

During September 2008 there were several mini-runs on Irish banks as Irish depositors moved several hundred million out of the Irish banking system often into the Post Office, but the likes of Northern Rock and Rabodirect and sellers of Gold and German Government (bonds) were also beneficiaries of this movement. The net effect is that Irish banks are even more under capitalised and almost collapsed, necessitating AIB and Bank of Ireland to go to the government for help as they could not raise money in the interbank market at a price they were willing to pay, hence the Irish government guarantee.

They are also facing mounting bad debts that will further eat into their remaining capital, because they will not realistically quantify the level of bad debts, their shares cannot be priced and are falling to the floor, with only Irish pension funds providing the last remaining support.

Certain banks and even a building society will effectively not be able to lend for a few years such is their impairment and are likely to be split and bought over or closed down.

Seem in this context, the banks don’t have as much money to lend and survival for them is now the priority, there is little hope of making €675,000 in my opinion for a poky apartment and I will not be surprised if they are actually clearing at €500K or less.

It’s a three bedroom house, with a very nice conservatory, which takes up the majority of their back yard (can’t be called a garden). It’s a nice house, in a nice development, but it is small. He has a wife and son (for whom he wants a garden when he’s a bit bigger!).

I’m kind of extrapolating (using jeacle.ie/mortgage/) based on what he said his monthly mortgage was and the price he bought it at, and reckon their out-standing mortgage to be about 370k. I think they bought for 570k or so.

If he cannot envisage living there for the next 5-10 years (i.e. until the market makes some semblance of a recovery) I think he should sell.

I am pretty sure I know the development in question (Monkstown is small with very few new houses) and I would be surprised if he gets more than 600k (which is pretty scary since those houses were going for €800k plus only about 18 months ago).

If he is very lucky and he sells immediately he could get €200k capital out of the sale. He could put it in a deposit account and rent for a year. At that point he should be able to buy a better place in the same area (but take stamp duty on the new house into account when working out the figures).

They’re not in that bad of a position. I personally wouldn’t sell in those circumstances.

I don’t see how he’s a ‘poor chap’. He can afford the mortgage, he has some equity, he’d prefer somewhere bigger. Not exactly a cello going on there.

Well, he can’t really afford the mortgage, which is the real problem I guess! He works in banking, his wife isn’t working (childcare vs. salary maths don’t add up), and has an uncertain future and have just gone through a round of paycuts which leaves them in a precarious situation with regards to the mortgage.

Their plan would be to move somewhere much further out where they could both have a bigger place and a mortgage that they feel comfortable with.

Sorry, didn’t realise, I thought they were just wondering if they should take advantage of the current market.
Why doesn’t he put it on the market and see what he can get? That should make the decision for him. If he prices it below everything in his market he may get a sale, people still want to buy.

Have a look at what other houses of a similar spec are selling for.

Take 25% off of that price. That might give a ballpark valuation, but due to the cloak and dagger nature of property selling in this country, its hard to know.

I think most of the suckers are gone out the system at this stage. People that can buy are looking for “bargains”.

How trustworthy is an EA valuation? Ie, if an EA says it would sell for 675-695, does one interpret that to mean: set your asking price to this amount and (this part left unsaid!) accept that you will be getting offers substantially less than that that you’ll eventually accept, or does it mean this is a reasonable selling price?

To try and say it more simply: does an EA valuation typically represent an asking price or a selling price?