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Confusing solicitor advice
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23-07-2011 6:35pm#1Hi,
I thought I'd done my homework and decided to buy a house to live in. I found a decent 3 bed semi in Dublin for 220K down from over 400 at the height of the bubble. I got a loan offer on variable rate over 35 years (
) which makes me repay 836 euros per month. Got financial advisor, valuation, structural inspection, life insurance, mortgage protection, etc. everything sorted. Then I asked the solicitor when we could sign.
He went on a 20 minutes rant about how this is a really bad time to buy, that the crisis is only at the beginning, that over the next 2 years interest rates will double and house prices will collapse 50%, rents too, that the only people buying in Ireland right now "no offence" are foreigners who don't have a clue (I'm foreign) and that Irish banks are thieves who will steal all my savings and leave me with nothing, that the valuer guy does not care and is paid 110 euros to put a number on a piece of paper in 20 mins tops, etc.
Now I'm not sure what to do. I don't want to be still sharing accommodation in my 30s, rent on my own would cost me more than mortgage, yet buying & mortgages are scary things, and you don't want to hear that when you're about to sign. I'm not asking what to do but what do you think of this solicitor, he seems to be going against his financial interest to help me...? But how bad can it really get within the E.U.? I disagree with everything he said but I think he knows better than I do.
Sorry for the long post.0
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Hi,
I thought I'd done my homework and decided to buy a house to live in. I found a decent 3 bed semi in Dublin for 220K down from over 400 at the height of the bubble. I got a loan offer on variable rate over 35 years ( ) which makes me repay 836 euros per month. Got financial advisor, valuation, structural inspection, life insurance, mortgage protection, etc. everything sorted. Then I asked the solicitor when we could sign.
He went on a 20 minutes rant about how this is a really bad time to buy, that the crisis is only at the beginning, that over the next 2 years interest rates will double and house prices will collapse 50%, rents too, that the only people buying in Ireland right now "no offence" are foreigners who don't have a clue (I'm foreign) and that Irish banks are thieves who will steal all my savings and leave me with nothing, that the valuer guy does not care and is paid 110 euros to put a number on a piece of paper in 20 mins tops, etc.
Now I'm not sure what to do. I don't want to be still sharing accommodation in my 30s, rent on my own would cost me more than mortgage, yet buying & mortgages are scary things, and you don't want to hear that when you're about to sign. I'm not asking what to do but what do you think of this solicitor, he seems to be going against his financial interest to help me...? But how bad can it really get within the E.U.? I disagree with everything he said but I think he knows better than I do.
Sorry for the long post.
Sounds to me like the solicitor is giving you very good advice which, bear in mind, seems to be against his own interest, because he is losing his commission. You should always be more willing to believe someone arguing against interest!
Here is what the Irish Central Bank predicted a couple of months ago:
http://www.irishtimes.com/newspaper/finance/2011/0317/1224292404434.htmlTHE CENTRAL Bank is stress-testing the Irish banks for a worst case scenario where residential property prices would fall 60 per cent from their peak and commercial property prices by 70 per cent.
This would involve residential prices falling by a further 17.4 per cent this year and 18.8 per cent in 2012 before the market recovers, while commercial property would fall a further 22 per cent this year before rising slightly in 2012.
While a worse or “adverse” case scenario will be looked at, the Central Bank expects residential property prices to fall by 55 per cent from their peak in 2007 until 2012 and to recover gradually in 2013.This would imply declines of 13.4 per cent in 2011 and 14.4 per cent in 2012 after falls of 14.8 per cent in 2008, 18.5 per cent in 2009 and about 15.5 per cent in 2010.
My opinion is that you have found one of the few honest lawyers anywhere and he's giving you great advice. Buy him a bottle of champagne in thanks and keep renting for at least another year.0 -
Hi,
I thought I'd done my homework and decided to buy a house to live in. I found a decent 3 bed semi in Dublin for 220K down from over 400 at the height of the bubble. I got a loan offer on variable rate over 35 years ( ) which makes me repay 836 euros per month. Got financial advisor, valuation, structural inspection, life insurance, mortgage protection, etc. everything sorted. Then I asked the solicitor when we could sign.
