House for sale @€265,000. What should we offer?

Lorrainbo

Hi all, my husband and I are looking to buy a house, which over the last 2 years has fallen from €375,000 to €265,000. We're hoping to be in a position to make an offer this October. With today's property market the way it is what would you think is a reasonable offer for a house at this price? It's a 5 bedroom house and never been lived in.

beertons

Offer 190.

Idbatterim

what are other directly comparable properties in the immediate area asking?

Lorrainbo

The house is in Donegal and the asking prices for comparable properties vary. The house is in a private development consisting of only 4 houses. The house we hope to buy is the show house. Only one other has been sold in this development. The other 2 are a builders finish and they are asking a price 'in the region of €260,000' for both houses.

golden lane

see if you can find out how much it would cost to build a new house.....find out how much you could get a similar plot of land for....add them together......that's how much it is worth....

smellslikeshoes

It's an estate with empty houses in Donegal. Give a lowball offer of 150k or so, the worst they can do is say no.

StillWaters

golden lane wrote: »

see if you can find out how much it would cost to build a new house.....find out how much you could get a similar plot of land for....add them together......that's how much it is worth....

Not necessarily, some houses are selling for below build cost now. Some pockets are going for >20% above asking. It's a very strange Market out there!

In this case either a bank or developer is selling, so it's possible you might get a very good deal. I'd go in with a very low offer. €150k.

Lorrainbo

I'm liking your thinking StillWaters;)

MadsL

Compare rentals ie: http://www.daft.ie/searchrental.daft?id=1206805

If you can rent for €750 a month, then why would you pay some €950 a month mortgage. get your mortage down to the €600 month figure and your might be approaching what you should be paying.

the groutch

from the details given, I'd say the maximum you should pay for this (final agreed price) is 200k, so go in at 160-170 and work from there

Pkiernan

Offer €265,000.

You will get the house if you offer this.

DublinWriter

Lorrainbo wrote: »

We're hoping to be in a position to make an offer this October. With today's property market...

October is a long, long way off. Remember it's a buyer's market and cash is king. Only when the banks start lending again then you'll know when the market has hit bottom.

snubbleste

I know a couple who were mortgage approved and drew it down two weeks ago. Does this mean the market has hit bottom DublinWriter?

DublinWriter

snubbleste wrote: »

I know a couple who were mortgage approved and drew it down two weeks ago. Does this mean the market has hit bottom DublinWriter?

No. In Statistics the size of the sample is generally in inverse proportion to the accuracy of the end-analysis. I'm sure it's great news for your friends, but I don't expect the national media to be making any proclamations on the market the back of their mortgage approval.

snubbleste

Thank god for that.
If I hear of anything in the media about banks lending for mortgages, I'll take heed of your wise words.

golden lane

StillWaters wrote: »

Not necessarily, some houses are selling for below build cost now. Some pockets are going for >20% above asking. It's a very strange Market out there!

In this case either a bank or developer is selling, so it's possible you might get a very good deal. I'd go in with a very low offer. €150k.

yes, i believe so........i did not say offer that much....

people sometimes do not know the real value........

MadsL

Just a question, but why would you consider buying this house @265k when you could rent a 5 bed property for €750 a month? Seems more value on the rental market no?

true

MadsL wrote: »

Just a question, but why would you consider buying this house @265k when you could rent a 5 bed property for €750 a month? Seems more value on the rental market no?

have done a google search and you can rent a fine 5 bedroom houses in denegal for a lot less than 750 a month. There are a lot of empty houses, and people glad to get someone to keep them heated / aired / maintained.

The banks in certain border counties are selling houses off @ well less than 100 k, so you would be mad to offer more.

Lorrainbo

Well because I would rather own the property and the end of 30yrs rather than pay €750 a month for 30yrs which equates to €270,000 and not own it. Dead money really!

Idbatterim

Well because I would rather own the property and the end of 30yrs rather than pay €750 a month for 30yrs which equates to €270,000 and not own it. Dead money really!

