# Buying a house - How much to offer!



## Savvy Row (17 Jun 2010)

As most of us already know, house prices are still far too high. Just this week, a lady on Joe Duffy programme told of how she had paid more than 200K too much for her apartment while believing that it had been "reduced to sell". Well it had been reduced alright - but not enough! And now she is devastated!

Houses once asking 1 million are now asking 500K - (reduced to sell!) - but should one offer half that again? Because if you paid 500K and discovered that in 12 months time it is only worth 300K, one will have lost 200K and that, for anyone, would be devastating.

So what kind of reduction should one seek when making an offer?


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## plant43 (17 Jun 2010)

Savvy Row said:


> one will have lost 200K and that, for anyone, would be devastating.



One will have lost nothing until one sells the house.


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## Savvy Row (17 Jun 2010)

Not true plant 43. Not true at all! Would you equally argue that if you paid 40K for a 25K car, you'd have lost nothing until you sold it?

Using that logic, if you intend to remain in the house forever, it shouldn't matter to you what you paid. 

Come on!


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## Cooper7 (17 Jun 2010)

You're really asking if house prices are still going to fall. 

If you believe they are hold off buying however if it's your dream house and you really want it then it's up to you to put in an offer, the vendor can always just say no.


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## boe (17 Jun 2010)

Savvy Row said:


> As most of us already know, house prices are still far too high. Just this week, a lady on Joe Duffy programme told of how she had paid more than 200K too much for her apartment while believing that it had been "reduced to sell". Well it had been reduced alright - but not enough! And now she is devastated!
> 
> Houses once asking 1 million are now asking 500K - (reduced to sell!) - but should one offer half that again? Because if you paid 500K and discovered that in 12 months time it is only worth 300K, one will have lost 200K and that, for anyone, would be devastating.
> 
> So what kind of reduction should one seek when making an offer?


 
So, you want to offer what you think the value will be in 12 months time then? If you think prices will continue to fall then sit it out. My opinion on it is that if you find the home you really want then go for it. We traded up recently and I don't worry that my house has since dropped in value because its my home and I have no intention of selling it anyway.


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## MrMan (17 Jun 2010)

Savvy Row said:


> As most of us already know, house prices are still far too high. Just this week, a lady on Joe Duffy programme told of how she had paid more than 200K too much for her apartment while believing that it had been "reduced to sell". Well it had been reduced alright - but not enough! And now she is devastated!
> 
> Houses once asking 1 million are now asking 500K - (reduced to sell!) - but should one offer half that again? Because if you paid 500K and discovered that in 12 months time it is only worth 300K, one will have lost 200K and that, for anyone, would be devastating.
> 
> So what kind of reduction should one seek when making an offer?



Why not sit it out for 12 months and see where the market is? If you predict a 50% drop then you will see if you are right or wrong, you could end up saving or spending more.
You cannot expect vendors to let you have your cake and eat it.


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## Pat Bateman (17 Jun 2010)

Speculation in relation to the future direction of house prices is not permitted on Askaboutmoney.

The sensible approach if you're in the market for a property is to assess each one on its own merits. Some may be overpriced and some may be underpriced. A property may prove to be the bargain of the century or the stitch up of the century. One should try and make any decision based on the best information one has to hand at that time.

Attempting to "call the bottom" in relation to any asset class really is a mugs' game.


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## Savvy Row (17 Jun 2010)

Very few houses are selling - but it would appear that there have been some sales. One would have to wonder if the people buying are getting the property for a song. Because of the lack of a register, nobody knows what is being paid for property - so offering maybe 20% less than the asking prices could be making a complete fool of oneself if others were offering 45% and getting it for that.

Diffidult to know!


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## foxylady (17 Jun 2010)

Offering 45% below asking would be making a fool of yourself as I doubt you would be entertained as well.


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## Slim (17 Jun 2010)

Why not have a chat with some local auctioneers - not the one acting for the vendor? Suss out what might be reasonable.


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## jinx9000 (17 Jun 2010)

I love the way it all works in reverse now, as to the boom years!


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## MrMan (17 Jun 2010)

Except it doesn't seem to be working!


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## queenlex (17 Jun 2010)

Savvy Row said:


> Not true plant 43. Not true at all! Would you equally argue that if you paid 40K for a 25K car, you'd have lost nothing until you sold it?
> 
> Using that logic, if you intend to remain in the house forever, it shouldn't matter to you what you paid.
> 
> Come on!


