Home truths: How to find a bargain house in a hot market
In any property market, no matter how competitive and heated, you can still buy houses for much less than their true market value - sometimes by as much as 20pc less. With a Dublin semi worth €400,000, that's €80,000 off if you get it for €320,000.
You don't believe me?
Think about it. If these sort of properties didn't exist, then we wouldn't have developers and professional flippers who buy and sell on again at a profit, sometimes after a minimal amount of decoration or refurbishment.
Through two decades and through heated markets I've twice bought bargain houses in good areas - the first was a second-hand property in D14 undervalued by 20pc, the second a new home in D6W undervalued by 18pc. But bargain homes are not 10 a penny and they do take some eking out. You also have to be systematic in your search and put in some work. To those interested in bagging a bargain I'll offer the following tips. The first step to locating a bargain in a heated housing market is to:
1. Find a useless estate agent
In the same way that there are useless lawyers, managers, teachers and stock brokers, there are also plenty of useless estate agents - professionals who are incompetent and/or lazy about what they do. As a result they are least likely among their peers to sell a property for what it's worth.
Signs of the useless estate agent include a drab office base, poorly-designed website/branding and badly-taken photos on their websites. Usually the useless estate agent will have quite an eclectic mix of properties listed on their books, which, much fewer people will find online or elsewhere. Find them and follow their websites.
Incompetent estate agents make a living in the the same way incompetent lawyers, accountants et al do - because Ireland is a country hung up on networks. Too many of us appoint who we know rather than who is best for the job. It's why we can't do homegrown business success stories like other countries. The old school tie, political favours, looking after old rugby mates, golf club contacts, GAA club pals, freemasons, relations or giving the business to someone from "back home". If you doubt it can impact, consider that the economist Morgan Kelly once described Ireland's biggest banks prior to the crash as having being run by "faintly dim former rugby players".
When it comes to selling properties, the well spoken but incompetent agent who haunts the 19th hole will be bestowed a decent share of properties to sell - simply because he plays golf (with enough of the next component required for our quest). 2. an Incompetent Vendor
Incompetent vendors are the oxygen of skilled bargain hunters - people who appoint an estate agent to sell their home based on factors other than an ability to do the job best are everywhere.
Most estate agents have their "turf" which they know backwards. But an agent appointed because he went to school with someone is more likely to end up selling a house outside his geographic- knowledge zone and therefore more likely to sell it for less than it is worth.
Other incompetent vendor types include those who have so many homes to sell they can't keep an eye on every one - the banks for example. These are currently reselling thousands of repossessions to strict in-house deadlines. So look for repossessions and don't feel guilty buying. Someone else will snap it up if you don't.
Incompetent vendors can also include greedy siblings trying to sell a deceased parent's home at pace to get quick cash - so look at executor sales. They can include absentee landlords based abroad who have lost touch with property values in the area. Incompetent vendors also include those who have never considered the true value of their home because they haven't considered selling it. This is why posting unsolicited offers in the letterboxes of homes which are not in fact for sale, is a tactic which can also yield a bargain. It's not nice to take advantage of people but that's what some professional bargain hunters do.
Next you need to locate...
3.The Filthiest House you can find
Estate agents will tell you that when a couple goes home hunting, the women tend to choose which houses they view and generally make the final decision to purchase. So anything that puts couples and single women buyers off will kill a vast tranche of the competition and make a home cheaper than it should be.
If men's faults include a lack of empathy and an inability to find butter in the fridge then women's weakness (often, not always) can be an irrational reaction to dirt which causes them to walk away from otherwise fine properties. This is why a huge percentage of bargain houses out there are completely filthy. The first house I bought had a carpet that stuck to your feet and rooms that smelled of fermented laundry baskets. But the survey revealed that all it needed was the manky old carpets taken out, and some painting and redecorating. For the sake of spend of less than €2,000 the idiot vendors had driven away most of their potential buyers with a surefire deterrant.
4. Find Homes with Hidden Value Boosters
A garage at the back to a lane may allow you to sell the end site for mews use, an attic could be floored easily or an outbuilding let out. Realise the hidden potential in oddball properties which can add value rapidly or repay you in spades after you move in.
5. Seasonally Nasty Timing
Make low offers in the wide run up to Christmas. Tired vendors want to be in their new home for the festive season. Make them in mid summer when there are no buyers and vendors want to be sold and in their new home before the kids go back to school. If you lose out in the bidding, come back again three or four weeks later. Bad estate agents are awful at contacting underbidders when deals fall through - by which time their punch-drunk vendors are more likely to snap at your lowly offer.