Rent is not dead money, I think there is an entire thread on boards about this... in the short to medium term, renting can save you a fortune when prices are dropping quickly. I agree about finding out what the cost price of land and similar house would be...

MadsL

Lorrainbo wrote: »

Well because I would rather own the property and the end of 30yrs rather than pay €750 a month for 30yrs which equates to €270,000 and not own it. Dead money really!

Do people still believe that even after the property crash? The real dead money is the €250+ extra a month you will pay in mortgage payments + stamp duty + fees + insurance + life insurance + maintenance of the property + whatever property taxes get brought in.

If there is better value to be had renting, rent!

But it is your money...

NakedNNettles

Rent is dead money, i'll go live under a bridge or something.

30 years is a hell of a chunk of your life to be paying a loan, that's the part I don't get with people.

The_Conductor

Lorrainbo wrote: »

Hi all, my husband and I are looking to buy a house, which over the last 2 years has fallen from €375,000 to €265,000. We're hoping to be in a position to make an offer this October. With today's property market the way it is what would you think is a reasonable offer for a house at this price? It's a 5 bedroom house and never been lived in.

By reasonable offer- I assume you're wondering how low an offer you can make that stands a chance of being accepted? If so- it all depends on how desperate the seller is to sell- if the property has been on the market for a considerable amount of time (like the 2 year time frame you've mentioned for example)- then its probable that the current asking price (regardless of how much its fallen) is too high to elicit interest from a small pool of possibly interested buyers- with an even smaller pool of those capable of sourcing the finances.

I don't know what the peak price of a property like this would have been- given the location I imagine around the 400k mark- allowing for a 50% depreciation from peak prices (which is a reasonable rule of thumb for a house- and possibly 70 to 80% for an apartment depending on location)- would indicate that somewhere in the 200k region might be considered reasonable value.

There are different ways of trying to value property- in the current market- possibly using an ROI model (where the price paid for a property would have to generate a net return on investment of say 7 to 8% per annum would be normal). So- assuming this house could rent for 1,000 a month (perhaps not valid given the location)- the annual rent would be 12k, which would indicate a fair market price of about 170k (at 7% ROI) or 150k (at 8% ROI). Investors wouldn't buy at under 7%- as it wouldn't cover the cost of the investment, plus a risk premia- so all things else being equal- if this property would cost 1,000 a month to rent- it might have a max realisable market value of about 170k........

Some people will always attach a higher value to a property (for whatever reason)- it could be close to family or friends, work or whatever........ So- the 170k price would probably be incremented by a premium that people are willing to attach to the property- in the current climate- this might be a 10 to 20% premium- possibly bringing you up to 200-210k..........

Personally- I think the asking price is purely aspirational at the moment- I'd offer possibly 180k, with a view to paying a max of 210- and if it went 1c over 210k- I'd walk, and not look back.

Once you become emotionally attached in a purchase or sale- you're screwed- and you will wrung for every penny a seller can extract from you.......

S.

donalg1

MadsL wrote: »

Just a question, but why would you consider buying this house @265k when you could rent a 5 bed property for €750 a month? Seems more value on the rental market no?

Because they want to buy!!

OP you should make an offer of €190k or that for a start which will let them know you have no intention of paying the asking price. When and if this gets rejected wait another couple of weeks before upping your offer and let them know that you have the finances in place and are ready to go straight away and also tell them that there are plenty of other options for you and you aren't prepared to look elsewhere if they are playing ball.

But really what you should offer, should be well under what you are prepared to ultimately pay.

zulfikarMD

its wait and watch game. Dont get emotionally attached to any house or else EA will try to squeeze money out of you! Just make an offer and thenleave it for a while before making a revised offer. I have always asked EA to tell me what is sellers expectation before making a revised offer and if EA doesnt give me a figure I just make a final offer and tell EA to come back anytime if interested in making a deal.

MadsL

donalg1 wrote: »

Because they want to buy!!

OP you should make an offer of €190k or that for a start which will let them know you have no intention of paying the asking price. When and if this gets rejected wait another couple of weeks before upping your offer and let them know that you have the finances in place and are ready to go straight away and also tell them that there are plenty of other options for you and you aren't prepared to look elsewhere if they are playing ball.

