# Should I sell and rent for a while ? (05-06-2008)



## Sangster (5 Jun 2008)

We are contemplating selling up our family home which we purchased in 2004.  We had it valued at between 650 and 700 by a couple of local EA's in 2006.  Unfortunately due to market conditions we are looking at around the 600k mark now.  I am of the view that selling now for as close as possible to 600 and rent for a year is a clever move.  At 600 we would walk away with 280k(approx), if the market keeps falling I should be able to pick up a 'better' house for the amount I'm mortgaged to at the moment in a year or so.  Am I being naive ?  
Sorry if the above is a bit of a ramble but it late


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## Chris (5 Jun 2008)

*Re: Should I sell and rent for a while ?*

Two things to keep in mind:
1) Can you really say for sure that prices will continue to drop significantly? What if they start going up?
2) You may not be able to get the same amount of money from a bank given the effects of the credit crunch


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## eamonn123456 (5 Jun 2008)

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Bad idea IMO.

You have all the transaction costs to sell, then again to buy.

You have all the moving costs.

You have rent to pay in the interim.

You have the hassle.

And at the end of the day, you are speculating on house prices, via the medium of your family home.

You need a home.  You are thinking about treating your current home as a speculative investment.

Your plan will work if prices keep on dropping (a lot).

If they stabilise or rise you will have serious egg on your face.

Don't do it.


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## eamonn123456 (5 Jun 2008)

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PS this plan would work better if you got out at the very top of the market, but you didn't.


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## Camry (5 Jun 2008)

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I would reckon if trying to set your expectations for sale at the moment that you should not expect to obtain much of a premium, if any, over prices paid in 2004.

That of course is an extremely generalised statment, without knowing anything specific about you property and how its capital value might have been enhanced (objectively).

AAM is not the place to get this sort of information. I ssuggest you try this site. Clever people:

www.thepropertypin.com


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## tiger (5 Jun 2008)

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everything eamon123456 said.
Think long and hard before you treat the family home as a speculative investment.


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## Afuera (5 Jun 2008)

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If you were already considering selling up for other reasons (e.g. you need to trade up), then do it and as soon as possible. You would have to encounter most of the downsides that eamonn123456 mentioned anyway (i.e. moving costs, transaction costs, hassle etc.).

280k in the bank would put you in a very good position to buy back in no matter how hard it is to source credit. The huge build up in inventory (both for sale and rental) tells the story of where things are going. Be aware though that you may have to rent for up to 5 years before you will find good value. Property is a rather illiquid asset so market corrections take time.


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## Mpsox (5 Jun 2008)

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On the pluys side, €280k invested for 12 months would cover off a fair chunk of your costs of moving again

However, is it really worth the hassle of moving twice in 12 months. I was watching Panorama on the BBC earlier in the week about the effect the credit crunch is having on householders/mortgages etc and it made a very good point at the end. In the long term, it might be a good thing if it got people to think of houses and property as their homes and not simply as a financial investement


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## IFT (5 Jun 2008)

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eamonn123456 said:


> PS this plan would work better if you got out at the very top of the market, but you didn't.



Trying to pick the top or the bottom of any market is a fools game. Warren Buffet is famous for always commenting on that.

My advice would be to sell. And I say that with full knowledge of the hassle, the transaction costs,renting, the stress, the risk, that it would involve. 

By selling you have minimised your risk to the transactions costs , stamp duty,rent etc etc but some of that will be offset against say house insurance, mortgage interest, house maintenance.

So say , i dont know, 30-40 , maybe 50K is what you could lose taking into account a slight or stable future property market. My own analysis would tend to lead me to believe that by not selling you may expose your risk to maybe a loss of 100-150K. By your own accounts your 'loss' for the last year is 50-100K (value of house has decreased from 700/650 to  600). Your 'loss' in the subsequent 2 years may be the same. The risk, in my opinion, is very high and the stakes are massive. 

But this is only my opinion based on my own logical analysis and is in no way intended as speculation on future house prices.


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## Howitzer (5 Jun 2008)

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Sangster said:


> We had it valued at between 650 and 700 by a couple of local EA's in 2006. Unfortunately due to market conditions we are looking at around the 600k mark now. I am of the view that selling now for as close as possible to 600 and rent for a year is a clever move. At 600 we would walk away with 280k(approx)


 
600 - 280 = 320

You bought in 2004 for 320K and in 2006 it was valued for 700K. Today it's valued at 600K. Are these numbers correct? If so I'd suspect the agent is playing to your vanity in order to get your business. You could end up placing it on the market at that price and wondering 12 months later why you've had no takers.


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## pinkyBear (5 Jun 2008)

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> On the pluys side, €280k invested for 12 months would cover off a fair chunk of your costs of moving again


 And you can say that for sure?? 
This is a family home and call me old fashioned but the one good impetous of buying a place - is that at some point in life you will own it.


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## moneygrower (5 Jun 2008)

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Why are you moving at all? We did this but we had too move anyway, we had a baby in a one bed apt so needed more space very urgently. If we had a three bed house there is no way we would have done this.


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## eamonn123456 (5 Jun 2008)

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IFT said:


> Trying to pick the top or the bottom of any market is a fools game.



I agree.  I think this buyer is hoping to do something like that.  I wouldn't.

My point is that he is not even going to sell at a peak, so he has missed that part of the equation.  He must be hoping to buy at a low, or a near-low.

In reality, if he sells below peak (as he has), and ends up buying in at a similar, slightly lower, or even higher price, he has made a big mistake.

The only way this scheme will now work is if he ends up buying at a MUCH lower price, before he has lost too much cash in rent (plus the fixed costs).

Which may not happen for years if at all.  By which time all his costs, especially rent, will have eroded any benefits.

Meanwhile it could be sub-ideal to rent, and it could be stressful waiting for the right market conditions and then the right house.

I wouldn't.


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## Sangster (5 Jun 2008)

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Howitzer said:


> 600 - 280 = 320
> 
> You bought in 2004 for 320K and in 2006 it was valued for 700K. Today it's valued at 600K. Are these numbers correct? If so I'd suspect the agent is playing to your vanity in order to get your business. You could end up placing it on the market at that price and wondering 12 months later why you've had no takers.


 

House cost 380 and was in need of renovation.  The 320 figure is the mortgage balance.


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## angela59 (5 Jun 2008)

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Hi,

I'm not going to discuss house prices as it is banned on AAM but I'm in a similar situation and had house valued around same time by 4 auctioneers for a bit more than what you've said - I'm in rural location on 1 acre have full planning permission to build on 3 acres - that's only reason I'm moving to have slightly larger house and more land but have been stuck for last year trying to sell house and have reduced price by 15%.  I wouldn't advise what you are doing prices may start to go up and where are you then - it's too much of a gamble - it is stressful selling your house and it is particularly so now - I honestly wouldn't advise anyone unless it is really necessary to sell to enter the market this year.


