When, if ever, will we see identifiable forced sales?

When will we see forced sales with 20%-plus discounts to today’s norm?

  • Before end July 2009.
  • Before end Sept 2009.
  • Before end Dec 2009.
  • Before end March 2010.
  • Before end Sept 2010.
  • Before end Dec 2010.
  • Before end June 2011.
  • Before end Dec 2011.
  • Later than 2012.
  • Never.

0 voters

Basically, I am seeing zero evidence of genuinely panicked sellers, even this far into the crisis.

(I’m not saying panicked sellers are a good thing, glee policy and all that.)

Right now, all the asking prices indicate an extreme degree of nonchalance among sellers, with nobody breaking ranks offering a game-changing discount. They are only willing to sell for a high fraction of the 2006 peak, and otherwise they are zen-like and will refuse to treat.

I accept that the concept is quite fuzzy. I would say, if I had to put a figure on it, that a 99,000 asking price for any Dublin private dwelling within the Royal and Grand canals would qualify.

3-beds for under 150K outside the peripheral working-class areas (Ongar, Mulhuddart, Tallaght etc) without an advertised “need of full modernisation”.

I’d say ppl are holding out a bit longer expecting sping early summer to be good, it might happen then when they see that it’s not happening.

Well, if you’re delusional now, why not stay delusional until 2014 and beyond!

I’m talking about a real, no-joke forced sale: where the owner sees that he is better off getting rid of the property or else risk losing his possession in court. In this situation, the owner is almost certainly going to be unemployed.

Because, frankly, it is a far better place to be in, selling your 3-bed in Cabra for 99K rather than losing your 3-bed and still owing the bank 300K, and having no job or place to live.

At least in the former situation, you have 99K, you can make your mortgage payments every month for the next several years, you can probably rent a place quite cheaply and have the breathing space to get your life back on track. Or not, I’m too tired to think this through…

Possibly one around here recently. I’m lead to believe a 4 bed went for €210,000 when most are still asking in the region of €400,000 to €450,000, asking price never dropped on Daft and absolutely no proof other than the neighbours giving out stink about it.

Forced sales could be going on all the time at relativity sane prices even though asking prices are ridiculously high. Without a national property database listing sale prices we’ll never ever know.

How would someone sell the house in negative equity, keep the 99k they get, keep paying a mortgage on a house they sold and still owe the bank 300K?

I dont think we will ever see it as there would be subversion by VIs and the state to avoid this which is manipulation of what should be a free market, welcome to Ireland.

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If it could happen, it would be happening…

With property, you cant sell what you dont own.

Basically, to sell for less than the outstanding value of the mortgage requires the active co-operation of the bank who provided the mortgage against which the deeds of the house are held as security. The deeds are with the bank till the last penny is paid off. In return for the deeds of the house, the banks will need their account settled.

I have heard stories of banks going to people who have money being offered property at very deeply discounted prices. Mostly land and sites… The rumour mill has the original farmer who sold them is getting them back for wayyyyy less than what he sold it for a few years ago… Cant verify this… but its possible, as if a bank has called in a developer they will do whatever they need to to get cash. But I dont actually know anyone who has done this so I dont know if these are urban myths or not…

Now on other stuff its happening all the time and people here probably don’t notice it… Plumbers, carpenters, electricians, groundwork contractors are having their property (trucks, tools, equipment) repossessed and sold to the highest bidder in public auctions up and down the country. In a depressed market, with those who owe the money paying for the auctions and left owing the balance as the prices are very low… But nobody gives a shite about them.

If you sell your 3 bed house in Cabra for 99k when you owe the bank 300k do you not have to give the bank the 99k and then still keep paying back the other 201k as a personal loan?

Can’t give a timescale to it, but there will come a time when personal bankruptcies increase. This will lead to an off-loading of BTL properties, IMO.

I can’t think of anyone I know who would sell their property unless forced to by the banks, they all intend ‘riding it out’. So IMO we wont get forced sales till the number of repossessions goes above the number of the banks’ inner circle of willing buyers. Only once the chosen few have their fill of cheap property will the rest of us mugs get a shot.

Canny is sitting tight, cos he’s been promised “recovery” in the second half 2010. Never underestimate the stubborn muleheadedness of the Irish Property Investor, I think the last 3 years have taught us that. Whatever way they can they’ll keep scraping up the money from somewhere to meet the BTL mortgage.

