Am I mad to buy a house just 6% under the asking price?

I

interyu

Guest
Hi all,

I recently paid a deposit to buy a mid Terraced House house in Raheny. This house is close to the Dart station. The agreed price is 6% off under the asking price. Based on my research, there are very few houses in this area for sale and it should hold its value duo to its location. But yesterday I read a report from Davy says the house price will drop about 18% to the end of 2009. This really scared me. Should I just cancel the purchase? Any comments are welcomed. Thanks.
 
interyu said:
Hi all,

I recently paid a deposit to buy a mid Terraced House house in Raheny. This house is close to the Dart station. The agreed price is 6% off under the asking price. Based on my research, there are very few houses in this area for sale and it should hold its value duo to its location. But yesterday I read a report from Davy says the house price will drop about 18% to the end of 2009. This really scared me. Should I just cancel the purchase? Any comments are welcomed. Thanks.
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the simple answer is that nobody knows where house prices are going to end up at (not that we could discuss it here anyway).

if you are buying it as your PPR, you can afford it, you can easily handle a few rate hikes and you don't think that house prices will fall much further, then go for it. If you believe they have a long way to fall, then you just answered your own question - you could save yourself a six figure sum by doing nothing except waiting....
 
Hard to comment without viewing the property and price that was accepted. However if you are uncomfortable now about the price, how are you going to feel if you proceed. Will you become a bundle of knots. If in doubt WALK away before its too late and in fairness to the vendor
 
mercman said:
Hard to comment without viewing the property and price that was accepted. However if you are uncomfortable now about the price, how are you going to feel if you proceed. Will you become a bundle of knots. If in doubt WALK away before its too late and in fairness to the vendor
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Thanks Mercman, it is low end of house in Raheny. The asking price is 450.
 
interyu said:
Thanks Mercman, it is low end of house in Raheny. The asking price is 450.
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wow, I have a nice mid-terrace in Raheny and wouldn't expect more than 380k in the current market. See my post on the sell/rent thread below?

pm if you want to discuss further
 
Obviously it's hard to comment without knowing the property in question but 450 certainly doesn't seem unreasonable for a house in Raheny near the DART.

There are houses more in Edenmore and Kilbarrack that may be worth less alright though so it really depends on the house in question. I used to live in Raheny myself and I'd buy there in a shot if I could afford it.

On the broader point then I think it all depends on how the house suits your needs. I wouldn't pay too much attention to the percentage drop off the asking price. There is a huge variety in asking prices at the moment - some vendors reduce prices to more reasonable levels to attract people through the door; other vendors keep prices high believing that they won't get the asking price anyway. So you could pay 10% over the asking price for some houses and still be getting good value, in other cases 10% below the asking price is still too much.
 
As mentioned above, it's hard to comment without knowing all the details, but it sounds like you may be getting cold feet, which is natural. Buying a house is a big step for most people, and it is understandable that it makes you nervous.

However, if I was you, I wouldn't base my decision on abstract material such as strockbrokers' research. They do not know the details of your particular situation and in any case, are not focussed toward the criteria that a person purchasing their private primary residence possesses.

Also, trying to time the market is a dangerous game and even more so when you are dealing with your home rather than an investment. There is no guarantee of finding another house that you like as much and with the credit crunch continuing and the ECB signalling more possible rate rises, you may not even being able to secure the same sized mortgage in the future.

As mentioned above, you should base the decision on how a house suits your needs, including your ability to afford the mortgage. Having bought myself three years ago, we felt that the best guarantee against a drop in prices was finding somewhere we truly liked, that we'd be happy to live in for the foreseeable future.
 
Ive recently been bidding on houses in the Raheny area also, and my experience having bin out bid a number of times is that most of the houses seem to go for a price very close to the asking price. Max drop ive seen so far is 10K less then the asking price on a house of 695K. My feeling is houses in the Raheny area will hold there price more due to closeness to city, transport links etc.
 