But really what you should offer, should be well under what you are prepared to ultimately pay.

How are you calculating 190K? As smcarrick posted below;

There are different ways of trying to value property- in the current market- possibly using an ROI model (where the price paid for a property would have to generate a net return on investment of say 7 to 8% per annum would be normal). So- assuming this house could rent for 1,000 a month (perhaps not valid given the location)- the annual rent would be 12k, which would indicate a fair market price of about 170k (at 7% ROI) or 150k (at 8% ROI). Investors wouldn't buy at under 7%- as it wouldn't cover the cost of the investment, plus a risk premia- so all things else being equal- if this property would cost 1,000 a month to rent- it might have a max realisable market value of about 170k........

I've already linked to 5 bed properties renting for €750 a month, which knocks 25% of those calculations. The house is probably worth €127,500 by that calculation.

190k is a mad first offer.

Here's a 5 bed for 125k
http://www.daft.ie/searchsale.daft?id=652704

Heroditas

MadsL wrote: »

I've already linked to 5 bed properties renting for €750 a month, which knocks 25% of those calculations. The house is probably worth €127,500 by that calculation.

190k is a mad first offer.

Surely the rental of €750 a month for those properties is linked to the mortgage/loan associated with those houses. Are they new houses? How much were they built and subsequently sold for....

tim9002

Lorrainbo wrote: »

Well because I would rather own the property and the end of 30yrs rather than pay €750 a month for 30yrs which equates to €270,000 and not own it. Dead money really!

Rent is anything but dead money when the market is falling. Renting for a few years could save you a small fortune. Also consider the interest you would pay on a mortgage and the additional interest you might earn on your deposit savings.

MadsL

Heroditas wrote: »

Surely the rental of €750 a month for those properties is linked to the mortgage/loan associated with those houses. Are they new houses? How much were they built and subsequently sold for....

I imagine they are renting for what they can rent for on the rental market. What has the mortgage got to do with anything? If the market could bear €1000 a month surely they would rent at that.

This looks new, and why the F you would buy when you could rent this for only 800 a month is beyond me. Put the other 300 a month into a pension fund or investments.

http://www.daft.ie/searchrental.daft?id=1183603

Vic Davidson

Pkiernan wrote: »

Offer €265,000.

You will get the house if you offer this.

Made me laugh :thumbup:

StillWaters

MadsL wrote: »

This looks new, and why the F you would buy when you could rent this for only 800 a month is beyond me. Put the other 300 a month into a pension fund or investments.

http://www.daft.ie/searchrental.daft?id=1183603

Because in 20 years time, the rent will be a hell of a lot higher than 800, and the op will still be paying €1100.

And in 25 years time, the renter still has to find a whack of money each month, and the op has a paid for home.
Lots of other reasons of course, but there is crux of the economics of home ownership.

ResearchWill

StillWaters wrote: »

Because in 20 years time, the rent will be a hell of a lot higher than 800, and the op will still be paying €1100.

And in 25 years time, the renter still has to find a whack of money each month, and the op has a paid for home.
Lots of other reasons of course, but there is crux of the economics of home ownership.

The OP will still be paying €1100 as long as interest rates stay low. There are many sites who give real maths on this issue, http://www.moneyguideireland.com/renting-or-buying-a-house-pros-and-cons.html one of the hidden costs of ownership is the lack of job mobility.

Yes for some people buying is a very good idea as long as the maths add up, but being honest 1/4 of a million in Donegal is madness when you think for less than three of them you could have bought this http://www.irishtimes.com/newspaper/breaking/2012/0301/breaking39.html

MadsL

StillWaters wrote: »

Because in 20 years time, the rent will be a hell of a lot higher than 800, and the op will still be paying €1100.

And in 25 years time, the renter still has to find a whack of money each month, and the op has a paid for home.
Lots of other reasons of course, but there is crux of the economics of home ownership.

