Irish Property Market chat II - *read mod note post #1 before posting*

yagan

I was watching a house last year during the first lockdown but it went sale agreed before I could go view. I went out after the last lockdown ended and almost a year later the sign still said sale agreed, but no sign of it appearing on the PPR. I think I'll giver the EA a rattle after I get my second shot behind me.

Graham

yagan wrote: »

I was watching a house last year during the first lockdown but it went sale agreed before I could go view. I went out after the last lockdown ended and almost a year later the sign still said sale agreed, but no sign of it appearing on the PPR. I think I'll giver the EA a rattle after I get my second shot behind me.

I wouldn't read too much into that at the moment.

I know of 3 houses local to me sold in the last year, new owners moved in, nothing on the register yet for some reason.

C14N

wassie wrote: »

Because sale agreed is essentially bargaining in good faith. Agents may insist on more evidence but you are under no obligation to provide it and likewise they are under no obligation to sell it to you.

Sale Agreed does not mean you have entered into any contractually binding arrangement. This only happens when you exchange contacts.

I haven't actually gone sale agreed myself yet, so I'm only going on what EAs I have dealt with so far have said, but I imagine I'd have a very hard time going sale agreed with a seller in today's market without showing that I can cough up the money. If they have 5 other people lined up who are more than happy to show their proof of funds, I can't imagine they'd waste too much time faffing around with me and my redacted funding letters hoping that I'm bargaining in good-faith. I know even just from my own parents that when they sold their last house, they took an offer substantially lower than the highest one because they didn't believe the highest bidder was able to actually produce the money they were bidding and the second-highest one was ready to move quickly.

Blowfish

Ace2007 wrote: »

But if you hide the amount, how do they know you can afford the house?

The point of redacting it is that for obvious reasons when bidding you don't want to reveal the total amount you can afford to the EA, but can show that by having AIP you aren't timewasting or bidding for the sake of it. I've done similar for a property that was a good bit below the 3.5 times I could afford and the EA was happy enough to accept it.

wassie

C14N wrote: »

I haven't actually gone sale agreed myself yet, so I'm only going on what EAs I have dealt with so far have said, but I imagine I'd have a very hard time going sale agreed with a seller in today's market without showing that I can cough up the money. If they have 5 other people lined up who are more than happy to show their proof of funds, I can't imagine they'd waste too much time faffing around with me and my redacted funding letters hoping that I'm bargaining in good-faith. I know even just from my own parents that when they sold their last house, they took an offer substantially lower than the highest one because they didn't believe the highest bidder was able to actually produce the money they were bidding and the second-highest one was ready to move quickly.

I hear you. Welcome to the dysfunctional Irish real estate game.

Ace2007

Blowfish wrote: »

The point of redacting it is that for obvious reasons when bidding you don't want to reveal the total amount you can afford to the EA, but can show that by having AIP you aren't timewasting or bidding for the sake of it. I've done similar for a property that was a good bit below the 3.5 times I could afford and the EA was happy enough to accept it.

What is the property was above your 3.5 times though?

yagan

Graham wrote: »

I wouldn't read too much into that at the moment.

I know of 3 houses local to me sold in the last year, new owners moved in, nothing on the register yet for some reason.

Yeah, I agree, but I passed the property a about a month ago and no sign of any occupation, sign still up, weeds in the driveway etc...

It could be some unresolved title issue on the sellers side too holding up the show.

Blowfish

Ace2007 wrote: »

What is the property was above your 3.5 times though?

I'd do exactly the same, but also set a max limit that I'd be willing to pay for that property and then submit to the banks (while providing the address) for an exception for that max limit even if bidding is currently below that. If I got sale agreed below that max limit, either pay less of a deposit or talk to the banks about lowering the mortgage amount which I doubt they'd have a problem with.

For the banks that want sale agreed first, get sale agreed and pay deposit and push for surveyor asap to show definite interest while the exception application is going through.

Villa05

Marius34 wrote:

I didn't know investment funds are aware when the crash is coming.

There well aware of the cycles and how they develop/manafactured

Balluba wrote:

In my opinion Irish people enjoy buying and selling houses to each other at inflated prices

Yet the vast majority that are fortunate enough, buy only one, two at a push

Marius34 wrote:

So we are heading to steep price increase in coming years... I though he was expecting prices to go down soon. It's difficult to follow up on the points.

