Buying a house

N

New_Buyer

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Just had an offer on an appartment in D1 accepted but all of a sudden I am getting very nervous.

I have been watching the reports on the housing market over the last few weeks and the mood seems to be turning negative. Sites like http://www.irishpropertywatch.com/ and [broken link removed]

are showing significant drops in prices in D1 and I'm worried I could be in negative equity if things go wrong.

Any advise would be greatly appreaciated. In people's opinion what should i do.
1. Go ahead with the purchase.
2. Try and get a better deal from the seller.
3. Try and delay for a few weeks to see what happens.
4. Pull out of the deal completely.
 
Rather as a buyer you just made an offer on an apartment. Is there a strict definition for "negative equity"? I would tend to think that you are not in negative equity unless you sell the property for less than you buy it for. Lenders might argue (and I am happy to be corrected) that you are in negative equity if you owe more than the property is worth but the only true way to verify the value is to sell the property which triggers my first definition. If your intentions are long term don't pay as much heed to short term blips try and see the picture overall, banal advice but if the property is well built, well situated, well appointed it will hold value. At the end of the day if you can afford the mortgage repayments, afford stress tested repayments (to account for interest rate increases) want to be in the centre of Dublin and like the place enough then "1" would be what I would think - everyone is entitled to have cold feet! There is never any harm in trying for a discount but the argument that rumour has it that the mood on property in D1 is turning negative won't be convincing to the seller - if you haven't signed contracts then you could try "2" - pushing a lower price by threatening to pull out altogether. I don't quite know what you could achieve by simply waiting as you suggest in "3" - that would just delay the deal, the seller would be none the wiser as to why you are and probably won't sell it to you cheaper since you have already agreed a price. As for "4" the reasons to pull out (assuming you have not signed contracts) should be based on your assessment of the value of the property to you. Unless you are investing speculatively (i.e. looking to make a short term gain) do you have any reason besides rumour of a slowdown in the growth of the property market? Look at the area, look at the property, look at what your long term goals are for this (take a look at at least 5 years). BTW my opinion is based on the presumption that you have paid a refundable booking deposit and not signed the contracts. If you have signed, you have agreed. PS not a builder or a seller just someone who bought an apartment and did have cold feet at first!!
 
Rents are climbing strongly so makes buying more attractive.
Also, if you are comfortable with the location and repayments then go for it. I can understand why you might be nervous though...
 
If you only plan to live there short term, before trading up, and you have concerns about house prices dropping then you need to think long and hard about whether its the right decision.

However, if you plan to live there longer term then there's no problem. It doesn't matter what your home is worth so long as you can meet the repayments and you're happy to live there.
 
892896 said:
Rents are climbing strongly so makes buying more attractive.
Also, if you are comfortable with the location and repayments then go for it. I can understand why you might be nervous though...
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The costs of buying are also increasing though.
 
True, but at some stage the top of the interest cycle should arrive.
Earnings typically increase each year too....
 
i rarely see but i stand corrected warning to first time buyers that they must either stay in the house for 5 years or sell it without incurring stamp duty penalties...rent a room being the exception. after a few years many people might like to change for one reason or another and keep their house with the rent paying for the mortgage..this is where problems can arise.
 
so-crates said:
If your intentions are long term don't pay as much heed to short term blips try and see the picture overall
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Even if it is only short term blips I am worried that I might be able to buy the proprety for €20k-€30k less in a few months time. That's nearly a years salary for me and I'd rather have it for myself than give it to the seller.

I just can't decide what to do.
 
New_Buyer said:
Even if it is only short term blips I am worried that I might be able to buy the proprety for €20k-€30k less in a few months time. That's nearly a years salary for me and I'd rather have it for myself than give it to the seller.

I just can't decide what to do.
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If you are that worried than wait a few months and see how things are then. No-one can tell you what to do, or what the future holds I'm afraid. But I don't think you should buy a house unless you are certain its what you want to do. Its a massive financial decision, and you should feel comfortable and happy in your new home, not worrying about whether you made the right decision or not.
 
New_Buyer said:
Even if it is only short term blips I am worried that I might be able to buy the proprety for €20k-€30k less in a few months time. That's nearly a years salary for me and I'd rather have it for myself than give it to the seller.

I just can't decide what to do.
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In an auction where the value of the commodity is unknown invariably the winner is the one who has overestimated the value by the greatest amount, and thus overpaid. The is known as the Winners Curse. This scenario is analagous to the current state of the Irish housing market as noone seems to know what fair value is at the moment. To avoid the Winners Curse you should only bid a price that is below your actual estimation of the value of the property and that you would be happy to pay irrespective of the fact that you may be paying over the odds.

dewdrop said:
i rarely see but i stand corrected warning to first time buyers that they must either stay in the house for 5 years or sell it without incurring stamp duty penalties...rent a room being the exception. after a few years many people might like to change for one reason or another and keep their house with the rent paying for the mortgage..this is where problems can arise.
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This only occurs where the person RENTS the house out within the 5 year period and so becomes a property investor. As such this is perfectly fair. It is the resposibility of each individual to take care of their own tax affairs.
 
Decided to withdraw the offer today after the publication of the TSB house price index on Friday.
I think I have made the right decision and hopefully I'll be able to pick up a similar property in a few months much cheaper.

Thanks for all the advise.
 
new buyer why not put in a price at a lower price you would be happy to pay

the vendor might be happy to shift the apartment and you are already mortgage approved shame to waste it
 
gar123 said:
new buyer why not put in a price at a lower price you would be happy to pay

the vendor might be happy to shift the apartment and you are already mortgage approved shame to waste it
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I wouldn't know how low to put the bid in? How can I judge how much the apartment is worth??
 
Put in an offer that you'd pay - something is only worth what people will pay.

I would go 10% below - you could be brave and go 15% .. The worst thing a vendor can say is NO. So why not with the current market chance your arm.

The property market has been on the side of the vendor for long enough - now its your turn.
Good luck:) P
 
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