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## triplex (5 Jun 2008)

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Interesting thread. 

what if interest rates increase to 6.5 or 7% - you could end up with  a smaller mortgage which costs you the same as your current one in the long term, which would only be worth while if your new property is larger than your current one...

mess around with mortgage calculators  - www.bankrate.com 

you need take the long term effects into account - this is not a short term decision..



thinking along same lines myself tho!


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## eamonn123456 (5 Jun 2008)

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Suggestion:

Do your sums on this whole idea, end to end.

Guesstimate your timeline i.e. how long do you think you would be renting before you would buy again.  Add in a large contingency factor to reflect the lack of certainty.

Total up:

Selling costs (all of them)

Moving costs

Renting costs 

Buying costs

Moving costs again

Be brutally honest with these and add some contingency.

Total = A

Guesstimate your selling price (B).

Decide on  your target buying price (C).

B - C - A = your 'profit'.

I guess you can also add in the interest (after tax) on your capital.  YOu need to subtract any interest relief I think.

You also need to add in the interest you would have paid on your mortgage - interest only!.

(I don't agree about the saving on the insurance - you get what you pay for.)

How about putting your figures up here and see what people think?


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## camel (5 Jun 2008)

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Just because it's been mentioned twice on this thread now by eamon123456 (how paying rent is money down the drain) I would just like to point out paying interest on a mortgage is also 'dead' money. So if they are paying less rent that mortgage interest they are 'up' overall (all other variables mentioned in other posts being equal).


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## ClubMan (5 Jun 2008)

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Neither rent nor interest on a mortgage are "dead money" or money down the drain. They are simply payments for a service provided.


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## eamonn123456 (5 Jun 2008)

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Absolutely true of course [that it is money you pay out].  I forgot to put that into the equation, you need to include that.


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## angela59 (5 Jun 2008)

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Hi Camel,

With rent you are paying the landlord's mortage with interest on a mortgage - you are paying the bank but you also get relief on your mortgage and you can decorate your house whatever way you choose you have more control - with renting the rent can be increased and it is never going to be your own home - the idea of a mortgage eventually you will own it so you will have an asset - with rent you will never have anything to gain in the longterm.


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## Guest117 (5 Jun 2008)

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Sangster

i agree with most of other posters

IMO it's a bad idea to look at the family home as an investment. An investment is usually something you can afford to speculate with and if you lose it you won't be destitute. Don't know your situation but for me ( few kids now ) I will never put family home at risk and never move family from a happy home in the hope of making a few quid


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## eamonn123456 (5 Jun 2008)

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IMO the sums don't stack up, never mind the less tangible stuff.

Do the sums first.  Ideally, share them on this thread so we can all understand the situation better.

If it still looks like it makes sense, then consider the hassle factor, the risk factor and the other stuff that has been mentioned.


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## Afuera (5 Jun 2008)

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angela59 said:


> with renting the rent can be increased


More specifically, the rent can be set at the market rate. With the build up in inventory it does not look like tenants are going to have to worry about increases for the next while.

BTW, I agree with the majority of the posters; speculating with your family home is not to be advised.

The only reason I would advise it is if you were already considering trading up. If there are reasons you want to move out of your current property (long commute, too small, etc) then now is as good a time as any to offload it. All the arguments about the transaction costs, hassle etc will have to be faced at sometime anyway.


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## angela59 (5 Jun 2008)

*Re: Should I sell and rent for a while ?*

Afuera,

Thats all very well what you say but there is a family involved here - hand on heart if I had known the way the property market was going to turn about 1.5 years ago I wouldn't have bothered trying to sell and move.  Lots of people are staying put now and extending and making use of what they have.  Put your house on the market even at a reduced price and potential purchasers will still want a further % cut and also potential purchasers are not being approved for mortgages with the credit crunch.  It is not just down to financial issues there is a lot of stress involved and it does affect the whole family also - if you don't need to sell in the current climate - don't is my advice!


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## Afuera (5 Jun 2008)

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angela59 said:


> It is not just down to financial issues there is a lot of stress involved and it does affect the whole family also - if you don't need to sell in the current climate - don't is my advice!


Fair enough, nobody said it would be easy under the current climate. It wouldn't be wise to ignore the financials completely though; the possiblity of losing another 100k in equity by staying put is not to be sneezed at. As I said before this only really applies if the OP already has plans to move out anyway. If they are happy in their current property then they should stay put. At the end of the day if they're happy there it won't make a blind bit of difference what their house is worth so long as they can afford the mortgage.


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## lightswitch (5 Jun 2008)

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I am in a similar position to the op.  I have reached a point where I want to move house but am not fully decided on exactly where I want to move to, as in I like a few areas.  I was thinking along the same lines as my home has also decreased in value by at least 100k.  I dont see my home as an asset but it does have a financial value, which cant be ignored.  IF, I can sell it, I will rent for six months to a year. LS.


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## DerKaiser (5 Jun 2008)

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Not sure on this but I think Paddy Power used to take bets on the PTSB house price index.  If you're out for a punt cut out the costs and hassle of moving by lobbing €50k on whichever direction you think things will go


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## eamonn123456 (5 Jun 2008)

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Yep, if you are just out for a punt, DerKaiser's suggestion makes sense.

If you need to move and are not just doing this whole thing for a punt, then that puts a very different perspective on it (as Afuera has said).

One advantage of selling now and buying later is that you would not be in a chain and therefore would have more bargaining power.  If the market dropped in the interim that would be a bonus.


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## lightswitch (5 Jun 2008)

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Yes Eamonn, that is exactly the way I see it.  Also get to "try before you buy" with a new area.


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## eamonn123456 (5 Jun 2008)

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Yep, that's a good idea, something I have done before (renting in an area before buying) and it makes a lot of sense. Just make sure you buy again before property rises again ;-)


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## camel (5 Jun 2008)

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angela59 said:


> With rent you are paying the landlord's mortage with interest on a mortgage - you are paying the bank but you also get relief on your mortgage and you can decorate your house whatever way you choose you have more control - with renting the rent can be increased and it is never going to be your own home - the idea of a mortgage eventually you will own it so you will have an asset - with rent you will never have anything to gain in the longterm.


 
Angela59. That's all correct. That's why I put in the note 'all other things being equal'. 

I just think sometimes people forget that the interest paid out every month does not contribute towards ownership of your property. It's the banks cut for providing you with money. In a similar way rent is the landlords cut for providing you with a roof. At a very basic mathematical level, compare one against the other.

By the way, in a falling property market a property could be considered a liability. not an asset.

All that being said, if I was the original poster I'd stay put. I'm buying a house myself at the moment.


