Sale of house - Question

c07

sorry about this, but it's going to be a long winded post.
Here's our dilemma:
The hubby and I put our house on market approx 2 months ago. We went sale agreed within 2 weeks (great, you might think!)... but since then we've got nothing.
Basically, the people we went sale agreed with had gone sale agreed on their house. However, their sale has now fallen thru and they are open for viewings again. Now, they haven't pulled out of our sale ..... yet! But it has been a while since they put booking deposit down and we still have not received the balance of 10% binding deposit.

Now, here's the dilemma - because we had gone sale agreed, we had named a date for our builder to commence our new build for mid may. Now, we know the sale definitely won't be through by then (even if it was to go through!), so we're going to have to postpone him.

Although, the buyers haven't pulled out of our house, they still haven't made the binding deposit, and all this time is time when our house could still be getting viewings and a possible new offer. I know the market has really taken a punch recently, but what do we do? Hang on to an offer that may fall through - or get estate agent to tell buyers that we will be putting house back on market due to our circumstances.
We are just above the FTB bracket, and in Meath.
Am stressed, confused and pissed off that we can't start building when we want.

What do you think?
And sorry again for long post.... all advice is much appreciated.

The_Conductor

In the current market, its entirely possible that your current potential purchasers may take some time to sell their own property- or indeed it may eventually sell for a good deal less than they were originally considering. You have no indication whatsoever as to when they are in a position to make a more definite commitment to buying your house. In the absence of a binding deposit to buy your house- I would have to advise contacting the current interested party and advising them that unless they are in a position to commit to the purchase that you will have to put the house back on the market again. While it is understandable that the sale of their house has put them in a bad position vis-a-vis moving, that should be their problem- don't make it your problem too.

Zambia

c07 wrote:

The hubby and I put our house on market approx 2 months ago. We went sale agreed within 2 weeks

The market was a horse of a different colour then.

I hate to say this but in essence I think your starting from scratch here , I would say to the buyer that the house is going back on the market.

I assume this is a one off build hat you have contracted a builder to build for you somewhere.

I would preceed with caution sit down see what will happen if in three months you have not sold your house.

If the outlook is bad you may have to scrap your moving plans.

Do-more

I'd have your Solicitors or EA explain your situation to the potential buyers and put it to them that you either need the sale to be completed or you will have to put the house back on the market, put it to them that if they really don't want to miss your house they should organise "bridging finance".

It's a fine line that you have to thread as you don't want to alienate your potential buyer but the reality is that the market is slow in many areas and has completely stalled in others so you really need to be pro-active.

Is your current house in an estate? Or are there many more similar houses in the area up for sale? If so how are they priced now compared to the figure you have gone "sale agreed" on?

Just asking this to get an idea if you are still in as good a position versus the rest of your local market, if you were to put it back on the market now.

Lex Luthor

I would be of the opinion that you should re-open viewings on your house.

Did you get much interest?

patrickolee

I think you'll have to just sit tight and wait for 4 weeks. If you put pressure on your current buyer, he will almost certainly just walk away and chances are you are not going to get another buyer at the moment.

Zambia

patrickolee wrote:

I think you'll have to just sit tight and wait for 4 weeks. If you put pressure on your current buyer, he will almost certainly just walk away and chances are you are not going to get another buyer at the moment.

Without knowing what the house is like I would not say that for certain but there are already 18 4 Beds on the market in Dunboyne

The_Conductor

Zambia232 wrote:

Without knowing what the house is like I would not say that for certain but there are already 18 4 Beds on the market in Dunboyne

Its actually more like 23 (and rising) if you look at the different property sites. There is no point in hanging on- your current potential purchaser has no ties to your property. There is nothing stopping him/her from picking up a different property in Dunboyne most probably for a lower price than previously agreed with you. He/she has not even paid a deposit- its not as though you have any binding agreement. Assume its off and move on. If you hang-around waiting on the current person you risk being stuck with a property that simply may not sell at all.

c07

brilliant... thanks for all the replies!!
Most of you have summed up exactly what I'm thinking.
Yes the build is a one-off build - we have builder lined up but no official contracts with him to start build in mid may.
Our house is on the meath coast (Laytown/Bettystown) area and currently asking prices are remaining static in our estate.
At the moment there are approx 8-10 houses like ours for sale in estate, but some of the decor is quite miserable. That is one thing our EA told us when viewing our house - that the presentation was impeccable and decor neutral and perfect for viewings.
In the 2 weeks we had it open for viewings - we had 3 viewings. Not a huge amount, but still people coming through the door.

