Friend-currently a house owner in commuter town; this week has decided to put an offer on an overpriced house in NE Dublin suburb.
Has expectation that they may ‘get it’ for 5% less than asking and was citing figures thrown around by the EA of 30% over asking achieved in 2005.
I am sure you have all been in this situation before: what do you do: quote unwelcome facts and figures until blue in the face, or accept that some otherwise rational people will ignore all reason and continue to behave with abandon in pursuit of their ‘dream house’.
With advice given to my own parents (thankfully they took it but not after some arguing) they live a lifestyle and in a location I never enjoyed while in the nest. Only now 12 months on they are really beginning to see it for what it is.
However they still haven’t stopped asking me when I will buy You can’t win them all.
Run them through a couple of scenarios on the mortgage calculator.
Inital Purchase Price - €500,000 (say @3% interest for 30 years - taking a Japanese possible future)
Click on the summary button to get:
Monthly payments - €2,108.02
Total Interest - €258,887.29
Total Payments - €758,887.20
Reduce the IPP by 10% - €450,000
Monthly payments - €1,897.22
Total Interest - €232,998.22
Total Payments - €682,998.22
Reduced the IPP by 20% - €400,000
Monthly payments - €1,686.42
Total Interest - €207,108.76
Total Payments - €607,108.76
It they still wish to give those honest, upright individuals in the bank their hard earned money then so be it.
Hmm, I’ve been debating this myself for about 2 weeks now.
A friend mentioned buying a do-er upper (executor sale) at a knock down price (just knock the gaff down please) and also mentioned prices going up (picture airplane-taking-off hand motion) in the summer. I am afeared where the “prices going up in the summer” idea came from.
In the interests of full disclosure, there’s a bit of previous there, so truthfully I’m debating whether to say anything rather than whether to say nothing (if that makes sense).
Mmmm I’ve given up with only a success rate of 1 in 4. The 1 didn’t even buy me a pint with the 250k I saved him and the other four all think I’m not buying just to rub it in their faces.
Altho that said with casual acquaintances I have recently done the “You are buying a house in IRELAND? Now? Are you mad?” Which apparently worked with one person.
I would avoid being blunt about advice, as in saying “don’t buy now”. Instead I would point out things like the number of empties, the tightening of credit, the increase in unemployment, falling rents. Then I would mention some of the fundamental theories of value (e.g. the 14x rents, 3.5x average salaries + 20% deposit) to arrive at a figure of what house prices can be like.
Then leave them figure it out. You can only lead a horse to water.
I’ve advised members of family not to buy and they have bought anyhow even though rental income wasn’t covering mortgage.
Later I advise them to sell while the market is still bouyant pointing out absolutely no further upside to the investment.
Now this weekend they’re complaining they have no tenant, tenants are scarce on the ground and mortgage is still more than plunging rental income even though mortgage rates have dropped hugely in the last year.
All I can do to console them is say that mortgage rates are lower than before and as property is fresh it is still letable unlike some of the poorer stock on the market.
Relatives don’t listen to you as they know you are not a genius with an abnormally large skull to hold a larger than normal brain and will instead listen to the media who “must” know what they are talking about.
Yes Yes Yes Yes Yes - stick your sticky nosey beak so far up their h*le that they wont be able to walk for a week never mind sign any papers.
You say this person is a friend?
Call every other friend of theirs and tell them what they are about to do. Call their mum and any other members of their family, Call their doctor or any psychiatrist from the phone book and please get this person the help they so obviously need!
This friend of yours is obviously high on something and needs to be talked down. They may not like you for it - you may not be friends with them after their rehabilitation but as friend it is your duty to do your best to stop them.
Go with reason first, if that doesnt work, then go with peer pressure. If that doesnt work then go with “telling on them” (rat them out to sensible parent - usually their dad) and if that doesnt work then try and get them committed for a short stint (lie about their crazed drug habit if you have to).
I no longer live in Ireland but in 2007 (before I left) I had successful “interventions” with 2 family members and 3 close friends - so far only 1 child has been named after me.
+1 on the never mention again. i also adopted a more general policy of only mentioning something twice and never again, if it is an opinion state a few of the most important weighted factors and if they do not want to hear, that is their choice. just too frustrating and we tend to glorify our successful opinions to the exclusion of the people/sources they can from, while contrary remarks may be taken as offensive. it is a no win but remember u are expressing an opinion.
on the other side of expressing opinion - personally, i was put under alot of pressure from family to part invest in property projects from 2003-5, a small estate in meath, mayo, small apartment blocks in dublin, galway etc. my cash would have facilitated bank loans and achieved other peoples ambitions, all i could do was site a few authorities that called it a bubble, while the truth was that i really never gave a crap what sort of house i lived in and was bored shitless by the mania so my justifications reflected this(in retrospect the 23% gdp in construction was only my second reason what i thought it was doomed. apartment supply with a decreasing 20 something demo was my number 1 reason. did not envision the credit bust, even though i said it’s exponentional expansion was unsustainable for years, until visa floated and caped so low ) . well it could have caused huge strife in the family, if i ever let the topic arise and now some people are licking there wounds but it is not much more than pride that gets hurt if u can stay afloat. swings and roundabouts we will all be there one day. stupid pride can get hurt by words