# Estate agent advising not to sell?



## whizzbang (9 Jun 2006)

A friend of mine bought a house up in Dundalk about 2 years ao and has decided to sell as the rent isn't covering the mortgage. So he rang up the Estate agent and they advised him not to to sell as the market is going to continue going up. Does this seem odd to anyone? Why would an estate agent turn down a job? Are they that busy?


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## thewatcher (9 Jun 2006)

They might be trying to shift their own stuff first,does seem odd though that they'd turn down business.Is there loads of places for sale in the particular estate ?


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## whizzbang (9 Jun 2006)

there are 5 houses for sale in Dundalk town according to myhome.ie so I guess business is not exactly booming...
[edit] there are about 10 on daft [/edit]


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## kane3000 (9 Jun 2006)

Don't see how an estate agent could prophesise this.

I also think that it is bad advice - if the rent is not covering the mortgage that means your friends' investment has a negative yield and is dependent on Capital appreciation for returns. (Which is very risky especially in the current climate).


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## whizzbang (9 Jun 2006)

It does seem weird, I'm just wondering are they seeing a flow of houses going up for sale and they are trying to stem the tide to prevent a glut of property? Not sure how likely it is but can't see why else they would want to do it?


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## kane3000 (9 Jun 2006)

I think thats it -  that particular EA may have been quietly informed that some really good and easy to sell properties will be coming on the market soon due to investors bailing out and he/she wants to keep his/her books clean so as to concentrate on selling the "sure things" without having (no disrespect to your friend) harder to sell properties hanging around their windows ??

I really don't understand whether or not the current housing market is good or bad for Estate Agents, I read recently that CBRE Ellis Gunne have sold off their residential property arm due to losses suffered !!
I understand the increased competition amongst EAs but their commision must have increased astronomically over the last few years.

Would a crash be good or bad for them ?


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## Afuera (9 Jun 2006)

kane3000 said:
			
		

> Would a crash be good or bad for them ?


Bad, I would think. Estate agents get work from sellers but only get paid when the buyer comes into the equation. More sellers (who are trying to bail from a falling market) would mean more work. Less buyers (who are waiting for the bottom of the market) would mean that there would be less payments coming in. More work for less money doesn't sound too good.

whizzbang, I think your friend should ask to get that advice in writing from the Estate Agent.


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## whizzbang (9 Jun 2006)

Afuera said:
			
		

> whizzbang, I think your friend should ask to get that advice in writing from the Estate Agent.



Good thinking, it would be interesting to see the reply!


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## Resident (9 Jun 2006)

could be that their office is far from the house and they just couldn't be bothered doing the viewings.
lower hanging fruit etc.


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## whizzbang (9 Jun 2006)

Resident said:
			
		

> could be that their office is far from the house and they just couldn't be bothered doing the viewings.
> lower hanging fruit etc.



true true,  would they ever suggest a closer agent? Or would they rather sell their own child? (they are estate agents after all)


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## Remix (9 Jun 2006)

kane3000 said:
			
		

> Would a crash be good or bad for them ?


 
volume is crucial - they have to shift to make their money. That's why when the market turns they can become agents for good (buyers perspective) and pressurise sellers into reducing prices further in order to move the property.


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## bacchus (10 Jun 2006)

A salesman refusing the sell a product?? seems rather odd, especially when salesman is mainly paid on commission..



> So he rang up the Estate agent ...


 
She would phone few EAs and see if they also turn down her business. I doubt very much....


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## X-Man (10 Jun 2006)

being from dundalk and still living here i can tell you all that this town is BOOMING!   house prices are crazy and the new motorway to the north of ireland is making things even better


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## asdfg (10 Jun 2006)

Not exactly answering your query but I hope you /your friend are aware of the tax implications of selling property. (CGT)

I hope that your friend is making annual tax returns in relatiion to the profit on rental income. (Remember it is only the interest on the mortgage that is allowed plus other allowable expenses) See [broken link removed]

If your friend is paying off the mortgage over a number of years then perhaps he/she should consider changing to an interest only mortgage even if it is only for a short term. Try and find a position your friend is comfortable with.


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## whizzbang (10 Jun 2006)

asdfg said:
			
		

> I hope that your friend is making annual tax returns in relatiion to the profit on rental income. (Remember it is only the interest on the mortgage that is allowed plus other allowable expenses) See [broken link removed]



I'm pretty sure he is not registered for any tax or anything. And so as far as the revenue are aware it is his Personal Residence. He has been living in a work provided flat for the time of his ownership. All very dodgey i know but I'm not sure there is anything I could say that would enlighten him to his moral obligations 

As for interest only mortgage I think he reckons the market might turn in the near to medium term future so he is just going to sell it and move on to the next thing. I also think he might be leaving the country in a while so that probably has something to do with it as well.


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## asdfg (10 Jun 2006)

I also take it that he did not pay stamp duty on the property. Revenue can charge heavy penalties and charge a fairly high interest rate charged on a daily basis.


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## whizzbang (10 Jun 2006)

asdfg said:
			
		

> I also take it that he did not pay stamp duty on the property. Revenue can charge heavy penalties and charge a fairly high interest rate charged on a daily basis.


yep, first time buyer. ( didn't live there for 5 year first so he is liable stamp duty clawback if he admits it to the Revenue) how likely is he to get caught do you think? so far as I am aware the Revenue think he is living there on his own.


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## ClubMan (10 Jun 2006)

Who knows? How many bogus non resident account tax evaders assumed that they would never be caught?