We know there are viewings still happening in our estate, although I'm not aware of any other houses going sale agreed.
I do think that holding out for this buyer could be a nightmare - i.e. they're giving themselves more time to find somewhere else and then pull out of ours at a later stage.
As there is no legal binding to this sale agreed yet, i'm inclined to say... put it back out there and 'start from scratch' as Zambia said!

Thanks again for all your responses...

c07

well, we're back on the market. Took a lot of your advice and gave the buyer an ultimatum. They admitted that they were not having any success selling their house and therefore could not commit to ours.
It's nearly a relief to be back out there as I knew this original offer was going nowhere.
So, back on the market since last week and no viewings as yet.
Although, i don't really expect viewings to get going again (properly) until after the elections.
Thanks again for all your advice.
C.

mathie

c07 wrote:

So, back on the market since last week and no viewings as yet.
Although, i don't really expect viewings to get going again (properly) until after the elections.

Is this common sentiment?
People will start to come back to buy after the election?
M

Zambia

mathie wrote:

Is this common sentiment?
People will start to come back to buy after the election?
M

People may but the supply & Interest rates are a bigger issue. At present I would say no-one is even thinking of buying until the election is over as all the likly parties are promising something.

At present the only thing that appears to be going through EA's offices is bramble

iguana

While people may be holding off until after the election to buy there is also a very strong possibility that interest rates will go up in the Eurozone next month. there will probably be about two weeks of renewed confidence in the market if people have to pay less stamp duty, followed by a swift rap on the knuckles as the amount they are allowed to borrow falls.

c07

i agree iguana - but for sellers like me, who are literally not that much above the stamp duty price (approx 20k over), this issue (of stamp duty), I believe, is biggest for our potential buyers. Maybe I'm wrong, but I would have thought interest rates are really going to be impacting the bigger purchases, which IMO are 500k+ (although, i guess it does depend on each individual of course!).
Well, i'm hoping we get a buyer... who knows though

The_Conductor

iguana wrote:

While people may be holding off until after the election to buy there is also a very strong possibility that interest rates will go up in the Eurozone next month. there will probably be about two weeks of renewed confidence in the market if people have to pay less stamp duty, followed by a swift rap on the knuckles as the amount they are allowed to borrow falls.

Realistically it will be at least the 3rd week in June before a new government is formed, so its probable that the next interest rate hike will have happened before the stamp duty 'reform' occurs.

With respect of properties just over the stamp duty threshold- I do think they are a bit of a red herring too. The vast majority of first time buyers are not affected as they simply cannot borrow 300k. The vast majority of second hand homes being traded up to- are getting swamped in the market slump. Its not even a case of a market slowdown- its property simply not moving good bad or indifferent, in all market segments. Stamp duty reform may possibly help those trading up- but those who hope to trade up have hopelessly unrealistic expectations. Who will blink first? At the moment its a logjam.....

Zambia

c07 wrote:

i agree iguana - but for sellers like me, who are literally not that much above the stamp duty price (approx 20k over), this issue (of stamp duty), I believe, is biggest for our potential buyers. Maybe I'm wrong, but I would have thought interest rates are really going to be impacting the bigger purchases, which IMO are 500k+ (although, i guess it does depend on each individual of course!).
Well, i'm hoping we get a buyer... who knows though

Have you had any offers at all our is it asdead as I imagine it is?

iguana

c07 wrote:

i agree iguana - but for sellers like me, who are literally not that much above the stamp duty price (approx 20k over), this issue (of stamp duty), I believe, is biggest for our potential buyers. Maybe I'm wrong, but I would have thought interest rates are really going to be impacting the bigger purchases, which IMO are 500k+ (although, i guess it does depend on each individual of course!).
Well, i'm hoping we get a buyer... who knows though

Roughly a €295k mortgage over 30 years would now have similar repayments as a €286k loan after a .25% IR rise. That's €9k, how much is the stamp duty on your property about €10k? Unless you have a ftb with a fixed rate mortgage arranged before the rates rise, they won't really be saving anything.

smccarrick wrote:

Realistically it will be at least the 3rd week in June before a new government is formed, so its probable that the next interest rate hike will have happened before the stamp duty 'reform' occurs.

Are the different parties promising stamp duty reform as soon as they get into office? Wouldn't something like this normally be changed in the budget?

The_Conductor

iguana wrote:

Are the different parties promising stamp duty reform as soon as they get into office? Wouldn't something like this normally be changed in the budget?

Normally it would be changed in the budget, yes, but there are many different ways that it could be immediatley implemented by an incoming government- SIs, or Statutory Instruments, are a great way of changing laws/implementing new rules (or transcribing legislation).

When a new government comes in, all government departments start with a blank slate again- all the annual business plans are rewritten to take into account of the policies of the incoming administration.

iguana

But have any of them actually said that if elected they will change stamp duty as soon as they possibly can? Why are the people who think stamp duty is the issue in this slow down so focused on after the election?

