How to know what offer to make on a house?

Mur1983

Hi I am interested in trying to purchase a house the asking price is 76,500euro. It is a small village in Co.Waterford around 20minutes from the City its in a council estate but its a nice quiet area and I know it well no trouble and close to beaches. The house itself is a 3 bed and had been unoccupied since 2009 on the market since and no one interested. A Bank is selling the house. Its needs a new kitchen and electrics/plumbing all need to be looked at. At present the house looks fairly bad but most of it is just a paint job. The house also has no heating system it use have a back boiler but that is broke so would need to get that fixed/replaced or alternatively install Oil Heating system. The property price register has one of these houses sold in 2011 for 62,500 but talking to locals that has was in a lot better condition than the one we want. I am thinking of making an offer of 40,000euro and starting from there is this too low? Or even too high ?

blops2013

Yes go in at the 40 because its what id do. Im looking at a few properties in interested in and theres one sitting at 89k and im going to put a cheeky bid in at 40k and hopefully settle for the 45 or 50, if not sure god loves a tryier

Idbatterim

do you have a link to it? how much are ones in walk in condition costing?

Mur1983

Here is the link

http://www.property.ie/property-for-sale/3-Killbarrymeaden-Kill-Co-Waterford/442240/

None of the other houses in the estate are up for sale. But property price register has one sold in 2011 for 62,500euro.

House looks a lot worst now photos were taken in 2009!

Needs heating system, electricial rewiring and probably some plumbing.

Also its with a Bank so I am sure they be glad to see back of it.

Thanks
Ger

blops2013

Mur1983 wrote: »

Here is the link

http://www.property.ie/property-for-sale/3-Killbarrymeaden-Kill-Co-Waterford/442240/

None of the other houses in the estate are up for sale. But property price register has one sold in 2011 for 62,500euro.

House looks a lot worst now photos were taken in 2009!

Thanks
Ger

I would never pay the asking price for that house. Your doing right with putting an offer in for 40k. The EA will tel you that is to low but stick with it and youll get it for this amount or near to it as possible.

divito06

Mur1983 wrote: »

Here is the link

http://www.property.ie/property-for-sale/3-Killbarrymeaden-Kill-Co-Waterford/442240/

None of the other houses in the estate are up for sale. But property price register has one sold in 2011 for 62,500euro.

House looks a lot worst now photos were taken in 2009!

Thanks
Ger

Property value has drop significantly since then. I would knock on a neighbours door and ask them what they think of the area and so on and introduce your and say your looking at buying the house nextdoor. All advise helps and especially when its costing hard earned cash. That would be my plan of action.. Offer a reasonable amount but not asking, if you offer a ridiculous amount as above no offence they could just tell you whistle as would i.

Buying a house anywhere is a Hugh commitment as it could loose thousands in value over night my house was bought for 165,000 and not its valued at 90,000 and i even spend 20,000 on it in the last two years.

So best of luck..

Mur1983

My thinking on it is that would probably have to spend 10k to 15k if not more on the house to bring it up to living standards. The house sold in 2011 was in good condition compared to this so what that house made minus the work needed 40k seems good starting point. We actually live the village now. And we are good friends with the people who use to own the house before so they have told us that there was loads wrong with the house electrics/heating etc. The Banks repossessed the house from them in 2009 and they have no problem with us buying it. House derelict since and looks in fairly bad condition from outside.

StillWaters

Have you asked the EA what the bank will accept? Normally they are upfront in situations like this, as the commission is so low, and the bank just want shot of it. I'd say you could get it for close to 40, maybe 50.

Mur1983

I got impression from them anything in the region of 55k would be taken. But that did not factor in the works needed. As far as the aucthioneer was concerned everything is in good working order with the house. But can see clearly that electrics need to be done and heating at least. Plus bathroom and kitchen all need to be redone. Radiators coming off walls etc. Wires coming out of walls in the bedrooms. Sockets broke..

divito06

Mur1983 wrote: »

I got impression from them anything in the region of 55k would be taken. But that did not factor in the works needed. As far as the aucthioneer was concerned everything is in good working order with the house. But can see clearly that electrics need to be done and heating at least. Plus bathroom and kitchen all need to be redone. Radiators coming off walls etc. Wires coming out of walls in the bedrooms. Sockets broke..

