Purchase an apartment or house

Hi

I am a first time buyer wanting to buy either a house that needs renovation or a 3 bed apartment in a good location.
I have mortgage approval from AIB. With savings, I have roughly €235k to work with.
I have looked at a few houses but the work involved seems way too much. Obviously I would like to buy a house.
The other option to is buy an apartment.
I am very interested in one. It's a three bed in a great location which I am familiar with. In the complex, there is only 19 units. It's on a main bus corridor into the city and it's beside a third level college.

It's listed as €288k. In this complex only half of the apartments have been sold. These were launched in 2008. I found an article online from October 2010 which had the apartment listed at reduce price of €320k. The asking price is 10% less this. The apartments are on NAMA listing.

I have looked at the % decline in apartments in Dublin on the CSO website. From October 2010 - Feb 2012, the value of apartments in Dublin have fallen roughly 30%. The asking price compared to this is way off. Should really be about €224k.

I am thinking of putting in an offer. From speaking to a few friends, they advise something in the region of €170k. One friend who recently bought a house got 50% reduction off the asking price or so he claims. But he was in negotiations for months over it. It was a new build. He recommends putting in an offer of €150k.

Just want some advise for putting an initial offer.

The way that I see it is

1) I'm a first time buyer
2) I have mortgage approval
3) I am ready to go on this.
3) The properties are on the Nama listing
4) They are struggling to sell them. Only half the properties have been sold. 4 when first launched in 2008 and a further 5 since.
5) It's on a bus corridor.
6) It's beside a third level college.


Thanks

Michael

micar

If your preference is to buy a house, then you should look at buying a house.

There isn't any rush to buy. You need to be patient. There are people desperate to sell and you can get a bargain if you are ready to go and don't have to sell another property. Check out the Allsops auction coming up soon.

Brendan

Have you considered what the management fees would be for the apartment against a house.
What about upcoming water charges. There is talk that apartments will have usage split so will you really have control. of your bills.

I would keep looking for a house as Brendan says as what I get in your post is that you want a house but you also seem desperate to just buy so this is best of what you can find. Be patient.

If you want a house then you shouldn't be looking at apartments. You have mortgage approval for 235K but it doesn't mean you have to spend 235K.

You are kind of asking us what is the value of the apartment. It's value is what someone is willing to pay for it. But a more realistic value is the rent X 12 times. What rent would the apartment achieve.

If you are looking at a house that needs work, banks are very reluctant to loan money for renovations in addition to the initial mortgage.

Personally I'd be very careful about buying an apartment that was built in the last 10 years. A lot of very dubious building work went on. Have you done an engineers report on the property? Can you tell us where the property is exactly and someone on here might know the builders reputation etc.

Bronte said:

Personally I'd be very careful about buying an apartment that was built in the last 10 years. A lot of very dubious building work went on. Have you done an engineers report on the property? Can you tell us where the property is exactly and someone on here might know the builders reputation etc.

Click to expand...

I think that's not only an apartment issue, though.
Seen some quite dubious semi-d, too.

Thanks for the response guys. I viewed the apartment this evening and was informed that when it first went on sale, it was priced at €750k. It has been taken over by NAMA. It was then reduced to €320k when taken into receivership and it is NAMA who would only allow it to be reduced to €288k or 10%.
I don't think they would let it go for anything less than €250 which would price me out. Ah well!!!!!

As an aside, I said that "a friend who recently bought a house got 50% reduction off the asking price or so he claims" He read this and realised it was myself. He had a slight issue with "or so he claims", oops!!!!!!. He did most definitely got a 50% discount. Sorry HK as no doubt he'll read this.BTW, last night was the first night in his new house. So congrats to him.

I suppose I should have picked a better more discrete name. But you gotta laugh!!!!!

Micar

micar said:

When it first went on sale, it was priced at €750k.

Click to expand...

The first thing you need to do with that information is put it straight out of your mind. Don't be impressed by that. Don't allow this to determine that you must now be getting a good deal. (maybe you are - but don't let the previous sales price influence you in this regard).

micar said:

. I viewed the apartment this evening and was informed that when it first went on sale, it was priced at €750k. It has been taken over by NAMA. It was then reduced to €320k when taken into receivership and it is NAMA who would only allow it to be reduced to €288k or 10%.

Click to expand...

This is sales patter and to be completely ignored. You are not approching the purchase in a professional way. 250K is an awful lot of money.

Buy in a good location something that you can afford and that is of good value. And don't buy to speculate or make a killing.

Hi Bronte

It's a fantastic location and I believe that I can get it for a very good price.
It's hard to know what they would let it go for. It been on the market for 18 months and there has been no takers. No one has even put in a bid.

They would like to see it sold before the possibility of it being put up for auction by allsop.

I looked at properties that are being up put for auction in May There is a 3 bed apartments down the quays with a reserve price of €185k. There are also other apartments 3km or 4km away with a similar price. If it did go for auction, it would have a reserve of something a little higher.

I'm not buying to speculate or make a killing. I know that If i ever wanted to rent it out, it would easily be done.

Thanks

Micar

micar said:

They would like to see it sold before the possibility of it being put up for auction by allsop.

