The waiting game
Prospective purchasers are holding off in the hope that prices will fall even further. But the buyers' market may not last forever, so it is a good idea to take the plunge while there is less competition, writes Donal Buckley 'bidding low and being in a strong position can pay off'
All estate agents are agreed that this is a buyers' market, but prospective buyers still seem to be holding off -- perhaps due to some forecasts that prices have further to fall. But why wait when a bit of haggling can secure a deal which incorporates any future price fall?
Some sectors of the market may very well have already hit the floor. For instance, Sherry Fitzgerald agent Michael Grehan says that some of the top-of-the-market properties in Dublin have seen their prices fall by around 40pc and are unlikely to fall much further.
On the other hand, a survey by the Irish Auctioneers and Valuers Institute expects that residential prices in Dublin and Leinster could fall by a further 10pc this year, while those in Munster may drop 8.4pc and those in Connaught, 11.2pc.
One reason the market currently favours buyers is because there are so few of them around.
John McGuire, managing director of First Credit Mortgages and presenter of RTE2's programme I'm An Adult, Get Me Out Of Here, explains that it's much easier to buy now than it was three years ago.
"Now, you may have only one or two bidders on a property; whereas you might have had 10 three years ago. So there's less competition and more buyers are willing to walk away if their bid is not accepted."
However, this may not last for long.
Mr McGuire, who also provides a buyer support service in addition to his mortgage finance service, says that he has noticed increased enquiries in the past few weeks.
"First-time buyers have worked out the sums which show that their buying power has increased.
"Not alone have prices come down, but so have interest rates and together with the increased tax relief for first-time buyers this makes buying more affordable.
"For instance, first timers who want to buy a €350,000 house and have saved an 8pc deposit can now borrow 92pc of the price for as little as 2.99pc. That works out as only €1,036 per month or, for a couple, only €518 each."
Mr McGuire, who is currently shooting another TV programme, Celebrity Bainisteor, which will go out on TG4 in March, also reports increased interest from people wishing to trade up.
"Some people put their current homes on the market six months ago, but found that everything froze in October. Now prospective buyers are beginning to view those houses again and so the vendors are checking to see if the banks are still willing to lend to finance their trading up."
Karen Mulvaney, who operates the Buyers Agent service, has also noticed phenomenal improvements for daring buyers.
Usually properties sell to the highest bidder but she recently came across a case where a house sold to the lowest bidder. The house in the upmarket north Dublin area of Sutton had been bought a few years ago for €2.5m, but then the bank decided to repossess it.
The house had been split in two and her client had bid €850,000 for the main section of the house, while another prospective bidder had bid €450,000 for the garden section. Although this would have generated a combined €1.3m, the bank accepted a bid of only €1.2m.
The vendor's agent justified accepting the lower bid on the basis that one buyer would be buying the whole lot, whereas with the split bids there was a risk one of the buyers might have pulled out.
"It just goes to show that bidding low and being in a strong position can pay off," she says.
"Remember to make the most of your position. So even if your bid is lower but you can close the sale quickly, the vendor may be willing to deal with you rather than the higher bidder," she adds.
Ms Mulvaney says this is also one of the reasons to find out as much as possible about both the vendor and the other bidders. Check to see if the vendor is under pressure to sell -- say for instance, if they have already bought another house.
While the agent may not say much about the rival bidders, you could ask: are they also a first-time buyer? Have they finance in place? Is their offer subject to the sale of an existing property?
Just because you are outbid you, you do not have to counter offer,especially if you are a more secure bet for the vendor.
On the other hand, if the rivals are first-time buyers, they could have the advantage of not having to pay stamp duty and they may be able to buy quicker. But at least you have some idea of your options and you can always walk.
As Mr McGuire says, buyers now are looking at a number of options, so if they don't get the right price with one they can walk away and switch to another.
- Donal Buckley