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## eamonn123456 (5 Jun 2008)

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Agreed, and that is why the OP needs to identify all the costs versus the possible gains, and reduce the whole thing down to a single figure - otherwise there are too many variables flying around - and get to the bottom line.  Then decide.

Right, I am going to try to stop adding to this thread, I've said my piece ;-)  Up to the OP now.


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## angela59 (5 Jun 2008)

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Hi,

Your main residence shouldn't be treated as a commodity it should be treated as a home!


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## Sangster (5 Jun 2008)

*Re: Should I sell and rent for a while ?*

Thank you all for your replies, I'm not sure that my post last night was especially clear.

My wife is very keen to move house and we have both agreed that we will move 'at some stage'.  This has been a great house and our 2 sons were born here but even when we bought it we knew this was not going to be our final rung on the property ladder.  So I don't have the sentimental attachment to it that I have, say to my parents house.

My logic behind the move is that if I can sell the house in a falling market, bank the cash, rent for a year or so (as long as the market continues to drop) and get back in as a cash buyer I should be able to get more house for my money.  

The bottom line I suppose is that I think the market has a long way to go to before it reaches the bottom.  Even when it starts to recover it won't come back to 20% growth overnight so it should be relatively easy to spot the upward trend if and when it returns.  

Even if the house is now worth 600k, another 10-15% drop this year and I could be looking down the barrel of 500k offers.  Selling now gives me an extra 100k(less rental expenses) for the deposit on the new place. All the other expenses I will incur when I sell the house anyway so I can't avoid them.

I don't understand the Paddy Power thing - is there somewhere I can bet that house prices are going to fall ?


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## Camry (6 Jun 2008)

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Sangster said:


> The bottom line I suppose is that I think the market has a long way to go to before it reaches the bottom. Even when it starts to recover it won't come back to 20% growth overnight so it should be relatively easy to spot the upward trend if and when it returns.


 
All the objective facts point glaringly in that direction.


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## IFT (6 Jun 2008)

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I think you are looking at it logically and I agree with your analysis. Whilst i agree with others that a home should not be viewed as a commodity , that has not stopped many using the equity or the 'perceived wealth' affect from borrowing more on the asset.

Its not beyond doubt that you have 'lost'  money in the last year. Maybe close to 100K. That is a sizeable chunk of money. 

I personally would suffer the stress of selling now to minimise any future losses. A couple of months of hassle may save you 100K more. And if you count in the hours required to sell your house, that is not a bad return. 

Good Luck , whatever way you decide to go.



Sangster said:


> Thank you all for your replies, I'm not sure that my post last night was especially clear.
> 
> My wife is very keen to move house and we have both agreed that we will move 'at some stage'.  This has been a great house and our 2 sons were born here but even when we bought it we knew this was not going to be our final rung on the property ladder.  So I don't have the sentimental attachment to it that I have, say to my parents house.
> 
> ...


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## eamonn123456 (6 Jun 2008)

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I'm not saying you are doing the wrong thing, given that you want to move anyway. Basically it mostly depends on your confidence in your prediction that prices will continue to drop significantly, plus the additional leverage gained from not being in a chain when you decide to buy again.

However, two points arise from your last post:

1. Unless the market drops hugely, or you trade down (which I don't think you plan to) you will not be a cash buyer.

2. There is nothing easy or obvious about spotting the turning point in a market e.g. when the trend turns upwards, as you hope to do. 
If you can do that, you should give up your day job. 
The fact that you didn't spot / act quickly upon the turning point on the way down proves the point.

Finally, if you wait for the market to turn, there will be more people trying to buy, which may make buying more difficult and expensive.

Many people, myself included, are open to the idea of buying in a falling market, because you can often actually drive a harder bargain and have no-one else bidding against you.

It's up to you, but there is nothing simple or clear-cut about timing the decision as to when to buy.

The Warren Buffett quote in a previous post applies.


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## DerKaiser (6 Jun 2008)

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I reckon the most valid point for renting for a period is as follows:
You can drive a hard bargain on selling your old place and then buying the new place as you will be in no rush for either transaction.

A second benefit is that it doesn't look like prices are going to pick up anytime soon, so it's unlikely you'll lose by not having property exposure.

I wouldn't, however, count on making a gain.  You really don't know how much your own place will fetch until you've completed the sale. What if the best offer is €550k after 6 months on the market?

Also price movements are not uniform between areas or types of house.  You might find the value of the type of house you intend buying holds up pretty well over the next couple of years.  An example might be that underlying demand for 3/4 bedroom houses will hold up pretty well possibly due to a backlog of people riding out the credit crunch waiting to move out of two bedroom apartments.


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## angela59 (6 Jun 2008)

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Hi,

I'd agree with the last post and I wish you the best of luck but you still have to sell your house - you seem pretty confident you will do this - there is a glut of houses out there for sale, competition is stiff, banks are not giving out mortgages like sweets any more - if  you think you can beat all these negative points - fair enough. You could sell your house after 1 viewing or you might not get viewings you could be waitning for 1 year to sell your house - there are also a lot of ifs and buts - if other houses around you have sold quickly that is a good indication.  As I say I've had mine for sale for quite a while with price drops and similar other houses also the same.


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## Treehouse (6 Jun 2008)

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Signed up for an AAM account just to reply to this thread, as I'm pretty perturbed by some of the stuff being said here.



Sangster said:


> We are contemplating selling up our family home which we purchased in 2004.  We had it valued at between 650 and 700 by a couple of local EA's in 2006.  Unfortunately due to market conditions we are looking at around the 600k mark now.  I am of the view that selling now for as close as possible to 600 and rent for a year is a clever move.



OP, let me say to you in all honesty that this sounds to me like you are very seriously behind the times. 

The valuation you got in 2006 - the top of the market - is utterly meaningless in 2008. I note that you have shaved around 10% off the valuation you got back then to get your 600k figure. Now, I don't know where your house is, but wherever it is, if it has only fallen in value by 10% in that time I would be absolutely astonished. In my opinion, you will be lucky to get the 2006 price minus 20%. And given that the valuations you were given in 2006 were in themselves probably optimistic in the first place, I think you need to work on figures of 650k for the 2006 valuation, minus 20%, giving you a figure of 550k +/- today. My personal opinion is a property valued at 650k in 06 would now sell at or below 500k, but that's a reflection of my bearishness on property, and I'm not gonna try to convince anyone to accept that big a drop. But even conservatively, 550k to me looks tops. 

And with respect, you seem somewhat naive in your presumption that it will sell even at this kind of price. Not everyone is aware of this yet, but the market is absolutely tanking at the moment. Every day we are seeing more and more price drops. Prices could be falling at almost 2% per month at this point. Expecting to offload your place at 2006 valuation less 10% in that environment is very, very optimistic. Why would somebody buy your house when it will be 10% cheaper by the end of year?