 
Plant is still right you havent proved anything with what you said there to be honest.  Its only if you need to move you actually lose anything...tho you could argue you were ripped off originally but not in an illegal way  its like you paid 100e for a ralph lauren shirt and in the sale someone bought it for 50e you havent lost anything since...


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## queenlex (17 Jun 2010)

foxylady said:


> Offering 45% below asking would be making a fool of yourself as I doubt you would be entertained as well.


 
Some might be obliged to entertain these offers whether they want to or not though..


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## Marietta (17 Jun 2010)

Anybody contemplating buying a house in the current economic conditions would in my honest opinion be completely off their heads!  We were told by the expects until recently that falls of between 25 and 30% were realistic now we are witnessing falls of 50 and 60% and prices are continueing to drop,  it is truely a  horrifying time for those who got lured into buying at the height of the boom and are now saddled with huge negative equity.

100,000 of our brightest and best people have emigrated from these shores in the last 12 months, it is a sad sign of how bad things are in this country.
[broken link removed]


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## Savvy Row (17 Jun 2010)

The naivety is unreal! It is hard to believe that some people actually believe that if you pay too much for a house, you have not actually lost any money once you don't resell it. Unbelievable! So you pay 200 Euro fo a bar of chocolate - no problem once you don't resell it!

Yeah right!

Don't worry about paying 200K more for a property than what it's worth. No problem, once you don't resell!


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## Pat Bateman (17 Jun 2010)

There's logic on both sides.

There are two key values in relation to a property - what you pay for it and what you sell it for. Anything in between might be good for bluffing down in the golf club but beyond that it doesn't really matter.

A paper loss does not become a real loss until it's crystallised.

If I buy a property for €400,000 in 2003, it's worth €350,000 today and I sell it for €450,000 in 2020, I haven't lost money. Yes there's an opportunity cost, but the same can be said in relation to anything.


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## Savvy Row (18 Jun 2010)

So Joe Public paid 600K for number 12 and Mike Public paid 300K the following year for exactly the same house next door. Joe's mortgage payments are double Mike's! The interest is twice as much as Mike's. Joe has incurred the "opportunity" cost of not having the 300K at his disposal. But cheer up Joe, if you sell it in 2020 for 601K - you'll have made a profit!

So the good news is, if you pay too much for your house, don't worry! 

Smile!


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## Cooper7 (18 Jun 2010)

That's life. Some people did exactly that spent €600k on a house in the boom years that is selling for €300k.

Maybe you need to review the supply and demand phenomenon.


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## johnymc2010 (18 Jun 2010)

A friend of mine was telling me yestersay that she bought a brand new house for 150.000euros of the the builder, originally the house asking price was 270.000e. She said she went to the BOI for a mortgage and naturally enough she did n't get it. But she got a mortgage from EBS via a mortgage broker, so apparently thats the way to go...via a mortgage broker and directly from the builder.

She also told me the poor bloke next door was trying to quiz her boyfriend about how much he was paying. It turns out he paid 288.000e for the house next door last year!!!


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## foxylady (18 Jun 2010)

Most people would think that a house is only worth what you are willing to pay for it


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## Savvy Row (18 Jun 2010)

The point is, it is still happening! People think "imagine having bought in the boom! I feel so sorry for them". But people are still paying way too much - just because it's half what it was, doesn't mean it won't be half again in 18 months. And if you pay 100K too much - that is nothing short of tragic for the average worker. I really can't believe that at least one subscriber thinks it's fine to pay too much once you're not going to sell untill 2020. I wonder is that subscriber an EA by any chance!


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## Murfnm (18 Jun 2010)

The house is worth what someone is willing to pay for it.  If the house is on the market at 500k and you are only willing to pay 250k, you cant complain if someone gets it for 400k. Nor can they complain if the value drops in 12 months time.  Everyone knows the market is allover the place. Things are uncertain. Maybe you are not ready to buy?  Or just put in a low offer and keep increasing it if it gets refused?


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## MrMan (18 Jun 2010)

Savvy Row said:


> The point is, it is still happening! People think "imagine having bought in the boom! I feel so sorry for them". But people are still paying way too much - just because it's half what it was, doesn't mean it won't be half again in 18 months. And if you pay 100K too much - that is nothing short of tragic for the average worker. I really can't believe that at least one subscriber thinks it's fine to pay too much once you're not going to sell untill 2020. I wonder is that subscriber an EA by any chance!