Your well aware of how these cycles occur.
Everything is manafactured
Choke supply
All interventions are demand side
Govt policy highly influenced by industry lobbyists
Units that are required that were cheaper to build than houses in the past all of a sudden are more expensive as thats where high finance and government are buying

My stance on property prices has been consistent
The higher the rises the harder the fall for the majority of us plus the self inflicted loss of competitiveness, additional debt and costs

There are alternative that can do the opposite to all this if carefully managed

JDD

I thought most people redacted Letters of Offer until after going sale agreed? It seems madness to be bidding in 1-2k increments on a house that's say, €400k, if the EA - who is working for the seller - knows that you are in fact approved for up to €450k? I mean, you can play it cool in a buyers market and threaten to pull out of bidding because the house is going above what you think it's worth. That's believable when there's plenty of other houses you can bid on and the EA knows that. But in a sellers market the EA knows that you wouldn't be bidding unless you liked the house, and there's a whiff of desperation off most bidders. Why settle for €410k for the seller when the EA knows you really want the house and have more cash approved to pay for it?

I know some people who have gone back to the Bank the day they went sale agreed to get a second Letter of Offer showing the sale agreed amount as the maximum approved amount. And then they show that to the EA the day after going sale agreed. Why? Because if that sale falls through (and a lot of them do), and you are back out bidding in the locality, you don't want that local branch of Sherry Fitzgerald knowing what your maximum approved amount is.

Ace2007

If I was selling a house now and was worried that a bidder could pull out - i would nearly ask for a non refundable deposit of x%. This would wash out anyone who wasn't serious about buying or was unsure and would leave only those that can afford the house.

I've know someone who did this, as they needed a quick sale but the buyer wasn't able to committee to the closing date - so they drew up the agreement (through their solicitors) and the non refundable deposit was paid and bought the seller 9 months breathing space. There was also a clause that it had to close out before a certain date so that it didn't drag on.

Marius34

Villa05 wrote: »

Your well aware of how these cycles occur.

Yes economic cycles occurs, but property price crash are rare events, and not on each economic cycle.

Villa05 wrote: »

My stance on property prices has been consistent
The higher the rises the harder the fall for the majority of us plus the self inflicted loss of competitiveness, additional debt and costs

Yes, I'm aware that of your stance, always predicting price fall for the last 10 years. Meaning consistently wrong.
I'm just surprised with your change in stance, with expectations of prices to go up in the coming years.

cnocbui

In Australia, a deposit is a deposit. If you make an offer, and it is accepted, you put down a deposit and sign a contract in the EA's office. If you renege, you lose the deposit. The seller is also bound by the contract and can't go accepting higher offers or pull out after you have signed. You don't even need solicitors on either side, you can get a settlement agent who checks utility bills and taxes/rates are sorted and paid, that the title transfer happens and that funds are paid and lodged. Last time it cost me €620.

JDD

cnocbui wrote: »

In Australia, a deposit is a deposit. If you make an offer, and it is accepted, you put down a deposit and sign a contract in the EA's office. If you renege, you lose the deposit. The seller is also bound by the contract and can't go accepting higher offers or pull out after you have signed. You don't even need solicitors on either side, you can get a settlement agent who checks utility bills and taxes/rates are sorted and paid, that the title transfer happens and that funds are paid and lodged. Last time it cost me €620.

That's the way it should be done.

It's kind of the way it is done for new builds. You pay your booking deposit - refundable if you change your mind. But then you pay your full 10% deposit about three weeks later. Non refundable and the builder has to sell it to you at the price in the contract.

With any contract where you're handing over your life savings to someone else, I'd want a solicitor involved. That's just my 2c though. Maybe it can be done without solicitors if contracts are standard and everything is on the land registry.

wassie

This is not exactly true in Australia. Each state has a different system. For example, in NSW, like here you have to exchange contracts and can be 'gazumped' before this happens.

Western Australia has probably the most straight forward system, sale by simple offer & acceptance.

Of course you can informally negotiate, but formal offers must be signed and in writing. If it is accepted, you have a contract for sale. Sellers can also counter offer any written offer if they choose not to accept.

Buyers & sellers are protected through conditions of sale in the T&Cs (eg sale is subject to purchaser obtaining finance, purchaser inspection etc) that must be achieved to allow settlement to be effected. Also T&Cs can be added, deleted or modified as you see fit (eg sale is subject to buyer selling their own property first). If all conditions of sale are met and one party chooses to not proceed, then they are open to being sued for liquidated damages, although this is rare.

Cuts out all this BS of lack of transparency in bidding as offers must be in writing.

Villa05

Marius34 wrote:

you always predicting price fall for the last 10 years. Meaning you were consistently wrong. .