Ask can you take a electrician and plumber in to house with you so can write out a cert or something to say its not up to safety regulations. If you know them even better saves you money. Then talk money. If all else fails walk away.

StillWaters

Mur1983 wrote: »

I got impression from them anything in the region of 55k would be taken. But that did not factor in the works needed. As far as the aucthioneer was concerned everything is in good working order with the house. But can see clearly that electrics need to be done and heating at least. Plus bathroom and kitchen all need to be redone. Radiators coming off walls etc. Wires coming out of walls in the bedrooms. Sockets broke..

When he says 55, I suspect he means 45/50. Are you cash purchasers, it could be difficult to raise a mortgage on this house?

Mur1983

Spoke to our mortgage company they would have no major problems once the structure of the house is ok which I believe it is. But will get our engineer to confirm.

Thanks for advice will let you know how I get on

JOSman

Looks like the house is in poor condition and will cost you a few bob to bring it up to a liveable standard.

Put in a low starting price (generally about 55 to 60% of the advertised price). The worse that can happen is they'll say no.

Start somewhere, it's your money.

Best of luck to you.

blops2013

divito06 wrote: »

Property value has drop significantly since then. I would knock on a neighbours door and ask them what they think of the area and so on and introduce your and say your looking at buying the house nextdoor. All advise helps and especially when its costing hard earned cash. That would be my plan of action.. Offer a reasonable amount but not asking, if you offer a ridiculous amount as above no offence they could just tell you whistle as would i.

Buying a house anywhere is a Hugh commitment as it could loose thousands in value over night my house was bought for 165,000 and not its valued at 90,000 and i even spend 20,000 on it in the last two years.

So best of luck..

Do you mean me when you say this

divito06

blops2013 wrote: »

Do you mean me when you say this

You said in one of your last posts

((None of the other houses in the estate are up for sale. But property price register has one sold in 2011 for 62,500euro.))

That would be a ridiculous amount to offer. As i said in my last post. I should have added your post to my comment so you would under stand....

blops2013

divito06 wrote: »

You said in one of your last posts

((None of the other houses in the estate are up for sale. But property price register has one sold in 2011 for 62,500euro.))

That would be a ridiculous amount to offer. As i said in my last post. I should have added your post to my comment so you would under stand....

IMO even thou another house sold for 62.5 k in 2011 i think he'd be mad to bid that amount for said property. If he goes in at 40k i think he'll get it for as close as possible to it because the banks are crying out to get these properties of theyre hands and are willing to listen to any offers even if they sound crazy ones. I know people who have bought houses for 30k that where advetised for 80k

divito06

blops2013 wrote: »

IMO even thou another house sold for 62.5 k in 2011 i think he'd be mad to bid that amount for said property. If he goes in at 40k i think he'll get it for as close as possible to it because the banks are crying out to get these properties of theyre hands and are willing to listen to any offers even if they sound crazy ones. I know people who have bought houses for 30k that where advetised for 80k

I totally agree with you. The banks will listen. Aman i know down the road from when into his bank nearly 2years ago to take out his money over the banks having problems. It was €200,000 , the bank offered him 6 brand new houses in a new estate worth round 100,000 each. So he went to his solicitor for advice he told him ask for 8 so he did and he got. Bottom line the banks used to take us for a ride nowwere in the driver seat.

Mur1983

Aucthioneer have come back and said Bank will have board meeting Wednesday and would really want 50k to settle. Not sure should I stick with the 40k or just go up to 50k to be sure.

Tow

Stick with 40K. It may be worth while getting a proper survey (done at this early stage) into the houses current condition done, otherwise they may not take your word for it.