An EA would probably say that in 18 months the house might well be worth more than it is now, but we won't know if your shot in the dark is any more accurate than that.


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## boe (18 Jun 2010)

Savvy Row said:


> The point is, it is still happening! People think "imagine having bought in the boom! I feel so sorry for them". But people are still paying way too much - just because it's half what it was, doesn't mean it won't be half again in 18 months. And if you pay 100K too much - that is nothing short of tragic for the average worker. I really can't believe that at least one subscriber thinks it's fine to pay too much once you're not going to sell untill 2020. I wonder is that subscriber an EA by any chance!


 
What in comes down to is that you are trying to predict the bottom of the market so as to make the maximum profit when selling. This is very difficult. Not everyone buys a property in order to make a profit when selling it, may sound naive to you but its true. A lot of people have families and are trying to make a home for their families. They are not thinking about what the value of the house will be when they sell it as they may not have ever any intention of selling it. Its obviously great if the value of your property is increasing but in reality it doesnt matter as that increase means nothing unless it was purely an investment property.

As a previous poster said, a house is worth what somone is willing to pay for it. If you purchase a house and can't live with the fact that the house may drop in value then purchasing may not be for you. You should probably stay away from buying shares as well.


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## Savvy Row (18 Jun 2010)

"A house is worth what you are willing to pay for it". That kind of thinking is exactly what had people people in South Dublin paying 500K  for a 1 bed apartment (now worth 180K) and 750K for a 2 bed(now worth 250K). Talk to the unfortunate people who are at their wits end trying to copy with a huge mortgage and praying that interest rates won''t rise. Tell them it was "worth it". 

The people of Ireland must never again pay too much because that is what caused teh horror of negative equity in so many lives.

If you heard someone say "I paid 50K for a Ford Focus and it was worth it because I was willing to pay it" you'd suggest that they see a psychiatrist.


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## Pat Bateman (18 Jun 2010)

It depends on an individual's circumstances.

The "speculation" side of things is more significant for some people relative to others. 

For someone buying their first home with a view to trading up in the short to medium term, a further decline in the market might be problematic. Of course, it might not be if negative equity isn't a problem as the house they'll be trading up to may have declined by a larger monetary amount.

For someone buying their family home where they see themselves longterm, they mightn't be as bothered by any further decline in the market.

I'd still be of the view that trying to call the bottom of the market is a mugs game.


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## Marietta (18 Jun 2010)

Pat Bateman said:


> I'd still be of the view that trying to call the bottom of the market is a mugs game.


 
Too true, but I reckon we are far from the bottom just yet


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## boe (19 Jun 2010)

Savvy Row said:


> "A house is worth what you are willing to pay for it". That kind of thinking is exactly what had people people in South Dublin paying 500K for a 1 bed apartment (now worth 180K) and 750K for a 2 bed(now worth 250K). Talk to the unfortunate people who are at their wits end trying to copy with a huge mortgage and praying that interest rates won''t rise. Tell them it was "worth it".
> 
> The people of Ireland must never again pay too much because that is what caused teh horror of negative equity in so many lives.
> 
> If you heard someone say "I paid 50K for a Ford Focus and it was worth it because I was willing to pay it" you'd suggest that they see a psychiatrist.


 
The quote was 'a house is worth what someone is willing to pay for it' - this will always hold true whether we are in a boom or as at the moment in a recession.
Quoting figures of people who are in huge negative equity doesn't prove your argument, all that shows is that prices were massively over-inflated which we are all aware of now.

Your original question was how much of a reduction should one seek when putting in an offer and what it comes back to is 'what do you think its worth'. If you think its only worth half the asking price then bid that.


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## MB2010 (19 Jun 2010)

I have been thinking of buying in lucan - there's a huge amount of sale agreed in the area and i have been told by EA that properties are going for pretty much the asking price. I find this hard to believe but there is definitely some activity going on - maybe because it's in one of the more affordable areas? some houses have only been on the market for a week or two and are sale agreed already. are these people buying just mad?  are prices really going to drop by another 50%?


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## Pat Bateman (19 Jun 2010)

MB2010 said:


> i have been told by EA that properties are going for pretty much the asking price.


 
NEVER believe an EA...they're only interested in their commission.