I don't think that's entirely true as my biggest complaint and the thing I bang on about the most is government intervention almost exclusively on the demand side which by definition pushes up price

There's a difference between saying prices will fall and declaring the property market is in a bubble.


I recall in the early stages of the recovery responding to a poster complaining that the only half decent stock on the market were apartments and questioning why anyone would buy an apartment again

I responded by saying the best time to buy any asset is when no one else wants it.

If anyone purchased an apartment back then they can now swap it for a house and have change left over as apparently apartments are more expensive than houses in our manafactured market

10 years ago was 2011

cnocbui

I'd rather be going after a person or company for missapropriation of funds, than a solicitor. You would have trouble finding a solicitor to represent you against another one and professional bodies are mostly there to shield and protect their members, not help the public go after them.

Way back last century, some of my family had dealings with a solicitor, one J Brooks. At one point I even contemplated using him for a property matter due to the family connection.

I'm glad I didn't. Very soon after, it turned up that he had embezzled a huge sum of clients funds, investing in property in Greece and other things. Such was the scale of his misdeeds that the bar associations fund to cover such things was emptied or insufficient to cover the losses; something like that.

In Oz, the contracts are standard throught the industry and handled by the EA mostly. The land registry titles are all computerised and transferring them is quick and simple.

I can understand why in Ireland a person might instinctivly consider a solicitor essential. The whole of Irish society has been carefuly crafted and nurtured to make them indispensible and unavoidable, by guess who? It's one of the several motivations for me wanting to get out.

In Oz, you can literally go from cradle to grave without ever needing to engage a solicitor.

cnocbui

Villa05 wrote: »

I don't think that's entirely true as my biggest complaint and the thing I bang on about the most is government intervention almost exclusively on the demand side which by definition pushes up price

There's a difference between saying prices will fall and declaring the property market is in a bubble.


I recall in the early stages of the recovery responding to a poster complaining that the only half decent stock on the market were apartments and questioning why anyone would buy an apartment again

I responded by saying the best time to buy any asset is when no one else wants it.

If anyone purchased an apartment back then they can now swap it for a house and have change left over as apparently apartments are more expensive than houses in our manafactured market

10 years ago was 2011

I stiil don't understand this over priced property meme. Did you see the photo I posted of the externally completed town houses a few pages back? They sat like that for over a decade. Around here, there was absolutely no construction of houses whatsoever, apart from two brave souls who built one offs, likely on their parents farm land.

The reason for a decade long hiatus in any house building was because the market price was way below the cost of construction. My own house I had valued, and it was about 50% less than it's replacement cost. Market prices at the end of 2019 - which many consider overpriced - had barely just got back to matching construction costs.

There is a shortage of housing now because the market prices were too low. In the last year, construction activity locally has started again because prices have recovered to where they are again realistic.

Marius34

Villa05 wrote: »

I don't think that's entirely true as my biggest complaint and the thing I bang on about the most is government intervention almost exclusively on the demand side which by definition pushes up price

There's a difference between saying prices will fall and declaring the property market is in a bubble.


I recall in the early stages of the recovery responding to a poster complaining that the only half decent stock on the market were apartments and questioning why anyone would buy an apartment again

I responded by saying the best time to buy any asset is when no one else wants it.

If anyone purchased an apartment back then they can now swap it for a house and have change left over as apparently apartments are more expensive than houses in our manafactured market

10 years ago was 2011

I didn't think you need to be reminded for your comments, when property price were at the lowest point in the beginning of 2012, with not much of buyers, pretty much all comments pointing to the same direction:

Villa05 wrote: »

does anyone else feel there is a dead cat bounce on the way. Very dangerous for those who do buy considering the economic Armageddon we are facing.

Well when NAMA are being forced to sell their stock to generate some cash for the troika, you can't blame a man with a massive vested interest from talking up the market.

Unfortunately there will be a few fools who will believe him and jump head first into this trap judging by some of the posts around here.

Cyrus

Marius34 wrote: »

I didn't think you need to be reminded for your comments, when property price were at the lowest point in the beginning of 2012, with not much of buyers, pretty much all comments pointing to the same direction:

i wish i had jumped head first into the traps in 2012.

JimmyVik

Marius34 wrote: »

I didn't think you need to be reminded for your comments, when property price were at the lowest point in the beginning of 2012, with not much of buyers, pretty much all comments pointing to the same direction:

Sure we all thought the world was ending then or we would have bought lots of properties ourselves.
It just serves to remind us that anything we say about knowing how property prices, or indeed the general economy is just pure guesswork. Noone on this thread actually does know. Noone.

yagan

cnocbui wrote: »

There is a shortage of housing now because the market prices were too low. In the last year, construction activity locally has started again because prices have recovered to where they are again realistic.