He went on a 20 minutes rant about how this is a really bad time to buy, that the crisis is only at the beginning, that over the next 2 years interest rates will double and house prices will collapse 50%, rents too, that the only people buying in Ireland right now "no offence" are foreigners who don't have a clue (I'm foreign) and that Irish banks are thieves who will steal all my savings and leave me with nothing, that the valuer guy does not care and is paid 110 euros to put a number on a piece of paper in 20 mins tops, etc.
Now I'm not sure what to do. I don't want to be still sharing accommodation in my 30s, rent on my own would cost me more than mortgage, yet buying & mortgages are scary things, and you don't want to hear that when you're about to sign. I'm not asking what to do but what do you think of this solicitor, he seems to be going against his financial interest to help me...? But how bad can it really get within the E.U.? I disagree with everything he said but I think he knows better than I do.
Sorry for the long post.
If you do a little investigation into the housing market you'll likely come to the same conclusion as him.
- house prices are dropping at around 15% per annum at the moment. That's about 30k off that house you're about to buy - this time next year. I sincerely doubt you could loose anything like that were you to rent on your own for a while.
- that rate of decline is steep. Steep declines don't come to a halt overnight which indicates there is some way to go til we reach the point where it would be economically sensibile to buy
- the government is broke. The chances of them sustaining rent allowance at current rates is nil. The current rate of rent allowance sets a floor on the rental market. Lower the floor and all rents (bar top end) go down with it.
The list goes on. I wouldn't buy a house now. At least not at 50% down from peak. Those who do will lose money for the next few years.
You've a decent solicitor. Give him the business later, when it is a good time to buy.0 -
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Hi Misccold,
Glad to see you back!! Just wondering how long the house has been on the market for that price?
According to the CSO, house prices fell by 14.4% over the past year so that would imply that this house that you are looking at has too high an asking price.
(Theoretically, based on an asking price of €250k, this house should be asking €215k approx)
And if you really want to buy it and get an offer accepted similar to what you offered last year then you should offer 12% less - €191k approx-assuming everythings equal.
So a saving of €29k!!
Whatever you decide, stress test for much higher rates (6-8%) and get as close as you can afford to a 20 year mortgage!
Good luck!0 -
So it's been a year, i guess noone cares anymore but me, here goes anyway.
I didn't go ahead. Currently there is only one other house for sale in the same estate, with an asking price of 229K. The one I had been looking at a year ago was asking 250K, selling for 220. That's a theoretical 21K drop (in asking prices) or 8.4% if I'm not mistaken.
Hi Miscold, good to see you back!
I suppose in retrospect the solicitor saved you 20K (-your costs for the incomplete purchase last year).
Personally I don't see prices dropping drastically in Dublin from here, however in some areas they will fluctuate and in sought after / high employment areas they will slowly increase.
You should be in a better position with a years top up on your deposit /savings & with the price down and still a buyers market for you to negotiate a price your happy with or walk away to another property with.
One thing that does resonate with me was your original solicitor saying :
"that the only people buying in Ireland right now "no offence" are foreigners who don't have a clue"
3 out of 4 of my clients buying houses / apartments are foreign nationals and I find them very astute and savvy buyers.
- Their buying property at 60% of the costs paid for the same homes 6 - 8 years ago
- Their engaging professionals for surveys and other services at 30 - 50% fee reduction than at the height of the boom
- Their in full time employment & most times more than one adult in the family is in employment.
- Costs are down across the board for anything you need to furnish / decor / or use a tradesman for in the property
Maybe it's just me, but i find statements like your solicitor made about someones nationality just a tad unprofessional ? (and I also have a pet hate -= that when you dress a sentence with 'no offence' -its a precursor to offending )
Mike F 0 -
Agreed, and I could go on about "no offence" for a long time, as I've heard it quite a bit, but that belongs to a separate thread. The fact is that, his giving me financial rather than legal advice was unprofessional as well, and yet it was in my interest! It saved me ~17K (excluding cost of shared rental accommodation). So, I'm not that bothered about this remark.engineermike wrote: »statements like your solicitor made about someones nationality just a tad unprofessional ? (and I also have a pet hate -= that when you dress a sentence with 'no offence' -its a precursor to offending )
Mike F
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