If I could say something else with the greatest respect, I think this thread shows that people are not at all coming to terms with the seriousness of the situation in the property market. It is absolute carnage out there folks. That OP still thinks he can make money from this kind of move is naive in the extreme. Please don't take that as an insult OP - it's not meant to be one - it's just my honest opinion about how uniformed people are about the current market. It is going belly-up by the hour, and yet a lot of people still see it as a sure-fire money maker. That people are still apparantly thinking like this astounds me. 

Basically OP, selling to rent is a really good idea, but it is 2 years too late. You cannot get that time back, the moment is passed and your idea will not now work. 

FWIW, I am not a VI or in anyway connected with property buying/selling.


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## IFT (6 Jun 2008)

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Treehouse said:


> Basically OP, selling to rent is a really good idea, but it is 2 years too late. You cannot get that time back, the moment is passed and your idea will not now work.



I agree with most you have said except for your point above that I quoted. Are you not making the mistake by calling the bottom of the market. It will not cost the OP anything to put his house on the market to see what value it might get. 

Also you cannot accuse the OP of being naive when you do not know the type of property he is selling. Even in bad times, good stock still sells.

You also contradict yourself somewhat also. You are right that some people are still uninformed about the market but it is these types of people who will be his 'customers'. So , the market is still intact until those behind on the information curve catch up.

Also....
Better to be 2 years too late than 2 years down the road and being 4 years too late.


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## cnu (6 Jun 2008)

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When people find a shorter queue, it all suddenly fills up and now it is the  longer one. Now joining  "shorter" queue is a wrong choice

Assuming people need a place to live:

*Year 2006:*  When people were making money in property, many jumped into it, now buying is a wrong choice
*Year 2008:*  When many are trying to sell, few more jump into it soon selling becomes wrong choice [imagine all those who sold have to rent]

*What's my point?*   So there is always a phase - either buying or selling becomes that "wrong choice".  What is constant is your monthly deduction towards residence [rent/mortgage].  The one who hung-in there for 30 years gets a house the other would have made profit 30 years ago [hopefully it multiplied]

So choose who you want to be first - a short time player, take the profit and call it a day or a long time player see's house more than money.

lastly:  I sometime back took a mortgage top-up of 30k, I dont know where its all evaporated [can you believe it?].  Looks like I'm going to stay a lill while more
.

added later...

Found this calculator, may be useful


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## Treehouse (6 Jun 2008)

*Re: Should I sell and rent for a while ?*

Hi IFT



IFT said:


> Are you not making the mistake by calling the bottom of the market. It will not cost the OP anything to put his house on the market to see what value it might get.



Yes, I see what you mean, but I was not so much calling the bottom of the market as calling OP's bottom line...his post implied that his plan will only work for him if he achieves the 600k. The piece of my post you quoted was meant in that narrow context. But if OP's plan could work for a sale price of 500k, then by all means I'd advocate he does it because I think prices still have a long way to fall and his house will almost certainly be worth less this time next year than he will sell it for now. 



IFT said:


> Also you cannot accuse the OP of being naive when you do not know the type of property he is selling. Even in bad times, good stock still sells.



Well, it's not really true that we don't know anything about OP's property - we do know the most important thing about it: the last valuation, which was in '06 at 650k. So we know it is not a redbrick in Dublin 4, and we know it is not a 1 bed apartment in the Liberties. So it is something in between: most likely a 3/4 bed semi-d, perhaps in somewhere like Churchtown, Rathfarnham or Castleknock. In my opinion, any property of that kind that was valued at that price in '06 is now experiencing a severe decline in price.

And in general terms, I do not believe any category of home or location is immune to the current HP falls.



IFT said:


> You also contradict yourself somewhat also. You are right that some people are still uninformed about the market but it is these types of people who will be his 'customers'. So , the market is still intact until those behind on the information curve catch up.



Ok, fine, but are we really going to make such an important decision based on the hope that we find the last fool? That's really no way to proceed. Even if there are  naive people out there, finding one and nabbing them is by no means a sure thing. But for what it's worth, I don't think it would be a bad idea to give it a go. Maybe OP will get lucky and it's probably no skin off his nose to have a for sale sign up for a few weeks to see what happens.



IFT said:


> Also...Better to be 2 years too late than 2 years down the road and being 4 years too late.



True. But again, I was basing my advice on OP's need to sell at 600k. If he doesn't need to do that, then maybe he is not too late.


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## eamonn123456 (6 Jun 2008)

*Re: Should I sell and rent for a while ?*

Is it just me or has this thread suddenly gone over-complicated?  ;-)

Spit it out, in plain english and ideally in bullet points - what are your recommendations for the OP.


----------



## Sangster (6 Jun 2008)

*Re: Should I sell and rent for a while ?*

Thanks for your contributions Treehouse.

The £600 figure was given to my wife a few weeks ago by an ea who valued it back in 06.  Even if I'm being optimistic at getting the 600k now if I wait for another year or so I could be looking at offers of sub 450k.  I'm not sure it's worth moving at that price considering the mortgage settlement figure is around 320k.

The house is a 4 bed semi in Rathfarnham in an estate which houses generally sell quickly.  I am going to get that ea up next week to give us a proper evaluation (the 600 was over the phone) and as long as its valued at over 550 I am going to give it a lash.  I have nothing to lose other than the few hundred quid fees.  I will let you all know what he says and keep you updated as to how it goes.

A question for you treehouse - you say that the market is tanking at the moment, do you have any idea how much more things are going to drop.(not a sarcastic question)  I feel that they have along way to go and that's my logic for trying to cash out.


----------



## Afuera (7 Jun 2008)

*Re: Should I sell and rent for a while ?*



Sangster said:


> A question for you treehouse - you say that the market is tanking at the moment, do you have any idea how much more things are going to drop.(not a sarcastic question) I feel that they have along way to go and that's my logic for trying to cash out.


Sangster, the policies on this web site do not allow for speculation of house prices. You will have to look at some of the lead indicators such as the build up in inventory and historical examples of boom-bust cycles to come to your own conclusions on this. Let's just say though that the chances of a 10 year property boom correcting itself in a one to two year period are very slim.

I think you are doing the right thing by trying to sell to rent given your personal circumstances. Since you already want to move a lot of the transaction costs can be discounted and the sums are greatly simplified.

Currently the interest portion of your mortgage for 320k is costing you about 16,000 per annum to service. If you sold for 550k, you would be able to bank 230k profit which would earn you interest of around 11,000 annually. Considering the area you live in, and presuming you want to remain living in that area, you would have to shell out maybe 2,000 p/m rent (24,000 over the year). Discounting the interest you earn from your outgoing rent means that it would cost you 13,000 a year on rent versus the 16,000 you are currently paying in mortgage interest. So at current price levels, even if it was a flat market, you would actually be better off to rent by 3,000. In a falling property market then obviously it goes even more in your favour.