Yeah, you keep believing that. If you had a time machine, knowing what you know now, would you give the same advice to the OP if you travelled back to say, 2003?

StillWaters

MadsL wrote: »

Yeah, you keep believing that. If you had a time machine, knowing what you know now, would you give the same advice to the OP if you travelled back to say, 2003?

of course not, as it made no economic sense to buy then. I took my own advice and didn't buy any property from 2001-2011 as it was clear to me anyway maths didn't stack up during that time. I have bought before and since. Nothing scientific or contrarian about it, just simple maths.

MadsL

StillWaters wrote: »

of course not, as it made no economic sense to buy then. I took my own advice and didn't buy any property from 2001-2011 as it was clear to me anyway maths didn't stack up during that time. I have bought before and since. Nothing scientific or contrarian about it, just simple maths.

Simple maths says there is far better value in the rental market in Donegal at the moment.

What simple maths tells you it is better to buy, other than the old chestnut about 'dead money'?

engineermike

Hi OP,
Not really sure how anyone can just arbitrarily say : offer 190 or some figure.
Location, location, location are the 3 keywords to gauge your offer buy.
Level of interest in the area, review asking price and find out the sale price of a similar unit in the area, which isn't difficult in this country!

Also talking to multiple est. agents and judging by the level of work we have at present & pending - the market is on the move again without a doubt within the Dublin belt and major city's with colleges & employment (Galway, Sligo, etc.)

I personally snagged a new property yesterday in Maynooth that were being built and sold in 2009 for 590,000 in the estate - the unit I inspected yesterday in the same estate (same size and spec.) - 310,000. I don't normally ask the price of the builders foreman or client , however I was genuinely interested and felt I had to ask & I have to mention the property had the best level of finsihing I've seen in my 20 years as a construction professional.
Certain key locations / areas have reached the market 'tidal' change point in my estimation.
Mike F:)

Mr. Loverman

MadsL wrote: »

Simple maths says there is far better value in the rental market in Donegal at the moment.

What simple maths tells you it is better to buy, other than the old chestnut about 'dead money'?

If he has bought recently nothing you say will change his mind. It is one of the logical fallacies of life...

It obviously makes no sense to pay anything near ¼ million for a house in the middle of nowhere in a broke country. I do personally like Donegal but come on, it's Donegal.

StillWaters

MadsL wrote: »

StillWaters wrote: »

of course not, as it made no economic sense to buy then. I took my own advice and didn't buy any property from 2001-2011 as it was clear to me anyway maths didn't stack up during that time. I have bought before and since. Nothing scientific or contrarian about it, just simple maths.

Simple maths says there is far better value in the rental market in Donegal at the moment.

What simple maths tells you it is better to buy, other than the old chestnut about 'dead money'?

I posted the sums on another thread, basically allowing for interest rates of 7%, and rents to rise in line with inflation, who is better after 5, 10, 20 years. This ignores the obvious advantage of the homeowner not paying rent for 30 years after the mortgage is paid off.

In a lot of cases now, it makes much much more sense to buy than rent, which has old wisdom on it's head. Of course home ownership doesn't suit everyone, and there is still lots of overpriced tat out there.

However ime buyers now are a very different breed to buyers of 6 years ago. They are demanding yield, build quality and affordability, and have cash in their pockets to protect against shocks.

Edited to add, excellent NCB Report out today concurs that in certain cases it is rational to buy rather than rent. Don't attack me before reading the report!

MadsL

StillWaters wrote: »

I posted the sums on another thread, basically allowing for interest rates of 7%, and rents to rise in line with inflation, who is better after 5, 10, 20 years. This ignores the obvious advantage of the homeowner not paying rent for 30 years after the mortgage is paid off.

In a lot of cases now, it makes much much more sense to buy than rent, which has old wisdom on it's head. Of course home ownership doesn't suit everyone, and there is still lots of overpriced tat out there.

However ime buyers now are a very different breed to buyers of 6 years ago. They are demanding yield, build quality and affordability, and have cash in their pockets to protect against shocks.

Edited to add, excellent NCB Report out today concurs that in certain cases it is rational to buy rather than rent. Don't attack me before reading the report!

