Sanity checking on house prices

Tigger

Ok i used to work for a americian corporation and they had an expression called sanity checking.
Basically when you had a "mad" idea you ran it by at least one other person in yer field to see if you were being crazy.

I have blabbed on about the housing market for years.I didn't buy i rented and for many years i rented a tiny sh1thole for 300 a month and saved and invested and worked 60 hour weeks and took money instead of holidays and just basically wanted to be able to strike when the iron is hot.

Well i'vce just been offered a 3000sq foot 2.5 storey house on 1.7acres in a good location (in the west of ireland ) finished to decent spec witha double garage.

Seriously now how much should my limit be?

Three ways of working it out.
Rent per year X (?)
Average wage of a person x (?)
Cost to build today + site + charges?

help :eek:

TwoShedsJackson

Ask them how much they want for it.

Decide if you are willing to pay that.

If not, offer less. The house is worth what someone is willing to pay for it, no more and no less. If you are happy to offer €X and feel secure that you will be able to afford it/the mortgage in the forseeable future, then the house is worth €X.

Zamboni

This does not count as 2.5 storey.

Tigger

TwoShedsJackson wrote: »

Ask them how much they want for it.

Decide if you are willing to pay that.

If not, offer less. The house is worth what someone is willing to pay for it, no more and no less. If you are happy to offer €X and feel secure that you will be able to afford it/the mortgage in the forseeable future, then the house is worth €X.

lol

i'm trying to use logic
i like the house (a lot i've admired it over the years)
and i agree its worth what someone is willing and able to pay but it also must have an inherant value of some form.

TwoShedsJackson

Tigger wrote: »

lol

i'm trying to use logic
i like the house (a lot i've admired it over the years)
and i agree its worth what someone is willing and able to pay but it also must have an inherant value of some form.

I know the angle you're approaching it at but it gets pretty hazy when you are talking about houses because people tend to get unaccountably emotionally attached to houses.

Look on it as a purely business transaction. As for it's inherent worth, the closest you're going to get is the actual build/rebuild cost, which you can estimate - the only value it has over that is the amount someone is willing to pay.

Tigger

TwoShedsJackson wrote: »

I know the angle you're approaching it at but it gets pretty hazy when you are talking about houses because people tend to get unaccountably emotionally attached to houses.

Look on it as a purely business transaction. As for it's inherent worth, the closest you're going to get is the actual build/rebuild cost, which you can estimate - the only value it has over that is the amount someone is willing to pay.

rebuild costs in the north are listed at €55 a foot finished good spec , cheaper than the south but i think more realistic

so 3000*55 + 20 (for agriculturial land 1.7 acrea for site) + 10 for development fund + 10 for other + 15 for the double garage is =€220,000

yes no mabey?

mmc2010

I think you're talking at least 250k-300k. Build costs are still around 90€ per sq ft, builders finish. A 1.7acre site would probably cost you 70-80k. If its a fabulous house on a nice site, there will be demand for it....

the_syco

Tigger wrote: »

(in the west of ireland )

How far west, and how near is the nearest city?

Tigger wrote: »

Three ways of working it out.
Rent per year X (?)
Average wage of a person x (?)
Cost to build today + site + charges?

Rent per year = how far is it from places?

Tigger

the_syco wrote: »

How far west, and how near is the nearest city?


Rent per year = how far is it from places?

its not in crazytown
25mins/miles from a county town
35mins/45miles from a different county town

the only city in the west is galway

fergiesfolly

Your vagueness is testing my sanity.
Wheres the house and how much do they want for it?
If the house is as great as you think, the cat will already be out of the bag and there will ,more than likely, be someone else looking at it, so being secretive here is pointless.
As Twosheds mentioned,buy with your head, not your heart. You've done the hard part by working hard and saving towards your home.
Theres no point getting sucked into buying something priced above its actual value now.

nicol

Given where I think you are located and your description of the house I wouldn't buy for any more than 250,000 at the very, very max. I wouldn't use building cost as an indicator as I think labour prices are still too high, rent in the area might be a good indicator. You say you've been offered the house, did someone approach you? If so I'd be inclined to go in with a much lower offer.

As an afterthought, you also need to consider possible taxes the property may incur in the future because of it's size / location.

Tigger

nicol wrote: »

Given where I think you are located and your description of the house I wouldn't buy for any more than 250,000 at the very, very max. I wouldn't use building cost as an indicator as I think labour prices are still too high, rent in the area might be a good indicator. You say you've been offered the house, did someone approach you? If so I'd be inclined to go in with a much lower offer.