Anyway, best of luck with it. Be sure to let us know how you get on.


----------



## Treehouse (7 Jun 2008)

*Re: Should I sell and rent for a while ?*



Sangster said:


> Thanks for your contributions Treehouse.
> 
> The £600 figure was given to my wife a few weeks ago by an ea who valued it back in 06.  Even if I'm being optimistic at getting the 600k now if I wait for another year or so I could be looking at offers of sub 450k.  I'm not sure it's worth moving at that price considering the mortgage settlement figure is around 320k.
> 
> ...



Hi Sangster,

Funnily, I had a feeling you were in Rathfarnham for some reason! 

As someone mentioned, speculation about house prices is _inderdit _in these parts so I can't do that. But you say if you can get €550k, you'll give it a lash. In my personal opinion, you will do very, very well to achieve this figure (if the 2006 valuation was €650k). 

But I don't want to be too gloomy, so using your figures, selling at €500k would still allow you bank €180k. Would that not be worth it? Seems to me it might be, even allowing for fees and stamp duty on your next purchase.

But that kinda gets back to my original point. Selling to rent in 2006 would have been a massive no-brainer. But now, the figures look tighter. It's possible your banked €180k when all costs are taken out, and hassle factored in, might actually get shaved down considerably, and the house might only drop a small amount below €500k when you want to re-buy it. This was why I originally said I thought you'd missed the boat on this.

Good luck anyway.


----------



## sadie (7 Jun 2008)

*Re: Should I sell and rent for a while ?*

My husband had a car accident yesterday. Car written off but thankfully he got out unhurt. However, as we are currently renting while househunting, it brought it home to me should he be out of work for say a couple of years or longer due to back injury or whatever, our buying power would be seriously reduced as we are a single income family. It just made us want to return to owning a family home asap. It might be advisable to take some additional measures to protect your buying power while you are 'between family homes' in the form of serious illness or accident cover insurance policies which would give you a lump sum in the case of being unable to work.


----------



## Complainer (7 Jun 2008)

*Re: Should I sell and rent for a while ?*

Don't gamble with the family home. The potential impact to your family if the market moves against you are huge. This could include never being able to purchase your current standard of property, or being saddled with a huge mortgage into your retirement years.

You could make a case for putting your house on the outcome of the 3.30 at Haydock, but you wouldn't do this. Don't gamble your family home on the property market.


----------



## Kemo_Sabe (7 Jun 2008)

*Re: Should I sell and rent for a while ?*



eamonn123456 said:


> IMO the sums don't stack up, never mind the less tangible stuff.
> 
> Do the sums first. Ideally, share them on this thread so we can all understand the situation better.
> 
> If it still looks like it makes sense, then consider the hassle factor, the risk factor and the other stuff that has been mentioned.


 
this idea intrigues me so I ran some simple scenarios in Excel today using the following info: sorry this may appear messy but stick with it. 

It relates to my own personal situation.

*Goal*: buy 'dream house' within 3 years for maximum financial benefit

*Three scenarios:*
A - sell now, buy now (the traditional method if you will). Take out 25 year mortgage on 'dream home'.
B - sell in 3 years, buy in 3 years (again traditional method). Take out 25 year mortgage on 'dream home'.
C - sell now, rent and buy in 3 years. Take out 25 year mortgage on 'dream home'.

*Assumptions:*
3 year timeframe

Current residence market value (realisable - very realistic, current asking of similar is about 450k) = 380k. (standard 3 bed semi-D in Raheny)

Current 'dream house' realisable value = 700k (again realistic). (nice 4 bed with biggish garden in Raheny)

Current cost to pay down mortgage = 267k (checked this with mortgage provider)

Cost to pay down mortgage in 3 years = 237k

Price gap ratio between two houses stays constant over 3 years (i.e. prices fall/rise in same ratio to each other)

40k in current savings - will save 60k more over next 3 years (realistic number, conservative if anything)

Interest rate of 6% used as working assumption.

*I am interested in the total cost of the mortgage over its lifetime*

*Findings:*
I can't afford scenario A - obviously.  My new mortgage would be 591k and would cost 1143k over the life of the mortgage.

If prices fall by *10%* over 3 years. Method B saves me 231k over the lifetime of the mortgage compared to buying now. Method C saves me 259k over the lifetime of the mortgage. The difference between C and B is not large enough to compensate for the hassle factors etc.
My mortgage under scenario B would be 471k and under scenario C, it would be 457k. Not much of a difference.

If prices fall by *20%* over 3 years. Method B saves me 342k over the lifetime of the mortgage compared to buying now. Method C saves me 439k over the lifetime of the mortgage. The difference between C and B is now almost 100k, C is definitely attractive at this level.
My mortgage under scenario B would be 435k and under scenario C, it would be 382k.

If prices fall by *30%* over 3 years. Method B saves me 410k over the lifetime of the mortgage compared to buying now. Method C saves me 577k over the lifetime of the mortgage. We are now in bonanza territory with a 167k saving between method C and B.
My mortgage under scenario B would be 398k and under scenario C, it would be 307k.

If prices fall by *40%* over 3 years. Method B saves me 477k over the lifetime of the mortgage compared to buying now. Method C saves me k over the lifetime of the mortgage. We are now in bonanza territory with a 167k lifetime saving between method C and B.
My mortgage under scenario B would be 361k and under scenario C, it would be 232k.

If prices fall by *50%* over 3 years. Method B saves me 545k over the lifetime of the mortgage compared to buying now. Method C saves me 853k over the lifetime of the mortgage. No comment neccessary.
My mortgage under scenario B would be 324k and under scenario C, it would be 157k.

If prices *stay level* over 3 years. Method B saves me 206k over the lifetime of the mortgage compared to buying now. Method C saves me 163k over the lifetime of the mortgage. No comment neccessary. Method C has just become a bad idea!
My mortgage under scenario B would be 508k and under scenario C, it would be 532k.

If prices *increase by 10%* over 3 years. Method B saves me 138k over the lifetime of the mortgage compared to buying now. Method C saves me 25k over the lifetime of the mortgage. Note I'm still saving money as I am saving faster than the prices have increased.
My mortgage under scenario B would be 545k and under scenario C, it would be 606k.


phew, that was longwinded. I need a beer. Obviously I cannot speculate on the future direction of house prices here but this may give some idea as to which scenarios may be best under which price events.

let me know if questions


----------



## eamonn123456 (9 Jun 2008)

*Re: Should I sell and rent for a while ?*

I tried to read this but just couldn't continue.  Any chance of posting a simple summary table or linking to a summary s/sheet?


----------



## Kemo_Sabe (9 Jun 2008)

*Re: Should I sell and rent for a while ?*



eamonn123456 said:


> I tried to read this but just couldn't continue. Any chance of posting a simple summary table or linking to a summary s/sheet?


