Budget v Asking Prices

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Vega

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I would be a first time buyer. I’ve got mortgage approval, good savings and know my budget. But how far roughly above my budget should I start looking? I know some sellers will not sell below their asking price and that’s fine. But anecdotal evidence, friends’ experiences etc. show that some sellers are willing to accept offers lower than the asking price to make the sale. Are there any general rules here, like 10%, 20% etc.? I have heard of people offering 100k below (admittedly on a higher budget than I am to start with), being rejected but then the seller selling to someone else (a different friend) at around about the lower price. Another friend recently sold his apartment by being “realistic about the price”, he didn’t say how much but he said he did take a big hit on it but the only way to look at it was how much more he would be saving on the house he was trading up to.

Say for example, if your budget is 300k, would an apartment with an asking price of 400K be anyway possible at the moment? I appreciate that all sellers have different personal circumstances but if I want to negotiate up to my walkaway price obviously I will have to start lower, so in general, how much lower can you start without wasting the estate agent’s (and your own) time?

I’ve been following the prices in a few areas for the last year and while some apartments close to Dublin city centre have dropped from 380k to 299k (and still have not sold) others in the same area that had an asking price of 400k are still 400k (and obviously have not sold either). What are the possible reasons for these anomalies? It would appear that some selling prices are significantly below some asking prices (while other asking prices are more realistic) but I can’t seem to get any concrete information other than my own very-amateurish research.

I have no experience in this area so any advice on where I should start would be greatly appreciated. I don’t want to waste the estate agents’ time if it’s not possible at all but if it is possible I can do the deal pretty quickly.
 
Has been said here before shop around and do the deal at your terms or wait... (one of the benefits of recession).
Regarding house prices some vendors are more desperate than others is the only reason but that's true that bottom is still to be reached.
So take your time and dont rush.

Best of luck...
 

Purely for search puposes on myhome.ie I think it would be useful to include up to a maximum of 20 to 25% above your budget.

You'll get a clearer picture on viewing of what might be accepted (don't tell them your budget though!)

As for wasting estate agents time, I'd imagine that there are alot of sellers who would gladly go back a couple of years to accept offers they may have thought silly. I would hope that the decent agents have learned to treat every prospective buyer with a bit of respect at this stage
 
Ok that's what i was looking for, that's very helpful, thank you kindly.
 
It looks to me, Vega, as if you see clearly enough what the market is like, and that the element that causes you difficulty is plain enough. You want to know how realistic asking prices are. I think you know the answer: they range from being slightly hopeful to being wildly overoptimistic.

If a seller is being fairly realistic, then you might bargain a price down by €20k rather than €100k. If a seller believes that 2008 prices still apply, you might get €100k off, but it might take time, until the seller realises the true state of the market.

I don't think you should base your viewing decisions on asking price. You should make your own judgement, and try to estimate the current market value of a property (it gets easier as you go along) and also judge the value to you of each property (which can be somewhat different). Your value should reflect those two variables. If the asking price is far above the general market, then the negotiation might be more difficult, and the seller might need many months to become realistic. Personally, I would not put too much time and effort into trying to bargain down a wildly excessive price unless the property had a very special appeal.
 
Ok that makes sense, I was just unsure as I haven't done it before. Many thanks for the info.

One other thing, I know you're not supposed to tell the Estate Agent your budget but when I tell them I’m looking for a property in a certain area, will they not naturally ask me what my budget is?

I know I should just evade the question and say something like “it depends on the property” but there are a wide range of prices in the main area I’m interested in, so how do you tell the EA what range of properties you are interested in without telling them your budget?
 

1) Location
2) Type: Apartment, detached, semi-detached, terraced
3) Number or rooms or approx size

e.g. a 3 bedroom semi-d in north county dublin by the dart

That's more than enough
 
Vega said:
... One other thing, I know you're not supposed to tell the Estate Agent your budget but when I tell them I’m looking for a property in a certain area, will they not naturally ask me what my budget is? ...
Click to expand...

Probably. And then they might try to move you a little bit up from that. I would indicate the ballpark, but conservatively. If my budget was €300k, I might suggest to the estate agent that I was looking for something in the region of €270k. After all, if you got something suitable for that price, you would be happy. And if the EA edged things a bit up the market, you could make pained noises and negotiate.
 
It really all depends on whether the EA have priced realistically or not in the first place and whether or not the price has already been reduced.

Some EA will price in a 20% discount whereas others will be pitching the price lower to attract a crowd of bidders.
For example, I looked at a house in cabra that was priced low €295k to attract a crowd, house was in much better condition than those around it and there were 20 viewers on the first saturday it viewed, it sold within 2 weeks for over €311k (that was the price when the EA got back to me).
I'm looking at houses in Dalkey where I'm bidding 10% lower than asking price and getting nowhere even though i've had the highest bid on the property for over 3 months now.
The EA's don't seem to be following the same path, some will price realistically others will pitch a price knowing that 10-15% lower will be accepted. Very difficult to tell until you put a bid in.
 
A lot will also depend on the circumstances of the vendor and when they bought the property.

Lets say that there are 2 identical properties for sale for 400k.

Vendor A could have bought the property as an investment 10 or 15 years ago and now has the mortgage paid off, Anything he gets for the property is pure profit, So if there are no other offers, he could be happy to take the 300k in todays falling market and bank it or use it to pay off other debts.

Vendor B bought the property 2 years ago for 420k. He is already taking a a hit of 20k and will hold out in the belief that he will get 400k or has decided he won't sell for anything less as its not worth his while.

I guess you need to try and target the first type of vendor, though there is no real way of knowing this apart from pitching in low and waiting for the response.

Different vendor circumstances will have an impact on the bottom line for which they will sell their property. Some may only go down 10% others 30%. Don't be afraid to pitch low or "waste EAs time", A lot of them are eating their words from this time last year. "This property will never sell for that price , A soft landing is approaching, the bottom has been reached, etc"
 

Yes I have noticed this but also even at the same Estate Agent. It is the same estate agent where one properly has reduced asking price 27% in less than a year and another apartment still has the exact same asking price. I presume it must just be a case of vendors having totally different personal circumstances.
 

Is it acceptable to ask the Estate Agent about vendors' personal circumstances or is that not the done thing in the industry?
 
you can ask is the seller motivated? and open the conversation by stating that you're a first time buyer and have mortgage approval and would be interested in moving quickly.

the house i'm currently bidding on i was informed straight out that it was an executor sale. there's no problem with asking anything.
 
Vega said:
Is it acceptable to ask the Estate Agent about vendors' personal circumstances or is that not the done thing in the industry?
Click to expand...

Ask lots of questions but make them relevant to the property such as 'why is the vendor moving?', 'Is the vendor in a chain to purchase elsewhere and if so have the purchased or are they still looking?'.

The vendor will ask you what your circumstances are and whether you have mortgage approval etc. which is an ideal time to return the similare questions relevant to the vendor.

If you are looking at apartments, don't forget to ask lots of questions about the management company, charges etc.
 
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