If you can afford the house and transaction costs and you are not putting yourself in to a high level of debt (say over 4 times your salary) over a long period of time (say no more than 20 years) then go for it!!

Bear in mind that the price of the property could fall, but over the long term 15-20 years you should be OK.
 
Surely it depends whether you think the asking price is reasonable. I'm selling at the moment - recently renovated house in decent northside area close to town. I put it on at about 10% less than it would have got before the slump. Loads of interest, but the only offer so far is another 15% less than that.
I'm not desperate to sell by any means and there's no way I'm taking a 25% hit on my house after all the work I put into it.
I'll just take it off the market and have another look in a few years. Point is, I genuinely think the asking price is fair but I suspect would-be buyers think they're being conned unless they're bidding massively under.
Can't help thinking a lot of people are shooting themselves in the foot in anticipation of further and further price drops. The slump could come to an end as suddenly as the boom did!
 
Drew said:
I'm not desperate to sell by any means and there's no way I'm taking a 25% hit on my house after all the work I put into it.
I'll just take it off the market and have another look in a few years.
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The market will dictate the price not you!! Just cos you put a lot of work in to it doesn't mean its worth it. Its worth what people will and can pay for it!!

Good job you don't have to sell because with your logic you'd have your house on the market for years!!


The slump could come to an end as suddenly as the boom did!
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And "the slump" could last as long as the boom...........
 
Mr DT said:
The market will dictate the price not you!! Just cos you put a lot of work in to it doesn't mean its worth it. Its worth what people will and can pay for it!!

Good job you don't have to sell because with your logic you'd have your house on the market for years!!




And "the slump" could last as long as the boom...........
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Hey, I'm just expressing the opinion that I don't feel I'm getting a fair price at the moment and I'm sure there are plenty like me. I bought a fixer-upper at a reasonable price a few years ago and spent a sensible amount of money modernising (not extending) it.
My "logic" if you want to call it that, is that I don't think I should make a loss on a modest renovation when re-selling.

My point was, some houses are still way overpriced, some aren't, but I feel the blanket assumption that you have to bid massively under everything is unhelpful to both sellers and buyers.

"The market" may dictate the price, but we all make up the market. No buyers; no demand. No sellers; no supply.
 
"The Market" never really dictated the price. The amount of money the banks would lend relative to someone's salary determined the price paid and that is (unfortunately for sellers) falling. Did anyone really look at price the last few years or was it just a case of "The banks will lend me X based on my salary, how much house can I get for that".

That said, back to the OP, if house prices do fall significantly, you could save a considerable amount of money but you have to ask yourself is it worth taking that risk? If you love the house and you can afford it comfortably (with a significant stress test for higher mortgage rates) you might be better off buying now
 
gearoid -- your post is probably the best and most sensible statement concerning mortgages and house prices i have read. For some strange reason the Irish based their home purchasing requirements on the amount it cost, not on the facts of suitaibility
 
gearoidmm said:
"The Market" never really dictated the price. The amount of money the banks would lend relative to someone's salary determined the price paid and that is (unfortunately for sellers) falling. Did anyone really look at price the last few years or was it just a case of "The banks will lend me X based on my salary, how much house can I get for that".
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the banks are part of the market
 
DerKaiser said:
the banks are part of the market
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If you were to believe their propaganda it would suggest that they are just innocent bystanders 'helping' poor FTBs get on the ladder by extending mortgage durations and offering 100% mortgages when all any of that ever did was drive prices ever higher and increase their profits. Turned us all into a generation of debt slaves.
 
There sure did along with the goverment and property developers they went about HELPING to creating unsustainable growth, and house prices over 10 times the avearge wage. Mad.

I'd say there are a few people in the banks a little glum now however. "My god you know those shares I get every year as a bonus.....they were valued at €19.00 last year, they are only worth €6.00!!!..... but we have (or were about to) spent that money on the new car/house/second house. What we going to do now?"

tighten yr belts it going to be a rough ride.
 
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