 
I tried posting a table but it just messed up completely

what do you want to know?


----------



## eamonn123456 (9 Jun 2008)

*Re: Should I sell and rent for a while ?*

Just curious as to what your conclusion is from all the analysis.


----------



## webtax (9 Jun 2008)

*Re: Should I sell and rent for a while ?*



Kemo_Sabe said:


> B - sell in 3 years, buy in 3 years (again traditional method). Take out 25 year mortgage on 'dream home'.
> Current residence market value (realisable - very realistic, current asking of similar is about 450k) = 380k. (standard 3 bed semi-D in Raheny)
> Current 'dream house' realisable value = 700k (again realistic). (nice 4 bed with biggish garden in Raheny)
> 
> If prices *increase by 10%* over 3 years. Method B saves me 138k over the lifetime of the mortgage compared to buying now.



I might be missing something, but if prices go up 10% how will buying a more expensive house in 3 years time instead of now save you 138k?


----------



## Kemo_Sabe (10 Jun 2008)

*Re: Should I sell and rent for a while ?*



eamonn123456 said:


> Just curious as to what your conclusion is from all the analysis.


 
the OP may not be as mad as most people have suggested, if prices fall by 20%+, he will do very well out of his strategy


----------



## DerKaiser (10 Jun 2008)

*Re: Should I sell and rent for a while ?*

you don't need a spreadsheet to tell you that....
Also I thought your conclusion was that he'd do well to rent even in the event of moderate price rises?


----------



## Kemo_Sabe (10 Jun 2008)

*Re: Should I sell and rent for a while ?*



DerKaiser said:


> you don't need a spreadsheet to tell you that....
> Also I thought your conclusion was that he'd do well to rent even in the event of moderate price rises?


 
no, *I'd* do well to rent under that scenario as I am saving cash fast

would have to make an assumption of no cash savings over next 3 years to see the income=expenditure scenario. Obviously it's not going to be favourable in that case.

fwiw, I'm speaking to agents this week about putting the house on the market


----------



## Kemo_Sabe (10 Jun 2008)

*Re: Should I sell and rent for a while ?*



webtax said:


> I might be missing something, but if prices go up 10% how will buying a more expensive house in 3 years time instead of now save you 138k?


 
my s/s is on my home pc, I'll go through it this evening and get back to you.


----------



## DerKaiser (10 Jun 2008)

*Re: Should I sell and rent for a while ?*

I think what your proving can be explained basically as this:
Say interest rates are 6% (on savings and mortgages).  If rental yields are 3.5% then you are financially better off renting (or deferring trading up) in periods where annual house price increases are less than 2.5%.
It's as simple as that.
Some of the scenarios above show savings as a result of staying longer in the less desirable house, these need to be offset against the benefit of actually living in a better house.  I will obviously save money if I drive round my '94 fiesta for a few more years rather than buy a BMW.


----------



## IFT (10 Jun 2008)

*Re: Should I sell and rent for a while ?*



Kemo_Sabe said:


> I tried posting a table but it just messed up completely
> 
> what do you want to know?



You can publish a spreadsheet using google documents  . PM the spreadsheet to me and I can do it for you if you like.


----------



## Kemo_Sabe (10 Jun 2008)

*Re: Should I sell and rent for a while ?*



DerKaiser said:


> I think what your proving can be explained basically as this:
> Say interest rates are 6% (on savings and mortgages). If rental yields are 3.5% then you are financially better off renting (or deferring trading up) in periods where annual house price increases are less than 2.5%.
> It's as simple as that.
> Some of the scenarios above show savings as a result of staying longer in the less desirable house, these need to be offset against the benefit of actually living in a better house. I will obviously save money if I drive round my '94 fiesta for a few more years rather than buy a BMW.


 
good summary, of course there are less tangible factors to be weighed up:

- the utility of having your own place (i.e. can do whatever you like with furniture/decoration etc, kids can draw on the walls, dog can dig up the garden etc)
- the opprobium of family/friends who tell you that you're 'insane'
- the flexibility of renting

etc etc


----------



## eamonn123456 (10 Jun 2008)

*Re: Should I sell and rent for a while ?*

and don't forget that there is no shame in paying for the benefit of knowing how much your target house will cost.

If you trade up now, you know (roughly) how much it will cost you.

If you sell-to-rent-to-buy, you are adding time, uncertainty, costs and risk to the equation.  

Bearing in mind that the market is already well off its peak, this option is less attractive now than it was had the OP done it at the peak.  (Before anyone starts, I know that no-one can be expected to have called the peak.)

But I think there is still merit in it, as long as you do your sums (correctly! and in a brutally honest way), are aware of the risks based on various scenarios, and can live with the worst case scenario.

Otherwise, pull your horns in and stay within your comfort zone.


----------



## Sangster (10 Jun 2008)

*Re: Should I sell and rent for a while ?*

Just an update - EA is calling over this Friday to give us a valuation.  I'll let you know the results as to be honest my decision will be based off what they say.


----------



## eamonn123456 (10 Jun 2008)

*Re: Should I sell and rent for a while ?*

Interesting.  Are you saying that your decision will be based on the valuation of a single EA?
If that is so, then your approach to making a decision seems much simpler than mine would be.  I sometimes wish I could be more decisive about these things.  Is there a large element of gut-feel in your decision making?


----------



## IFT (11 Jun 2008)

*Re: Should I sell and rent for a while ?*



eamonn123456 said:


> Interesting.  Are you saying that your decision will be based on the valuation of a single EA?
> If that is so, then your approach to making a decision seems much simpler than mine would be.



I believe he said that his decision would be based on what 'they say'.


----------



## eamonn123456 (11 Jun 2008)

*Re: Should I sell and rent for a while ?*

Picky picky ;-)



Sangster said:


> Just an update - EA is calling over this Friday to give us a valuation. I'll let you know the results as to be honest my decision will be based off what they say.


----------



## Sangster (14 Jun 2008)

*Re: Should I sell and rent for a while ?*

OK -so we had 2 ea's over on Friday.  One reputable 'independent' and one big national one.  (not sure if I can give out the names) The big one valued it at 600k and the local guy at 620.  The big crowd won't move off the 1.5% fee whereas the local guy is only 1%.  We are going to take the plunge, god knows how long it might take to sell.


----------



## Treehouse (15 Jun 2008)

*Re: Should I sell and rent for a while ?*



Sangster said:


> OK -so we had 2 ea's over on Friday.  One reputable 'independent' and one big national one.  (not sure if I can give out the names) The big one valued it at 600k and the local guy at 620.  The big crowd won't move off the 1.5% fee whereas the local guy is only 1%.  We are going to take the plunge, god knows how long it might take to sell.