Do you know which bank is selling it? If you are getting your mortgage from the same bank they maybe more interested in selling it cheap, as in their balance sheet the house switches from being a liability into an asset.

divito06

Tow wrote: »

Stick with 40K. It may be worth while getting a proper survey (done at this early stage) into the houses current condition done, otherwise they may not take your word for it.

Do you know which bank is selling it? If you are getting your mortgage from the same bank they maybe more interested in selling it cheap, as in their balance sheet the house switches from being a liability into an asset.

Spot on..

blops2013

Mur1983 wrote: »

Aucthioneer have come back and said Bank will have board meeting Wednesday and would really want 50k to settle. Not sure should I stick with the 40k or just go up to 50k to be sure.

If theyd settle so early for 50k then your going to get it alot cheaper. Dont give in because youll get it for cheaper if you just stick with it.

StillWaters

I'm going against the grain here, but I suspect 50k is the banks bottom line. The EA isn't mucking around for a couple of hundred euro.

blops2013

StillWaters wrote: »

I'm going against the grain here, but I suspect 50k is the banks bottom line. The EA isn't mucking around for a couple of hundred euro.

If the banks said theyd take 50k for it when first contacted them then i would bet that hed get it for less.

StillWaters

blops2013 wrote: »

If the banks said theyd take 50k for it when first contacted them then i would bet that hed get it for less.

Boards generally dont negotiate in the way a regular vendor would. Of course its worth putting the 40, but it could be 2 months before the nexr meeting.

Boom__Boom

A good approach is to look at it from the bank's point of view.

At the moment it looks like they have got zero in the way of offers for this property.

However they do not want to be seen as giving away property, which is why I would have said they were always going to turn down your first bid. How many times have you ever heard about someone who was serious about a house but in their best bid as their first bid?

The bank will know that in the case of a house such as the one described the first offer is unlikely to be the last offer.

Its not the case that the house is turn-key and there is a queue of potential interested purchasers.

BANKS DO NOT WANT THE HEADACHE OF HAVING HOUSES ON THEIR HANDS.

Remember that you can always go back with a higher offer.

Take no notice whatsoever about what the estate agent says.

Mur1983 wrote: »

I got impression from them anything in the region of 55k would be taken. But that did not factor in the works needed. As far as the aucthioneer was concerned everything is in good working order with the house. But can see clearly that electrics need to be done and heating at least. Plus bathroom and kitchen all need to be redone. Radiators coming off walls etc. Wires coming out of walls in the bedrooms. Sockets broke..

The fact that the auctioneer doesn't realise the true state of the house should be a major clue. The auctioneer will be interested in 1) the commission which won't vary all that much given the price of the houes 2) keeping on the bank's good side [chances are the odds of dealing with you again is minimal whereas the bank will likely have a massive portfolio of repossessed houses to sell before too long] 3) putting in as little effort as necessary. Don't give a second thought to the auctioneer and be extremely suspicious of any feedback you receive back from him. The auctioneer wants the most reward from the least effort and doesnt care if that ends up costing you an extra €5k or €10k

divito06 wrote: »

Ask can you take a electrician and plumber in to house with you so can write out a cert or something to say its not up to safety regulations. If you know them even better saves you money. Then talk money. If all else fails walk away.

I would have said you should have done this before submitting a bid. A couple of €100 could potentially save you thousands on the sale price. Any flaws/work to be done would be a useful tool in reducing the price. At the very worst you have gotten more information on the true state of the property/ a checklist of things to work on when you do become owner.

After they have completed their inspections I would have made sure that you provided the auctioneer with copies of the reports along with your initial bid. I wouldn't be surprised if the bank are relying on the auctioneer who thinks everything in the house is in perfect liveable condition. Verifiable evidence that this isn't the case should definitely make the bank more amenable on price on a house that has been unoccupied since 2009.