Let me clarify - what simple maths means it is better to buy this property. Renting at 800 a month values the property somewhere around 140K - why on earth someone would even suggest a value around 200K is beyond me.

golden lane

buying houses to rent......is a business gamble..........if there is a big mortgage attached.....

StillWaters

MadsL wrote: »

Let me clarify - what simple maths means it is better to buy this property. Renting at 800 a month values the property somewhere around 140K - why on earth someone would even suggest a value around 200K is beyond me.

No, it puts the house you linked to at €140k. Neither of us have seen the house in question.

engineermike

golden lane wrote: »

buying houses to rent......is a business gamble..........if there is a big mortgage attached.....

I don't agree that its a complete gamble, in the midlands, a Pub - bed and breakfast, chipper and 2 flats & a house with yard and sheds - in a town with 15 thousand + residents, failed to sell at auction for 350 K a few months ago.
I wonder why,
In a nut shell 350 K would buy 4 / 5 ish 3 beds in the county that are prime rent income - @ 450 - 650 dependent on location -
yes there is management,
yes there is irresponsibility involved and investment capital - however, as a business person the numbers add up for me,
also btw, p/m i'm someone looking to rent in bundorran if its that part of Donegal ?

MadsL

StillWaters wrote: »

No, it puts the house you linked to at €140k. Neither of us have seen the house in question.

Why do you think in this particular house could be worth a rental calculation of approx €1500 a month. Do you think this house could be worth almost double the one I linked. Is it made of gold?

StillWaters

Where are you getting 1500 from? No-one, bar one Tongue in cheek poster has suggested offering the asking price. You will see I suggested 160k, general consensus seems to be 160-200, which would be 1,000 rental for rational yield.

MadsL

StillWaters wrote: »

Where are you getting 1500 from? No-one, bar one Tongue in cheek poster has suggested offering the asking price. You will see I suggested 160k, general consensus seems to be 160-200, which would be 1,000 rental for rational yield.

Compared to the house I linked, t'would want to be nicely appointed to pay a 25% premium over market for it. But, as you say, no-one has seen the house.

Personally speaking I would want to be 10% under the prevailing, ie: the best value house in the most expensive neighbourhood. That doesn't apply in rural areas but again, I'd want to be aiming at getting it at 10% or under what I think it is worth, otherwise i would walk away (or rent )

Lorrainbo

http://www.daft.ie/searchsale.daft?id=564424

Here is link to view the house.

ted1

Nice. Ballyshannon is a great town, and rossnowlagh is a lovely beach.

The_Conductor

Lorrainbo wrote: »

http://www.daft.ie/searchsale.daft?id=564424

Here is link to view the house.

Popular commuter route?
That estate agent really is taking the monkey.
Its a rural property- near a scenic beach.
Its a nice house- and if it were in a different area- it probably would be worth a hell of a lot more- but suggesting because it once was 450k that it is now good value at 265k really is wishful thinking in the extreme........

I'd stand by previous post- max 210k- and not one penny more. Ideal price 160-180k.

I'm guessing they are hoping someone sees it and gets emotionally involved in buying the place and is blind to how remote it is, its lack of broadband, its lack of proximity to work etc etc etc.......

I'd love it- if I won the lottery and didn't have to work, and could rely on satellite broadband etc. However- its not an idea world- and an apartment without so much as a garden better suits my current circumstances- because its near work.........

MadsL

I also stand by putting in a very low ball offer - €135k (800*12*14) at the very most – 150k at most if you want to live in it the rest of your life. Just make sure your job is secure.

tim9002

Lorrainbo wrote: »

http://www.daft.ie/searchsale.daft?id=564424

Here is link to view the house.

What will the annual property tax be on a house this size in 2013?

The_Conductor

tim9002 wrote: »

What will the annual property tax be on a house this size in 2013?

Damn good question.......
They still haven't agreed on the equation to figure how to determine property taxes- Urban based TDs want it done on a size basis- Rural TDs want it done on a value basis. Still up in the air.......