Earlier in the thread I said you'd be lucky to get 600k, so it's only fair I reply to this and say so far it looks like I could be wrong. Either that, or the EA's are overestimating in their valuations. Interesting to see what happens. I still say a 2006 valuation at €650-€700k equates to sub-€550k today, but the EA's say otherwise, so we'll see.

And Sangstar, the length of time it takes to sell is purely a function of price. If you priced it at a €1m, it would sell in 2030. If you priced it at €100, it would sell tomorrow. In that sense, the length of time is not the important variable, price is. You can sell it any time you want at the right price, or you could wait forever at the wrong price.


----------



## angela59 (15 Jun 2008)

*Re: Should I sell and rent for a while ?*

Hi Sangster,

We had our own house valued by 4 different auctioneers early last year - valuations ranged from E680,000 to E700,000 to E750,000.  We have dropped price to E610,000 and after a year of trying to sell it am taking it off market end June.  As you are based in Dublin yours will probably sell quicker - I'm rural but I wish you the best of luck.   I will stay out of property market for a while too stressful for me!

Angela59


----------



## Sangster (15 Jun 2008)

*Re: Should I sell and rent for a while ?*

Treehouse - I meant we'll see how long it takes at that price.  I suppose if it's still on the market after the selling season in autumn then you may have ben proved right.  But like you say, your not a ea.  I hope you are proven to be wrong though 

Angela - I'll get back to you re. the stress of it all in a couple of months time 

Thanks to everyone who has contributed to this thread - I'll keep you updated with the sales process (or lack thereof) in due course


----------



## wildcard (12 Jul 2008)

*Re: Should I sell and rent for a while ?*

I'm also thinking about selling up now and buying again in a couple of years time. If I do I can afford to save roughly 35k a year after paying rent. This will give me an extra 70k to put towards the purchase of a new house with any profit I make now. Sounds better than staying put and loosing money by the month! But in saying that I'm still in the thinking stage and weighing up the pros and cons. Fair play to you op for taking the plunge, be interesting to see how you get on.


----------



## Complainer (12 Jul 2008)

*Re: Should I sell and rent for a while ?*



wildcard said:


> I'm also thinking about selling up now and buying again in a couple of years time. If I do I can afford to save roughly 35k a year after paying rent. This will give me an extra 70k to put towards the purchase of a new house with any profit I make now. Sounds better than staying put and loosing money by the month! But in saying that I'm still in the thinking stage and weighing up the pros and cons. Fair play to you op for taking the plunge, be interesting to see how you get on.


Sounds like a plan to sell low and buy high, which may not be the best approach in the long term. Your extra 70k will not be much use if the price has gone up €150k in the meantime. It's a huge gamble you are taking.


----------



## Sangster (12 Jul 2008)

*Re: Should I sell and rent for a while ?*

An update for anyone still interested.  The first viewing was 3 weeks ago and we had an offer the next day.  We went sale agreed last week at for about 2% below asking, so please god things will go through now and we have agreed with the purchaser that we will move out in september. 

So far, there has been no stress (apart from getting the house ready for viewing).  We have been so lucky so far, we are just hoping it all goes through now. 

The funny thing is the fact that ours has sale agreed so quick and for so close to asking is making me think that maybe the market doesn't have that much left to fall before things level off again.


----------



## eamonn123456 (14 Jul 2008)

*Re: Should I sell and rent for a while ?*

Well, that's the thing isn't it?  If prices level off or even start to rise, it negates the attraction of selling - to rent - to buy for anyone who is thinking of doing that *purely *in order to sell high and buy low.
Risky strategy but it could work, as long as prices drop sufficiently after one sells.


----------



## Sangster (31 Aug 2008)

*Re: Should I sell and rent for a while ?*

Update : house sold for 2% below asking.  Contracts have been exchanged and move day has been set.   The rental prop works out about E300 less than current mortgage so hopefully I'll be in a good position when we decide to get back onto the ladder.  At the moment we feel that this time next year will be when we do.


----------



## angela59 (1 Sep 2008)

*Re: Should I sell and rent for a while ?*

Well done sangster - you proved us all wrong!  Good to hear good news rather than the doom and gloom.  I was telling you about my tale of woe trying to sell earlier - we have taken house off market - we said we'd give it a year and did.  Am glad we are staying now - are in the middle of revamp and will do attic conversion in time.   I'm actually glad now we didn't go and build - can be stressful.  Good luck in your renting and hope you get that dream house for good price!

Angela59


----------



## ClubMan (1 Sep 2008)

*Re: Should I sell and rent for a while ?*



Sangster said:


> The rental prop works out about E300 less than current mortgage


But your rental payments, unlike annuity mortgage repayments, are not purchasing any equity in the property in which you live.


----------



## poorrelative (1 Sep 2008)

*Re: Should I sell and rent for a while ?*



ClubMan said:


> But your rental payments, unlike annuity mortgage repayments, are not purchasing any equity in the property in which you live.


 
Yes but at least the 300 is making about 4% interest (or simply not being eroded by inflation) whereas only about 40% of the monthly mortgage repayments are paying capital of an asset depreciating at a rate of...well lets say slightly more than 4%


----------



## eamonn123456 (1 Sep 2008)

*Re: Should I sell and rent for a while ?*



angela59 said:


> Well done sangster - you proved us all wrong!



Not much is proven until the time comes when the OP buys a house.

Personally, and with no disrespect to the OP, I hope that the Irish property market stabilises and stays that way.


----------



## Kemo_Sabe (1 Sep 2008)

*Re: Should I sell and rent for a while ?*



Sangster said:


> Update : house sold for 2% below asking. Contracts have been exchanged and move day has been set. The rental prop works out about E300 less than current mortgage so hopefully I'll be in a good position when we decide to get back onto the ladder. At the moment we feel that this time next year will be when we do.


 
the very best of luck with this sangster, my only advice would be that you may need to move your timeframe outwards to achieve the maximum financial benefit (housing markets are slow moving creatures and I don't think the crash will have bottomed by this time next year)


----------



## Sangster (2 Sep 2008)

*Re: Should I sell and rent for a while ?*



Kemo_Sabe said:


> the very best of luck with this sangster, my only advice would be that you may need to move your timeframe outwards to achieve the maximum financial benefit (housing markets are slow moving creatures and I don't think the crash will have bottomed by this time next year)


 

Thanks Kemo Sabe, the thing is that I am not trying to find the bottom.  I agree with you that the bottom will be beyond '09 but I don't want to be renting for too long.  I think I will save anywhere between 50 and 100k between waiting for the year and being a 'cash' buyer when the time comes.  That will be well worthwhile.  And before anyone says it I know its a gamble but it's one I feel comfortable with.


----------



## moneygrower (3 Sep 2008)

*Re: Should I sell and rent for a while ?*

Best of luck Sangster!