The_Conductor

iguana wrote:

But have any of them actually said that if elected they will change stamp duty as soon as they possibly can? Why are the people who think stamp duty is the issue in this slow down so focused on after the election?

I think the reason they are so focused is thats the line thats being fed to them by the Estate Agents and Developers- and its whats being plastered all over the media. Unfortunately a lot of people are falling for it hook-line-and-sinker. They simply don't know any better.

Slicknik

smccarrick wrote:

I think the reason they are so focused is thats the line thats being fed to them by the Estate Agents and Developers- and its whats being plastered all over the media. Unfortunately a lot of people are falling for it hook-line-and-sinker. They simply don't know any better.

Pretty much every party has promised to bring in stamp duty relief of one kind or another ASAP after the election. It's a lot more than "a line" fed by EA's and Developers.

Zambia

We are in a slow down the reason for focus on the election is there is no other answer to the slide or stall in house prices.

Once whatever reform is introduced basically because vested interests are demanding it. Then if the slow down does not turn things around well maybe people will start to believe the true facts about the slump. Interests rates and over supply.

Lets take C07'S position

There are 23 houses for sale in Dunboyne of her description. Lets stay each is at 340k.

With stamp thats about 350k to and FTB and whooping 360k for trading up.

So if you remove stamp for FTB or decrease stamp all round you are still left with 23 houses in Dunboyne and as basic economics gos over supply leads to a drop in price.

The_Conductor

Slicknik wrote:

Pretty much every party has promised to bring in stamp duty relief of one kind or another ASAP after the election. It's a lot more than "a line" fed by EA's and Developers.

Pretty much every party has promised to bring stamp-duty relief of one kind or another, asap after the election- because its being demanded by the public. The public are demanding it- because of spin from EA's and Developers (the FF turnaround being a very ironic case-in-point where pressure was brought to bare on the party by its funders). There is a presumption on the part of the public that the reform of stamp duty will result in lower costs for purchasers. Wishful thinking......

The vast majority of First-time-buyers (for 2006 this was a little over 93%) do not pay stamp duty at all, because they are either buying new builds or purchasing below the threshold (317.5k). Stamp duty reform would only benefit in the short term those who hope to immediately trade up (i.e. before the benefit of stamp duty reform is out weighed by further interest rate rises), and those who wish to invest (very small number now, given the very poor ROIs available).

In the very very short term, stamp duty would underpin house prices, and benefit those selling properties (as the drops in asset prices would temporarily be minimised) not those buying properties (as prices would continue to fall, and possibly gather pace on a downward trachetory).

While there was a massive difference in fundamentals for the past few years- its only now that interest rates are rising that the issue is coming to the fore. A couple earning over 3 times the average industrial wage between them, only qualify for a "starter home" on a 30 year mortgage in the Dublin area- and with asset price falls and the nature of these homes- their "starter home" may be unsaleable at any price in the very near future.

Spain cleared an interesting new law in parliament yesterday (to be brought in on the 16th of June)- concerning 40% of all new units being affordable housing, and 100% disposal taxes on property purchased by developers where its not developed within a 5 year period. While it may seem drachonian in nature- it does very much seem like the sort of medicine necessary here......

c07

sheesh guys - ur putting the heart crossways in me.
In answer to your earlier question Zambia, the market here is extremely slow. We were speaking with our EA on Friday (after being back on market for a week) asking about the lack of viewings. And he has basically stated that we prob won't see any viewings until after elections.
Now, that in itself is pretty much what were expecting, but from reading all your posts, I get the impression that even if stamp duty is reformed, we still might be sitting on our house for months to come.
We are based in Laytown in Meath - and while there are approx 10-15 houses for sale here (as opposed to 25 in Dunboyne), it's still quite a sizeable quantity.
We all know it's a buyers market, but do we go down the road and hold onto our asking price, or bite the bullet and reduce, and if so, what do we reduce it to?
Our asking is 335k - houses in our style range from asking price of 330-335k, so already we're at the higher end (albeit by 5k). The reason we have the extra 5k is due to extra kitchen units and walled in front garden (a few extras that are above the norm). But if we drop then, by how much do we drop?
We are lucky in that we are not waiting to buy another house as a result of sale of this - we will be building - and we can postpone that until an eventual sale has gone thru.
However, what would be your advice on this?
As is pretty clear by all my posts, I'm a novice in the property field and all your information is giving me a lot of food for thought.
Some of you seem to be very au fait with the property market - what would you recommend we do?

Thanks,
C.

iguana

If I was you I would look very closely at what drop you could make to the house price right now. How much could you drop before it starts to hurt? I would consider the extras you describe on you house as items which add saleablity rather than value. As in they may not be worth any extra on the sale price, but they may be the added extra that makes your house sell faster than the others on the market.