As an afterthought, you also need to consider possible taxes the property may incur in the future because of it's size / location.

lol @ location mayo

no i've made my intentions clear to anyone in the house selling game
i'm looking for value; this is one that interests me

taxes are a good point at the moment they seem to be on the owner

Tigger

fergiesfolly wrote: »

Your vagueness is testing my sanity.

sorry

Wheres the house and how much do they want for it?

its in the west and they want lots

If the house is as great as you think, the cat will already be out of the bag and there will ,more than likely, be someone else looking at it, so being secretive here is pointless.

i disagree. sorry but i do

As Twosheds mentioned,buy with your head, not your heart. You've done the hard part by working hard and saving towards your home.
Theres no point getting sucked into buying something priced above its actual value now.

i agree but its very hard to value stuff

El Weirdo

Tigger wrote: »

i agree but its very hard to value stuff

It's even harder when you haven't given enough information for people to help you.

the_syco

Tigger wrote: »

its not in crazytown
25mins/miles from a county town
35mins/45miles from a different county town

the only city in the west is galway

That's my point. You mention rent, so I assume you're thinking of renting it. If it's a fair bit away from anywhere, why would someone pick that house to stay in?

With limited info on the house, we can only give you vague answers back. If they want lots, give them little, and put a time frame on it, such as "€225k, take it or leave it, the offer expires on the 27th February". On the 27th tell them that the offer is €220k, take it or leave it, the offer expires on the 15th March", etc.

Tigger

the_syco wrote: »

That's my point. You mention rent, so I assume you're thinking of renting it. If it's a fair bit away from anywhere, why would someone pick that house to stay in?

With limited info on the house, we can only give you vague answers back. If they want lots, give them little, and put a time frame on it, such as "€225k, take it or leave it, the offer expires on the 27th February". On the 27th tell them that the offer is €220k, take it or leave it, the offer expires on the 15th March", etc.

by rent x (?)
i ment rent of that year multiplied by ? years as a gauge of worth sorry i wasnt clear

everything in the west is a fair bit away from things

Tigger

El Weirdo wrote: »

It's even harder when you haven't given enough information for people to help you.

what info do you need ?

the_syco

I have a piece of string. It's in the corner. I will not tell you how long it is, what coulour it is, how old it is, or any info at all, but I want a clear answer of how much I should sell it.

We can only give advice based on info. Without info, why don't you low ball them at €150,000 with a date, and see if they take it.

Diddler1977

the_syco wrote: »

I have a piece of string. It's in the corner. I will not tell you how long it is, what coulour it is, how old it is, or any info at all, but I want a clear answer of how much I should sell it.

We can only give advice based on info. Without info, why don't you low ball them at €150,000 with a date, and see if they take it.

I'd offer 80,000 as a starting point.

Tigger

3000 sq feet for 150k or 80k
thanks people

gigino

Tigger wrote: »

Well i'vce just been offered a 3000sq foot 2.5 storey house on 1.7acres in a good location (in the west of ireland ) finished to decent spec witha double garage.

The property tax on that could be 5,000 a year in a few years time.

If its in the back of beyonds not many people may want to pay that, esp. if petrol/diesel goes up in the next few years as much as it has in the past few.

Keep your powder dry for another year or 2....it will be much cheaper then....but even you may not want it then.

zac8

Tigger wrote: »

its very hard to value stuff

It's not that difficult to value property. Investors are looking for at least 10% in this market.

So, realistically, what monthly rent could this property achieve? Have a look on daft for similar properties for rent. Include "let agreed" properties in your search. Multiply that monthly rent estimate by 120 and that's the maximum you should pay.

Zamboni

I like this game

Can you tell us the difference between the maximum that you would pay for it and what they are currently asking? Either value or percentage would do...

Tigger

Zamboni wrote: »

I like this game

Can you tell us the difference between the maximum that you would pay for it and what they are currently asking? Either value or percentage would do...

I'd pay 55% of what it's advertised for on daft now, not the peak figure
The ea says I can have it for 64%.

Or I'd pay 30% of original asking and the ea is looking for 35%

Zamboni

Tigger wrote: »

I'd pay 55% of what it's advertised for on daft now, not the peak figure
The ea says I can have it for 64%.

There is your answer so.
The property is worth exactly 55% of the curent asking on Daft
assuming you can get the vendor to sell at that price
assuming nobody else values it at a higher price and is ready to buy.

So either get him to sell at 55% or less and if not walk away.

gigino

zac8 wrote: »

It's not that difficult to value property. Investors are looking for at least 10% in this market.

So, realistically, what monthly rent could this property achieve? Have a look on daft for similar properties for rent. Include "let agreed" properties in your search. Multiply that monthly rent estimate by 120 and that's the maximum you should pay.