Click to expand...

Wow have they told you that? I'd bet they would (like it sold before Allsop's takes it).

At the last auction at least one of the mainstream banks were giving out loans as far as I recall. So banks are open for business at the auction. Why don't you find out if it's possible for you. But first do all your research, there must be a reason only half the apartment are sold. Are good quality apartments not a dime a dozen in Dublin? Or is there something wrong with this scheme. Who was the developer?

What is the potential rent of the property?

An apartment is the better option for someone who is young ,abhors gardening or much housekeeping, works in the city centre and hates commuting, and wants to be in the centre of things, especially in the evening.

A house is the better option for somone -maybe a bit older- who likes a more space, doesn't mind tending to a small garden, hopes to have a family in the near future and doesn't mind a commute-whether to work or for the city night-life.

So, if the place is for you to live in then it doesn't matter whether it's an apt or a house. It's entirely what suits your living preferences.

One thing though -and this is not property price speculation(forbidden due to unknown mystical reasons on this website). Prices are not still dropping everywhere...

Prices of the average 3 bed semi in many reasonable suburban areas have "stabilised". I have a 3 bed in a western suburb 20 mins by bus straight to town. My auctioneer tells me I can get 10k (=4%of approx price) more than three months ago and that there is a growing demand for these properties from the thousands of youngish couples desperate to move up from tiny apts or as first time buys. A couple of times he's asked me whetehr I'd like to put it on the market rather than keep letting it.

So, if you are keener on a ,say, a 3bed semi in an O.K. area on a quick commute route then buy sooner rather than later.
Apartments may be a different story -even though you can get great rental yield from them.

P.S. - just seen the latest cso property price report which confirms Dublin house prices have (slightly) increased in the last month. Of course, this may be a blip but I am sure that if one was to analyse the prices by area and type one would see that the 3bed semi in "reasonable" areas have recorded the biggest increase, whilst larger old city-centre houses( most of which are divided into flats) still saw a price decrease.

oldnick said:

So, if you are keener on a ,say, a 3bed semi in an O.K. area on a quick commute route then buy sooner rather than later.
.

Click to expand...

Are you calling the bottom of the market there Oldnick. No need to answer, due to mythical reasons, but will watch with interest. It could be a dead cat's bounce.

At best the current "increase" could be seen as a dead cat bounce. Though a combination of FTB, public servants with large retirement lump sums, cash buyers, people sick of waiting etc trying to get in probably more so *before* the property database comes along. Budgets can only push things down further on a national average scale, however as mentioned, the 3/4bed good areas are possibly nearing the point where they hit parity with rebuild costs which should help a price floor, but then since the houses are built, its a sunk costs so they could go right the way to ZERO if they wanted.

In short, no one really knows. Even if you had the next 6 months data, you *still* wouldn't know for sure. We have a few larger road bumps ahead before we get out of this "financial crisis", some which could send prices in either direction, massively so.

Case in point, if they let the brakes off inflation, I'm sure that'd push house prices up in absolute terms but possibly down in relative terms. Purely for the newspaper headlines, this could be a good one. The indo could run stories saying "House Prices go UP!" and "House Prices go DOWN!", and have both be right.

My own opinion is that the debate prices or "the bottom" focuses on the wrong things quite often. The reality should be looking at buying at a price that you are happy with and can reasonably afford without stressing too much, for a properly you are happy with and not just a place holder/step on the ladder. By definition, once you've bought, the price of your house no longer really matters until you decide to move. If your house price multiplies in value, it really makes no difference since your house isn't your bank balance.

There is also many many more things than just the purely financial side of the property transaction. If all decisions in life were made based purely on the financial spreadsheet numbers, almost no one would buy anything. Its pretty hard to justify that morning coffee on a spreadsheet, but very easy to do so subjectivity.

Sorry for the rambling

I've no idea how property prices will go, not only because of my own miserable failure to predict the size of the property crash , but also because of new economic and banking factors that none of us have hitherto encountered.

After I wrote my brilliant post yesterday I saw a big headline in the Irish Times Property Supp -"where have all the family homes gone?" describing the great demand for, and the great shortage of family homes in Dublin suburbs.

That, plus yesterdays Stats report , plus my own auctioneer advising that I'd now get a quick sale at a higher price than he'd previously estimated convince me that 3/4 bedroomed houses in reasonable locations around Dublin (I don't know about the other cities) are presently increasing in price,albeit slightly.

Whether this will increase further, stop or even go into reverse I don't know . I'd personally speculate that.........
censored censored censored.

Hi Guys

I put in a offer about €100k of the asking price. The estate agent immediately said that I would be rejected but said that she'd put it in. I expect a call on Monday.
She said that for the other properties sold since Oct 2010, they got the asking price. How am I suppose to believe that?
Anyway, I found out online who the receivers are.

Just happened to come across a thread on thepropertypin.com.
One person wrote that "the seller (receiver) has no emotion involved in the sale, so is more likely to accept a low offer"

Just would like opinions on this.

I will probably give another offer, maybe two anyway, then i'd have to walk away.

Micar