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## MB2010 (19 Jun 2010)

how does that explain properties being snapped up? 2 properties that I have viewed are already sale agreed within 2 weeks.


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## tenchi-fan (19 Jun 2010)

I was looking at houses in 2006 and they cost €230k.. the cheapest half-decent houses in town.

Last year I decided to buy one. one was listed at €169k, another at €179k.
I made offers of €130k on both and it was accepted on the house for €169k.

Now the house which was selling for €179k is listed for €110k. Not a bad deal! i wonder how low they will go.


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## solstice (19 Jun 2010)

MB2010 said:


> how does that explain properties being snapped up? 2 properties that I have viewed are already sale agreed within 2 weeks.


 How do you know they are sale agreed? Are you just taking an EA word for it? It's easy to put up a notice saying Sale Agreed on a place that is not selling if you're trying to sell similar properties in that area.


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## Savvy Row (20 Jun 2010)

The fact that a house is "Sale Agreed" means nothing since most "Sale Agreed's" fall through. If you look at the Property Pin site, you'll see houses that have been Sale Agreed 5 or 6 times and still aren't sold.

It's dog-eat-dog out there because a sale to an EA is like a glass of iced water when you're dying of thirst!

What some buyers are doing is giving a booking deposit (knowing that the EA must return it if the sale does not go through. They then stall and delay for months, then tell the EA that the bank have reduced the availlable loan by, say 50k - so the price has to drop. By that stage, the seller has become desperate and says to hell with it and sells at the new lower price just to get shut of it!

EA's aren't the only ones up to tricks!


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## MrMan (21 Jun 2010)

Savvy Row said:


> The fact that a house is "Sale Agreed" means nothing since most "Sale Agreed's" fall through. If you look at the Property Pin site, you'll see houses that have been Sale Agreed 5 or 6 times and still aren't sold.
> 
> It's dog-eat-dog out there because a sale to an EA is like a glass of iced water when you're dying of thirst!
> 
> ...


 
A vendor will only want shut of a property if they afford to accept the purchase price. If I bought for 500k in 2006 and you offer 250k today I can't accept because I will then be homeless and still have a 200k debt in my name.
If you were to offer a lower than market price and a vendor was to accept it, the EA should make it conditional on signing contracts within 4 weeks of deposit payment. Because of 'tricks' or underhand tactics being used properties are generally left on the market until the contract is signed.


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## Savvy Row (22 Jun 2010)

Is 4 weeks interval between Sale Agreed and signed contracts regarded as being as quick as it gets?


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## MrMan (22 Jun 2010)

Savvy Row said:


> Is 4 weeks interval between Sale Agreed and signed contracts regarded as being as quick as it gets?



Purchasers solicitor has to look at contract and any grey areas have to be ironed out (contents included etc) and by the time both parties are happy with everything that is in writing then 3-4 weeks is a good time.


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## MB2010 (24 Jun 2010)

thanks for advice - it's very useful


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## Vega (28 Jun 2010)

Savvy Row said:


> "A house is worth what you are willing to pay for it". That kind of thinking is exactly what had people people in South Dublin paying 500K for a 1 bed apartment (now worth 180K) and 750K for a 2 bed(now worth 250K). Talk to the unfortunate people who are at their wits end trying to copy with a huge mortgage and praying that interest rates won''t rise. Tell them it was "worth it".


 
Well then why did they pay it? It reminds me of when I get outbid on Ebay by someone who pays over the odds, they must have thought it was worth it at the time. I’ve been looking at buying a property in Dublin for nearly five years but couldn’t justify the cost. Interest rates are at the bottom of the cycle, praying they won’t rise ignores the reality that they must.


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## Hells_Belle (28 Jun 2010)

Savvy Row said:


> Talk to the unfortunate people who are at their wits end trying to copy with a huge mortgage and praying that interest rates won''t rise.



Where did they get that huge mortgage? Oh wait - they applied for it. They went to a bank and begged the bank to give it to them. Did people not work out how much the payments were before they took the loan? Did they think the tooth fairy was going to sprinkle magical mortgage dust on their bank accounts? Or did they - God forbid - think they were going to pay for it with their marvellous and reliable end of year bonuses?

Praying that interest rates won't rise is a fool's game. Specifically, it is a game for fools who paid no attention in history class. Rates rose to 16% under Thatcher in the 80s. History, in case you haven't noticed, does tend to repeat itself.


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