It's an odd situation where essential workers need 10x annul wage to buy a house where they're needed, so maybe the issue is the boom and bust nature of the unregulated Irish property market.

When activity picks up the short termist profit driven speculator market becomes a feeding frenzy and costs become driven up.

The leading hot money is in the international funds and as long as they're not deterred from yield farming by the government or falling yields I can't see costs falling. The stamp duty hike excluded apartments as I reckon the government are happy to keep the cement mixers turning, even if it means we end up with vertical ghosts estates.

We had 15% employed in construction before the last bust, and another 7-8% in ancillary services. I believe the long term average in a mature market is only 7-8% are engaged in the construction sector.

Marius34

JimmyVik wrote: »

Sure we all thought the world was ending then or we would have bought lots of properties ourselves.
It just serves to remind us that anything we say about knowing how property prices, or indeed the general economy is just pure guesswork. Noone on this thread actually does know. Noone.

Well, tell to the ones who come up here telling that the crash is coming.

JimmyVik

Marius34 wrote: »

Well, tell to the ones who come up here telling that the crash is coming.

They all know.
Ive predicted a crash many times myself
Some day I will be right.

SmokyMo

Marius34 wrote: »

Well, tell to the ones who come up here telling that the crash is coming.

What is your outlook?

timmyntc

Marius34 wrote: »

Well, tell to the ones who come up here telling that the crash is coming.

The crash is coming - we just dont know when

timmyntc

cnocbui wrote: »

I stiil don't understand this over priced property meme. Did you see the photo I posted of the externally completed town houses a few pages back? They sat like that for over a decade. Around here, there was absolutely no construction of houses whatsoever, apart from two brave souls who built one offs, likely on their parents farm land.

The reason for a decade long hiatus in any house building was because the market price was way below the cost of construction. My own house I had valued, and it was about 50% less than it's replacement cost. Market prices at the end of 2019 - which many consider overpriced - had barely just got back to matching construction costs.

There is a shortage of housing now because the market prices were too low. In the last year, construction activity locally has started again because prices have recovered to where they are again realistic.

Market prices are well above construction costs - recently (pandemic) construction costs have gone up a good bit due to price of materials spiking, but prior to this market prices were still a good bit above cost.

Marius34

SmokyMo wrote: »

What is your outlook?

I have shared my thoughts in November of last year, it haven't changed since than.
I expect prices to go up this year.
In long term there may be ups and downs, but won't go below 2020 level, due to long term inflation factor.
There won't be crash anytime soon due to high saving, relatively low private sector debts, and low number of construction in past decade.

Pussyhands

I have the cash to buy a property with a mortgage but the prices are disgusting.

The current bidding is currently 10% at least over what I'd be willing to pay.

C14N

JDD wrote: »

I thought most people redacted Letters of Offer until after going sale agreed? It seems madness to be bidding in 1-2k increments on a house that's say, €400k, if the EA - who is working for the seller - knows that you are in fact approved for up to €450k? I mean, you can play it cool in a buyers market and threaten to pull out of bidding because the house is going above what you think it's worth. That's believable when there's plenty of other houses you can bid on and the EA knows that. But in a sellers market the EA knows that you wouldn't be bidding unless you liked the house, and there's a whiff of desperation off most bidders. Why settle for €410k for the seller when the EA knows you really want the house and have more cash approved to pay for it?

I know some people who have gone back to the Bank the day they went sale agreed to get a second Letter of Offer showing the sale agreed amount as the maximum approved amount. And then they show that to the EA the day after going sale agreed. Why? Because if that sale falls through (and a lot of them do), and you are back out bidding in the locality, you don't want that local branch of Sherry Fitzgerald knowing what your maximum approved amount is.

Because you may not want to pay the full amount you have approval for. You could quite easily have approval for €450k, and be willing to spend that on a property that has X, Y, and Z features that you're looking for, but then you come across a house that only has X and Y, but not Z, so you're only willing to pay €410k for that one. You may "like" the house enough that you would spend a certain amount on it, but that doesn't mean you want to spend every peny on it. From the perspective of the EA, unless there's a reason to believe that the potential buyer is not in a position to just walk away from the deal, it's not really that wise to assume they'll be willing to pay everything they have for this particular property you're selling.

Assuming it's even legal to just up the price to the maximum agreed amount after the offer has been accepted, it certainly would be off-putting enough that it would be a real danger of having them walk away from the deal.