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## whizzbang (10 Jun 2006)

ClubMan said:
			
		

> Who knows? How many bogus non resident account tax evaders assumed that they would never be caught?



True, true. How could he be caught? the only way I can think of is that the revenue will look at people who are getting regular payments into their accounts (rent) from people they didn't have any relationship with.

Or maybe the renters could rat him out to the PRBT? I think he gives them a good rent rate so they will not claim the tax relief.

Any other way?


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## ClubMan (10 Jun 2006)

There are innumerable possibilities including the ones above. Don't forget that Revenue are getting better at profiling taxpayers and singling out some for audits where there may be circumstantial evidence of evasion. Hopefully they catch up with more spongers sooner rather than later and stop them ripping the rest of us off.


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## whizzbang (10 Jun 2006)

ClubMan said:
			
		

> There are innumerable possibilities including the ones above. Don't forget that Revenue are getting better at profiling taxpayers and singling out some for audits where there may be circumstantial evidence of evasion. Hopefully they catch up with more spongers sooner rather than later and stop them ripping the rest of us off.



true, I'll mention it to my friend next tiem I see him. I take it it would be better for him to do it before selling than after right?


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## SarahMc (10 Jun 2006)

> Or maybe the renters could rat him out to the PRBT? I think he gives them a good rent rate so they will not claim the tax relief.



The tenants are mad not to be claiming tax relief.  Has he made a deal with them that the rent is lower if they don't claim?  If so, all it needs is for them to feel agrieved over something and he is screwed.


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## whizzbang (11 Jun 2006)

SarahMc said:
			
		

> The tenants are mad not to be claiming tax relief.  Has he made a deal with them that the rent is lower if they don't claim?  If so, all it needs is for them to feel agrieved over something and he is screwed.



I think he has made a deal with them and they are paying under the going rate. He also tends to have foreign nurses and students in the place so chances are they don't really know about rent relief and stuch. They are probably just happy to be getting cheap rent.

In reality I think there are a lot of people doing this and if the revenue started cracking down on it you might see a lot more houses on the market as people start to factor in the higher cost of being an "Official investor".


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## ClubMan (11 Jun 2006)

whizzbang said:
			
		

> In reality I think there are a lot of people doing this and if the revenue started cracking down on it you might see a lot more houses on the market as people start to factor in the higher cost of being an "Official investor".


 Not necessarily. By being a tax evader your friend is missing out on significant tax breaks such as the ability to offset 100% of mortgage interest and other allowable costs against rental income. He is also potentially losing out by discounting the rent below market rates in an attempt to cover his tracks. He may actually be better off in the long run as a tax compliant investor rather than a tax evader even after the other tax liabilities are taken into account. Even apart from the risks of being found out and having to pay outstanding liabilities, interest and penalties and perhaps worse.

But otherwise bring it on...


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## whizzbang (11 Jun 2006)

ClubMan said:
			
		

> Not necessarily. By being a tax evader your friend is missing out on significant tax breaks such as the ability to offset 100% of mortgage interest and other allowable costs against rental income.



hmm, does this mean if you had an interest only mortgage you could get 100% tax relief on it?


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## hmmm (11 Jun 2006)

SarahMc said:
			
		

> The tenants are mad not to be claiming tax relief.  Has he made a deal with them that the rent is lower if they don't claim?  If so, all it needs is for them to feel agrieved over something and he is screwed.


 If I was in their position I would take the so called "deal" and then once I left the property claimed the tax relief for the years in question. I'm sure they will more than likely do similar, if the landlord wants to try and evade tax that's not their problem.

I probably should observe that the foreigners I work alongside tend to watch every cent and euro much more than the Irish workers (because most of their income is sent home and means a lot more to them). I wouldn't assume that foreigners would know less than Irish people about tax relief.


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## whizzbang (11 Jun 2006)

hmmm said:
			
		

> If I was in their position I would take the so called "deal" and then once I left the property claimed the tax relief for the years in question. I'm sure they will more than likely do similar, if the landlord wants to try and evade tax that's not their problem.
> 
> I probably should observe that the foreigners I work alongside tend to watch every cent and euro much more than the Irish workers (because most of their income is sent home and means a lot more to them). I wouldn't assume that foreigners would know less than Irish people about tax relief.



good point, my mate is very laid back, hopefully he doesn't get screwed by this!


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## Smi1er (13 Jun 2006)

whizzbang said:
			
		

> if he admits it to the Revenue) how likely is he to get caught do you think? so far as I am aware the Revenue think he is living there on his own.


 
How stupid! Where money is concerned there are two quite major lessons.

1/ Don't screw the Taxman
2/ Don't screw the VAT Man

It quite simply isn't worth it. Last person I knew that screwed the VAT man thought he was been smart. Until they collared him. He owed the VAT man £170K. 4.5 years he got along with a £170K fine.


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## ClubMan (13 Jun 2006)

whizzbang said:
			
		

> hmm, does this mean if you had an interest only mortgage you could get 100% tax relief on it?


 It means that an investor using an interest only loan to purchase/renovate an investment property can offset 100% of mortgage interest against rental income.

Interest only mortgage


			
				whizzbang said:
			
		

> good point, my mate is very laid back, hopefully he doesn't get screwed by this!


If by "getting screwed" you mean paying his fair share of the sort of tax liabilities that we all face then I hope he is!


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## whizzbang (13 Jun 2006)

ClubMan said:
			
		

> If by "getting screwed" you mean paying his fair share of the sort of tax liabilities that we all face then I hope he is!



good point, well made.  

I plan on asking him when  I'm going to get my cut of the stamp duty. 1/4,000,000th of it is mine after all!


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