Only when all other assets have been exhausted and Canny’s family are flat broke and barely able to afford a staple diet of Lidl porridge will he for a second countenance dumping his “investment”.

I’d give it another 18 months before the pips really start to squeak, and possibly another 3 or 4 years before final capitulation.

But does selling at a huge loss actually solve your problem? You still owe the banks a huge mount of money that you can’t repay.

Maybe people are hoping Ireland will reform bankruptcy laws before they are forced into that position.

You will never get the opportunity to sell without the consent of the banks, let alone ever see the 99k… There is no way a bank will give up the deeds of your house which is security against the 300k mortgage in return for 99k cash and a 201k personal loan. Not even for 201k cash and a 99k personal loan.
The vendors bank own the house and calls the shots. People were allowed to move out and sell property by the banks when prices were going up because the banks got paid and were happy to not even mention who was in control.

Yes but put yourself in Cannys shoes

Say Canny owes Xk mortgage and rent is bringing in 700/month and her mortgage is 1k/month … Now lets pretend Canny knows the score, the thing can only be sold for X-100k … What does she do?

Canny’s options are very limited.
The bank want the full Xk, they want Canny on the hook for this… So the bank may agree to the sale if Canny lobs the extra 100k on her personal mortgage and the bank have calculated this lessens their overall exposure… Remember who is in control…
Canny is losing 300/month on the thing as it stands but at least she is paying for an asset that is worth something…
If she sells. she will still be paying the extra 300/month on the extra amount on her home mortgage

Dumping the investment is no guarantee that the family diet will change…And Canny will only be allowed dump the investment on Mr. Banks terms.

Same for repossession, except this time Canny will be still chased for the Xk plus the banks costs in selling the house minus the price paid by the buyer.

(edit to correct last sentence)

And the banks can’t just write off the NE because that would quickly collapse every single one of them. Though in the long run on an individual case basis it might be the least painful option for the bank, in aggregate it’s a killer.

Hmmm. So we’re stuck?

Any houses, either PPR or BTL, bought between say 2000 and 2008 will never sell, at least not for decades until the mortgagee either passes on or pays it off, or nominal prices get near 2006 levels…

We will probably in effect end up with two housing markets - future new builds, old houses bought pre-bubble, and the occassional distressed bubble-era sale, which will (eventually) start trading again at the market clearing rate; and a huge mass of bubble properties which will never shift because neither the owner nor the banks can afford to come anywhere near market clearing prices.

Does that sound right? And if so, what are the implications for the trading part of the market? What proportion of the total housing stock would be in A and B - and if the functioning market is relatively small, would this not act to push prices there higher, more quickly?

God this is depressing stuff.

You are, of course, quite right. I was, in my defence, extremely tired when I posted that bit of silliness. That’s why I wrote “Or not, I’m too tired to think this through.” But you were spot-on for pointing it out.

Pedantry follows: There’s a slight problem here with using the words “would” and “intend”.

As has been pointed out, the moment you wander into negative equity, your intentions are null and void. Your hands are tied, and the bank calls the shots. You are their slave.

As has been pointed out, you cannot sell your house at a loss unless the bank chooses to allow you.

I am, of course, starting to see the glimmer of a notion:

Let’s say there are 150,000 mortgageholders in negative equity to one of the major banks. Let’s say these 150,000 are able, somehow, to get their hands on €500m cash.

Let’s say they offer to buy 50.1% of the outstanding shares in this hypothetical bank.

Would they then be able to arrange things so that the bank allows people to sell at a loss if they wish to, provided they keep up the payments on the mortgage?

Minority shareholder oppression is illegal.

That’s not quite true in Ireland, certainly not for PPRs.

If you’re reasonably upstanding and have just fallen on hard times and show intent to pay where possible, get MABs in early, etc., I’d argue it’s exactly the opposite. In time, the PR spin might change but at the moment, it’s almost impossible for a bank to countenance going live with reposessions against this category of punter.

Start Mortgages might do it but I can’t see AIB / BOI or a nationalised bank of choice adopting this tactic as of yet.

Buy to let / specuvestors, perhaps… But there will be other avenues for disposing of large tranches of that stock.