And I wouldn't focus on after the election as being the point to do this as every other seller in your area is probably saying the exact same thing. You should try and get your sale as fast as you can, as I really do think that the slow market you are seeing now is just the start of things. I could be completely wrong, but once you look at everything that is being said about the election logically it makes no sense.

On the otherhand as the construction industry slows, you may be in a position to save money on your build.

The_Conductor

c07- should you reduce your asking price, and if so by how much?
Well- every 1/4% increase in interest rates reduces borrowing capacity by 30k- which is almost 2 times the stamp duty that would be payable on your house. What you have to ask yourself is what market are you aiming your house at? If its the first time buyers market- bite the bullet, put the house on the market at 317.5k on the dot, and suggest another 7.5k seperately for the fixtures and fittings that will be remaining in the house. Rather than waiting- when interest rates are going up in 3 weeks time, bite the bullet and be done with it. Any reform of stamp duty will be worth less than the reduced borrowing capacity from increases in interest rates.

If, on the other hand, you are selling the house as a second-hand property- then you have a problem. Property isn't moving. Estate Agents are refusing to list properties at below certain levels- as it would mean acknowledging that the floor has fallen in the market. They are trying to support the minimum prices by not listing properties that are going below these levels. Its wishful thinking on the part of the EAs though. If someone who wants to buy your house has to sell a property too- then forget it.

The only market moving at all is the FTBs and they are being squeezed by interest rate rises- aim it at them and make it attractive to them (it probably will mean taking a 10k hit- but to get it sold in the current market- this may be what it may take). Stamp duty is a red herring- its a one off hit, aim it below the current FTB threshold and aggressively target FTBs. Its harsh, but if you want to shift the property anytime soon, it may be what you have to do.

Btw- even if a new government is formed pretty promptly- it could still be the new Dail (September) before anything happens to stamp duty. If you are willing to wait, to see things out, and accept that there will be 2 interest rate rises by Oct, off you go. If not- aggressively targetting those who do not need to sell property in order to buy yours is your best option.

Shane

iguana

smccarrick wrote:

If, on the other hand, you are selling the house as a second-hand property- then you have a problem. Property isn't moving. Estate Agents are refusing to list properties at below certain levels- as it would mean acknowledging that the floor has fallen in the market. They are trying to support the minimum prices by not listing properties that are going below these levels.

If you find yourself in this scenario can you end your agreement with the selling agent and sell the property yourself? That way while you might be selling for less than you hoped you would save on agent's fees.

Zambia

c07 wrote:

sheesh guys - ur putting the heart crossways in me.
C.

Sorry however there is a lot to be said for tackling the issue head on.

Smmcarick has already advised on price and I think a drop to 317,500 is a good one from 335,000.

Plus take the time to buff the house to perfection. Clean everyting walk around the house and ensure your house is basically a turn key house.
You have to really sell this house and so does your EA.

c07

Shane, Zambia, Iguana - thanks so much for your honest advice. I think you're all right on the button. To get this house sold, it looks as though, yes, we do have to drop the price and get our FTB.
After thinking about it, we were willing to accept 325k as an offer before, so a drop to 317.5k is really only a 7k drop from what we would have accepted. So, yes, we have decided to go down that road.
We are lucky in that our house is in turnkey condition - which we are quite happy about. When it was previously on the market (up to the sale that fell thru), we were getting positive feedback, so we know it's buyable.
We will get in touch with estate agent tomorrow.
I'm not confident about selling it on our own, Iguana, because I'm not sure we could sell the house properly(i.e. give the right sales pitch). We have negotiated a fair price with EA of 0.8% commission, so although it will cost approx 2.5k, I do believe EA would have better chance of selling than ourselves.
As for build quotes - we have already been given a reduced build quote (which i think is definitely a reflection of the fall in market!) so we are very aware that we are in the driving seat of this build.
again guys - i very, very much appreciate all the great advice, and for explaining the reality of the situation.
Fingers crossed with the revised price going to market next week, we will get a positive result.
Cheers,
Caroline.

c07

iguana - i just realised i read your post incorrectly. (I thought you meant dumping our EA and doing it ourselves to save money.)
Hopefully we shouldn't have a problem with our EA as they have plenty of property under stamp duty prices (in other locations).
If it is to be an issue, well then I would have no issue in changing EA or doing it ourselves. Hopefully, it shouldn't come to that though!

c07

well, we rang EA today, he made a few calls... seems the FTB market is still going (below stamp duty, of course!) and we already have a viewing tomo evening. In fairness, the house is a bargain at the price... so here's hoping...
AND ... the house has been SCRUBBED from top to bottom.