Ten tips on how to buy a house in the Dublin heat
Those who saved money to buy a home for years, waiting for the bottom of the market, have been caught off guard and at September's rate of increase, have seen property prices rise by €3,000 a week.
So in the midst of competition, what should a buyer do? Karen Mulvaney, owner of The Buyer's Agent has been a professional property buyer specialising in Dublin homes for the last 12 years – acquiring properties for her clients through the boom, the bust and resurgence.
"I think it's safe to say that once again we're in a vendor's market. We're seeing home-hunters completely caught off guard.
"They don't know how to deal with estate agents and they don't know how to negotiate effectively. At the same time they're rightly worried that their savings and purchasing powers are fast reducing before their eyes."
So as a professional property buyer who finds herself in hardball negotiations every day with wily estate agents, what advice can Mulvaney give the fraught home hunter currently trying to buy a property in the overheating Dublin market?
"There are basic rules to follow and some which are not as obvious, but are guaranteed to yield results."
Have All Your Ducks In A Row
"There is absolutely no point in bidding for a Dublin property if you haven't got your basics sorted out. You've got to have updated bank approval and finance so you can buy straight away. You need to have appointed your solicitor and have their details ready for the vendor. You've got to have a surveyor appointed and ready to check the house out and have their details ready.
"And it sounds stupid, but you'd be surprised how many people go bidding on a home when they haven't already sold their own. Unless you can show contracts for your own home signed by both sides, stay well away from bidding on any house. Without the above you just won't be taken seriously. I have regularly been successful at €10,000 below the highest bidder because he or she doesn't have finance sorted, or because they need to close a deal on their own home first."
The Vendor's Estate Agent Is Not Your Friend
"It is extraordinary how so many people who are trying to buy a house will regard the vendor's estate agent as their good buddy and tell them everything. The vendor's estate agent is a professional sales person whose job is to get the absolute most money out of you on behalf of their client – the vendor – and on behalf of their business, which gets a bigger fee the higher sale price they achieve. Don't confide in the other side."
Never Tell Them How Much You Have To Spend
"Never, but never reveal how much money you have to spend or what your upper limit is. Once they know, the vendor's agent will try and take you straight to that level and beyond.
"You don't have to buy a house at your upper limit but revealing what that figure is just gives the vendor's estate agent a challenge and a sales target to aim for."
Bid Fast, Bid Low
"I really can't understand why, in the current market, bidders will initially sit back and wait for each other to take the initiative. If a house is on offer at €400,000 and you want it, get straight in there and bid €390,000. The agent usually will tell the other interested parties what the underbid is. If the underbid is below the asking price then the other bidders tend to be more reluctant to move up. Bidders tend to mimic one another's behaviour.
"It's the agent's nightmare to have a first bid below the asking price and kill momentum before things have even started. But if you go straight in with €10,000 above the asking price, you'll only excite the opposition and lead them to believe the house is worth more. Also, believe it or not, there are still undervalued homes out there for which bidding low can produce a real result."
Interrogate the Estate Agent
"For some reason house hunters are in complete awe of estate agents. Don't be. You have every right to ask them countless and necessary questions, which they generally will answer.
"These answers put you in a position of strength. Ask them about the owners – are they ready to transact straight away or do they have to buy a house first, what's their bottom line? Ask them about the highest bidder – do they need to sell before buying this house?"
"Use the information you glean to your advantage. If you are ready to move quickly without a house to sell and are buying cash, remind them of it that constantly.
Vendor's estate agents are constantly monitoring the overall 'package' presented by a potential buyer and many people don't realise that homes often aren't sold to the highest bidder. I have secured properties at €10,000 and more below the best bid because I am more likely to close."
It's Not Bought Until Both Parties Have Signed
"We've returned to gazumping. I've met many distraught buyers who have 'sale agreed' a house only to be discarded weeks later in favour of a vendor with a higher offer. Buyers need to realise that 'sale agreed' means nothing. Your deposit is returnable and you have no deal at all until your name and the vendor's are both signed on the contract."
Put Yourself On the Underbidder's List
"Despite all the craziness out there at the moment, a hell of a lot of sales are falling through. Either the buyer cools down and says 'What the hell am I doing?' or their bank reins them in and puts the kibosh on the deal.
"Banks are hugely conservative at the moment and just because they approve an upper limit doesn't mean they'll pay out if they feel the price agreed is too much for the property. For this reason, even if you are unsuccessful, make sure you put yourself down on the list of interested parties in case of a fall through.
"I always do this and have acquired a lot of property for the client because the other underbidders walked away and the agent came back to me when the sale fell through."
Be Aware of Different Tactics
"Some estate agencies typically value a house low in order to build up momentum on bidding to get the price up while others start deliberately high with the expectation of coming down. Watch the different agencies' 'forms' on other properties and you'll soon establish which tactics they tend to use.
"In fact there's a problem with some agents offering their own clients a higher price estimate so they'll get hired and in the sure knowledge that they'll try to manage these expectations down again.
I've been among a gaggle of apparently interested viewers who have been told the vendor will sell for €600,000 when the reality is the vendor won't sell for less than €650,000."
One Week Is Enough To Wait
"Given that it's now worthwhile for a vendor and his or her estate agent to stretch out a deal in order to attract more buyers, you should realise that your waiting around for weeks for a decision actually costs you money by the day.
If you hang around for three weeks and then fail to buy the house you have been interested in, then you have not only lost the property you'd set your heart on but you have also made its equivalent more expensive for you to buy.
"With houses going up by sometimes a thousand euro a week at the moment, seven days is more than enough for a vendor to organise a solicitor and sort out contracts with you.
"You should make this clear from the beginning and if they're not organised by one week – move on and don't look back."