There are lots of empty houses in the west. Not many high flying people in top jobs in remote areas wanting to rent, so rents are far from Dublin levels. On daft you can rent big houses in remote areas for 600 /800 /1000 a month. Even at a thousand a month the price of the house would be 120,000.
They will be cheaper in a year or 2 once property taxes etc are increased and more austerity kicks in and probably the CPA is scrapped and possibly interest rates increase and oil rises.

finisklin

Its on a fair large site 1.7 acres.....opportunity to fence some off and buy the house portion?

What are other houses selling for in the area? Any idea of recent sales, if any? Perhaps someone in the local bank can help?Probably not.....

Best way to test this is to make a low ball offer and see what happens. Don't forget that you don't know the circumstances of why they are selling. Perhaps they are under financial pressure and need a cash buyer meaning that closing the sale quickly is important.

Shop around as there is value out there in the west of Ireland esp if you have cash to go.

jmayo

Tigger wrote: »

Well i'vce just been offered a 3000sq foot 2.5 storey house on 1.7acres in a good location (in the west of ireland ) finished to decent spec witha double garage.

Has to be in Mayo

Tigger wrote: »

Seriously now how much should my limit be?

Three ways of working it out.
Rent per year X (?)
Average wage of a person x (?)
Cost to build today + site + charges?

I would actually discount the last one since the cost of building means nothing since there is such over supply.
Houses are and will sell below what it did take and probably would today take to build them.

Also if this is out in the country or just beside a village, then that lowers the price again as the probable rental value would be much less.
As some else said put in low offer and see how it goes.

Tigger wrote: »

its not in crazytown
25mins/miles from a county town
35mins/45miles from a different county town

the only city in the west is galway

How far is it from a third county town ?

Tigger

jmayo wrote: »

Has to be in Mayo

yup

I would actually discount the last one since the cost of building means nothing since there is such over supply.
Houses are and will sell below what it did take and probably would today take to build them.

i'll be bidding below the price i think it would cost me to build and i'll only be giving (in my calculations ) a bit for the site and garage

Also if this is out in the country or just beside a village, then that lowers the price again as the probable rental value would be much less.
As some else said put in low offer and see how it goes.

will do/was doing

How far is it from a third county town ?

no triangulation please

Tigger

So this is the house

http://daft.ie/searchsale.daft?id=602810

Nice but too cluttered a layout
Still think its good value at 220 tho

Opinions?

nicol

Tigger wrote: »

So this is the house

http://daft.ie/searchsale.daft?id=602810

Nice but too cluttered a layout
Still think its good value at 220 tho

Opinions?

Nice house, pity it's in charlestown

See what you mean about the layout. I' say 220 would be around the max I'd be willing to pay.

I'd be cautious about the heating costs; living in a similarly sized house at the moment and it's costly enough to heat. Wonder what the BER is?

johndaman66

nicol wrote: »

I'd be cautious about the heating costs; living in a similarly sized house at the moment and it's costly enough to heat. Wonder what the BER is?

I'd second that. Not only that but if property taxes based on floor area/ site size or combination thereoff are introduced following the mickey mouse €100 charge the owner might be in for a right shock. It is a nice imposing house (in my opinion the kind of houses that make nice one of builds in the countryside) with some nice features but can't say the layout inside seems fantastic.

I think you could only justify it you had a large family or were planning to do so, or perhaps intened to go down the B&B route. Also, 1.7 acre site, thats a lot of grass to be cutting:)

gigino

if property tax in a few years will be based on site size, it would be expensive to run....
150k is enough for that house. Some other (smaller ) new houses in that locality are half that.

Tigger

gigino wrote: »

if property tax in a few years will be based on site size, it would be expensive to run....
150k is enough for that house. Some other (smaller ) new houses in that locality are half that.

with 2 garages and a workshop?


links to value in the area would be appreciated

mmc2010

Jeepers Tigger, that's a massive house! wouldn't fancy vacuuming that! I would think €350k is probably cost price and I would doubt if they would accept anything less that 250-300k for it. I think its well worth that....

Zamboni

I love it.
Photo 10 has got awesome home gym written all over it.

Tigger

mmc2010 wrote: »

Jeepers Tigger, that's a massive house! wouldn't fancy vacuuming that! I would think €350k is probably cost price and I would doubt if they would accept anything less that 250-300k for it. I think its well worth that....

Built 12 years ago would have cost about 190

Zamboni wrote: »

I love it.
Photo 10 has got awesome home gym written all over it.

that would be my car/bike workshop. The gym would go in the second living room.

I think that there are too many small rooms I'd prefer less but bigger rooms

mrmitty

Nice house but hard to value given location.
Forget rebuild costs as they have no bearing on valuation at present.