The estate agent is trying to pressure you into upping your bid to €50k.
If he gets this he will get major brownie points with the bank. Ring him back tomorrow and say no-way do you think the house is worth €50k. Tell him you are leaving your offer on the table until the end of the week and that you want to have an electrician and plumber inspect it as you are concerned about the state of the place. Mention the engineer as well as a condition of your mortgage. None of these three inspections are going to turn up anything that is going to make the house more valueable.

StillWaters wrote: »

Boards generally dont negotiate in the way a regular vendor would. Of course its worth putting the 40, but it could be 2 months before the nexr meeting.

Its not the case that the bank will have some massive formal meeting to decide on a bid.

All of those involved in deciding will be in work 9-5 (probably longer) and will have email/phones.

If the bank get word back from an auctioneer on a property that has been on the books since 2009 chances are they will have a response fairly sharpish.

This is my opinion but its based on over 15 years working in the finance industry.

None of the people in the bank involved will want to be regarded as the person that turned down a genuine bid as a result of holding out for a few more quid.

Overall I would have said the odds of them turning down the initial bid were nearly 99% whereas playing hardball with them and raising the price fractionally would be far more likely to be a successful strategy compared to with a private vendor.

StillWaters

Banks do have formal meetings to discuss bids, if you miss that meeting. You will not hear back about your bid until the next board meeting which could be a couple of months. Thats how BoS operate anyway, who I imagine are the bank in question in this case.

blops2013

StillWaters wrote: »

Banks do have formal meetings to discuss bids, if you miss that meeting. You will not hear back about your bid until the next board meeting which could be a couple of months. Thats how BoS operate anyway, who I imagine are the bank in question in this case.

I find that hard to believe in this day an age. Banks will want them properties of theyre books quickly

Mur1983

Thanks for all the feedback here, they accepted 42,500euro but I have actually ended up going for another house. Its a new build and in walk in condition I even getting the furniture included. Getting that for around 90k. With two young children probably would have being nightmare to get the other house liveable.

flintash

well done, and thanks for update.

divito06

Mur1983 wrote: »

Thanks for all the feedback here, they accepted 42,500euro but I have actually ended up going for another house. Its a new build and in walk in condition I even getting the furniture included. Getting that for around 90k. With two young children probably would have being nightmare to get the other house liveable.

At the end of the day aslong as your pleased with your choice. The new house sounds better and less hastle.

StillWaters

Congratulations, and I hope your family have much happiness in your new home :-)

Boom__Boom

Mur1983 wrote: »

Thanks for all the feedback here, they accepted 42,500euro but I have actually ended up going for another house. Its a new build and in walk in condition I even getting the furniture included. Getting that for around 90k. With two young children probably would have being nightmare to get the other house liveable.

Congrats. Hope you have many happy years in your new home.

Also thanks for the update on what had happened - some potentially useful information for other buyers especially those dealing with banks and distressed properties that they have been on the books for a while

Mur1983 wrote: »

asking price is 76,500euro. The house itself is a 3 bed and had been unoccupied since 2009 on the market since. A Bank is selling the house

Mur1983 wrote: »

I got impression from them anything in the region of 55k would be taken. But that did not factor in the works needed. As far as the aucthioneer was concerned everything is in good working order with the house.

Mur1983 wrote: »

Aucthioneer have come back and said Bank will have board meeting Wednesday and would really want 50k to settle. Not sure should I stick with the 40k or just go up to 50k to be sure.

Mur1983 wrote: »

They accepted 42,500euro.

From a starting point where the asking price was €76,500 to a situation where the auctioneer was looking for €55k to a situation where the bank "would really want 50k to settle" to a final place where the bank accepted €42,500

Key points for me.

1) A discount of €34,000 on the asking price or in percentage terms 44%

2) ALWAYS REMEMBER THAT AUCTIONEERS ARE ACTING IN THE SELLER'S INTEREST AND THAT EVERYTHING THEY SAY IS INFLUENCED BY THIS.