----------



## Kemo_Sabe (3 Sep 2008)

*Re: Should I sell and rent for a while ?*



Sangster said:


> Thanks Kemo Sabe, the thing is that I am not trying to find the bottom. I agree with you that the bottom will be beyond '09 but I don't want to be renting for too long. I think I will save anywhere between 50 and 100k between waiting for the year and being a 'cash' buyer when the time comes. That will be well worthwhile.


 
personally I think you are setting your sights too low with this

look at the panic and desperation out there at present - emergency budget, tax take 6bn behind, uneployment skyrocketing. The artifical level of current asking prices has a long, long way to fall and someone in your position is perfectly placed to benefit - wait it out!


----------



## Sangster (19 Jan 2009)

*Re: Should I sell and rent for a while ?*

My question is not about the house but I figured I'd keep it in the same thread.  Is any one else worried that their money may not be entirely safe in the banks ?  We lodged our 'profit' into one of the banks covered by the government guarantee.  With all the banking shenanigans, is the money still safe ?


----------



## paddyd (19 Jan 2009)

*Re: Should I sell and rent for a while ?*



Sangster said:


> We lodged our 'profit' into one of the banks covered by the government guarantee.  With all the banking shenanigans, is the money still safe ?



you've answered your own question. Its covered by the Government guarantee, 100%.


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## Bronte (20 Jan 2009)

*Re: Should I sell and rent for a while ?*



paddyd said:


> you've answered your own question. Its covered by the Government guarantee, 100%.


 Not if it's 100K lodged in one bank.  I recommend a mix of banks under different schemes because we live in strange times.  Also prize bonds and the post office are different options to consider.


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## Kemo_Sabe (20 Jan 2009)

*Re: Should I sell and rent for a while ?*



Sangster said:


> My question is not about the house but I figured I'd keep it in the same thread. Is any one else worried that their money may not be entirely safe in the banks ? We lodged our 'profit' into one of the banks covered by the government guarantee. With all the banking shenanigans, is the money still safe ?


 
as long as the government is solvent, you're OK

what's your mindset towards waiting out this collapse now I wonder? property is now toxic here - I think winter 2010 will see the return of value to Irish property. Will you wait that long? Are you looking now? Can you afford to commit to a new mortgage if your job is looking shaky?

would be interested to hear your responses


----------



## paddyd (20 Jan 2009)

*Re: Should I sell and rent for a while ?*



Bronte said:


> Not if it's 100K lodged in one bank.  I recommend a mix of banks under different schemes because we live in strange times.  Also prize bonds and the post office are different options to consider.



didn't the Gov guarantee trump the incvrease of deposit cover to 100k?


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## Kemo_Sabe (21 Jan 2009)

*Re: Should I sell and rent for a while ?*



paddyd said:


> didn't the Gov guarantee trump the incvrease of deposit cover to 100k?


 
they 100% guaranteed all of the bank's liabilities

that includes all deposits

now the key is whether you believe they have they have the wherewithal (i.e. the borrowing capacity) to make good on that guarantee?


----------



## Sangster (21 Jan 2009)

*Re: Should I sell and rent for a while ?*

KemoSabe,
I am delighted/relieved to be in the situation I'm in at the moment.  I am more than happy to wait this one out.  I didn't foresee the speed of the collapse in the market and I had no idea the banks were in so much trouble.  I think by the end of the year a sub €500k 3/4 bed nice semi will be a reality in Dalkey/Killiney/Glenageary.  If this is the case I will be looking at a smaller mortgage than I had in Rathfarnham. I initially was reluctant to rent for too long but with the way things are going I'll bide my time.

My problem when the time comes will be getting the mortgage. I was mortgage approved for €460k back in June of last year so even if I can only get half that I am still ok.  

As for my job, I think I'm as safe as anyone in the private sector at the moment.


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## Kemo_Sabe (22 Jan 2009)

good to hear sangster

please do not be tempted by dead cat bounces, a temptation to compare current asking to 2006 and conclude 'value!', the 'need' to own your own home (rents are also dropping fast) or any other spurious factors that may arise.

wait this one out and you could well be in the house of your dreams *and *mortgage free

please report back with progress!


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## Buggy (23 Jan 2009)

*Re: Should I sell and rent for a while ?*



Sangster said:


> My question is not about the house but I figured I'd keep it in the same thread. Is any one else worried that their money may not be entirely safe in the banks ? We lodged our 'profit' into one of the banks covered by the government guarantee. With all the banking shenanigans, is the money still safe ?


 

Sangster

I'm wondering if you have heard anything to make you feel any better about the safety of your profit?

I have been saving a deposit while watching and waiting for some time now. I would be very happy to continue waiting but I'm now worried my deposit might disappear into a black hole some time soon!


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## Tuttlinghorn (26 Jan 2009)

Similar scenario to KenoSabe but a few months later. Advice needed and couple of specific questions :



 We need to move - garden space for kids is main priority and don't want to live so close to  city
 I'm sensing a buyer is getting cold feet and need to consider what to do in the event of sale falling through !
 
Options: 
1) Cross fingers and push to exchange contracts on house we are in (sale price minus mortgage leaves 150k, sale agreed)

 Rent for a year, try out a new area, longer commute, hope to buy there, as cash buyers & with 'blood on the streets' (I don't think we are really there yet).
2) Hang on to current house, put on rental market, go and rent somewhere else.

 Likely to have to pay 5-800 premium per month to do so (assuming we can rent current house, no idea what local market is like though we're D8 and good access to city.)
 Questions : 
A) 
All things being equal (property prices continuing to fall, credit crunch notwithstanding) 
*Would a lending institution normally lend their max multiple of earnings PLUS any equity in an existing property ? *

i.e. in scenario 2 above, if there's any equity left in our house in 12 months time and we want to buy, will we be able to use this equity plus the max the bank will give based on my earnings (plus savings). 
OR will bank typically just not go above their earnings ratio ?

B) Am I nuts even posting this and thinking about not ditching an ever depreciating asset ? My reason for considering holding on to it is that it could someday be a uni crash pad for kids, and ultimately a nest egg (probably for the kids when we croak from the stress of servicing 2 mortgages). 

C) what other glaringly obvious things am I forgetting to consider?? 


Mods, pls advise if this should be a new thread and I'll re-post. Comments on this thread & elsewhere have been valuable but I dont think these specific questions addressed ? esp regarding my sanity.

Thanks for reading & answering - longer post than I intended.


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## Kemo_Sabe (27 Jan 2009)

Tuttlinghorn said:


> Similar scenario to KenoSabe but a few months later. Advice needed and couple of specific questions :
> 
> 
> 
> ...


 
complete the sale, thank your lucky stars, stick your 150k in the bank and rent a nice place in the area that you eventually would like to buy in(driving a very hard bargain with the LL!)


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