It's got Celtic tiger written all over, it by the way.

Tigger

How do you figure rebuild costs as irrelevant ?

Not agreeing or disagreeing just interested

mrmitty

The flood of available houses have distorted the market.
Just as the flood of money distorted the market during the bubble.


It's all about demand v supply.


If I need a 4 bed house and I am the only one with the resources to purchase it then it does not matter if this is a 10 bed house or 4 bed house. There's only demand for a 4 bed, thus the price will reflect this.

Also
Location, location, location.

makeorbrake

Big is not beautiful (not to mention practical, economical). Whilst it's a nice part of the country, in terms of demand, it's probably one of the worst locations. What would you estimate your yearly oil bill to be with that house?

Mr. Loverman

Do you really need a house that big, i.e. do you have or plan to have a few children? I grew up in a fairly big house and heating it was a nightmare.

gigino

Tigger wrote: »

How do you figure rebuild costs as irrelevant ?

Not agreeing or disagreeing just interested

because they are not relevant to other property being sold. Some apartments are on sale for 40 to 45 to 50k : thats less than their build cost too.

That big house would be a nightmare to property tax in 3 years time, and to heat. Also its location is not great....it would be worth more in a more desirable area. Its not as scenic as some other parts of the country, and not beside a big city. Still a nice house to live in though, I 'll give it that. There are a lot worse.

In a year or 2 houses like that will be a lot cheaper, in my humble opinion.

ArraMusha

Nice looking house, but location is not good therefore I'd value it today at 200k max.

That's assuming its in a private area not too overlooked.

in 6 mts time take 20k off that.

Senna

Tigger what are your ties to the area?
How far is it from your place of work?
Is your job rock solid, i.e. do you see yourself staying in that job long term?
If you did lose your job, is there employment locally in your field?

The reason i ask is i was in a similar position, i could have bought more impressive and cheaper if i went further away from Letterkenny. But i always said more than a 15 minute drive to town was too much and now i'm really glad i didn't buy further away.

amdublin

Big house = big cleaning.

That is one badly designed house with fiddly little rooms :eek: The rooms with the two single beds wtf?
The kitchen is horrendously dated, as is the fireplace (dated for even ten years ago).
Are you planning on knocking down walls and completely opening it is up on the inside op?

And then there is the outside...IMO this is one ugly house (it's so tacky!) with no real design element - probably picked from a book.

I wouldn't pay a red cent for this house.
Seriously dude it's a buyers market, get a gem, not some pumped up Celtic tiger ugly folly.


(ps. Do you have a large family or are you planning one?? After seeing the link to the house I am seeing you as a single man currently )

amdublin

^^^ sorry if the above was harsh but you wanted a reality check/sanity check

not even wrong

amdublin wrote: »

And then there is the outside...IMO this is one ugly house (it's so tacky!) with no real design element - probably picked from a book.

Seriously. In the dictionary under the word "McMansion" there's a picture of this house.

jmayo

Tigger wrote: »

So this is the house

http://daft.ie/searchsale.daft?id=602810

Nice but too cluttered a layout
Still think its good value at 220 tho

Opinions?

Hang on isn't that out the road to Curry/Tubber ?
If so you are in Sligo me boy.
But it's ok you can pretend you are in Mayo.

amdublin wrote: »

Big house = big cleaning.

That is one badly designed house with fiddly little rooms :eek: The rooms with the two single beds wtf?
The kitchen is horrendously dated, as is the fireplace (dated for even ten years ago).
Are you planning on knocking down walls and completely opening it is up on the inside op?

And then there is the outside...IMO this is one ugly house (it's so tacky!) with no real design element - probably picked from a book.

I wouldn't pay a red cent for this house.
Seriously dude it's a buyers market, get a gem, not some pumped up Celtic tiger ugly folly.

(ps. Do you have a large family or are you planning one?? After seeing the link to the house I am seeing you as a single man currently )

Ah ffs let me guess you want some architecturally designed monstrosity that was designed specifically for one person's criteria like yer man on About the House or one of those shows servers up.
Everyone doesn't bleedin want a house that is like a goldfish bowl or has some kitchen that would blind you with blink.
And everyone doesn't want a freaking US style open plan you know.

amdublin

^^^ yeah but i would assume that everyone at least wants a nice house??

That house is tacky imo.

professore

All relative. Open plan / IKEA style furniture is "in" now, in 10 years time no-one will touch that kind of layout with a barge pole. If you made that house open plan you'd freeze to death in winter.

It's a fine house for a B&B, IMO it's too big for a family home, unless you're really loaded.