It’s the little things!

This is our office window.

Until yesterday, the 3 sections were the same.

Details of properties on our headed paper, together with a photo and price.

As the property market has fallen, some prices have reduced by a small amount, some substantially.

These price reductions were put on our front window, but did not seem to generate much interest.

Yesterday, I did the price reduced details in a different format.

Non-branded paper. Large red border. Headline “Substantially reduced”.

We put these in the centre section of the window last night.

It is 4.15pm as I write and already today 19 separate walk-in enquiries have come from the Substantially Reduced section!

Some of them are great value.

Yes that is €75,000 for a cottage!

Simplicity, clarity, singleness works as well in window display as in life.

www.pfq.ie

IAVI Auctioneers report 9.2% fall in house values for Q2 2009

15th July 2009 – A member survey by the Irish Auctioneers & Valuers Institute (IAVI) has confirmed that value of houses has dropped by an average of 9.2% nationwide in the second quarter of the year.
Conducted amongst IAVI members nationwide, this survey shows that the values of houses in Dublin declined by an average of 7.7%.
In Munster, values dropped sharply by an average of 10.7%. Meanwhile, in Leinster and Connaught/Donegal, values decreased on average 9.6% and 7.4% respectively. Second hand apartment prices fared somewhat worse than houses in urban areas during Q2 2009, with average decreases in value of 11.7% (one bed) and 12.5% (two bed) in Dublin and 12.2% nationally for both one and two bedroom apartments.
Since the start of 2009, the survey has shown that, nationally, house prices dropped by 16.9% in the first six months of the year, with the following regional results: Dublin houses are down by an average of 12.2%. In Munster, values are down 22.3% on average. In Leinster and Connaught/Donegal, values decreased on average 19.9% and 14.9% respectively.
According to Simon Ensor from the Residential Panel of the IAVI National Council, “These results are based on the experience of professional practitioners conducting property transactions; they are more reliable than advertising-based statistics or other surveys that are based on data from some months ago. In effect, the IAVI survey represents the view from the coalface of those engaged in selling property in the current market. “Depreciation has continued apace for the second quarter of the year. For the first half of 2009, new urban house prices are down by an average rate of 17.14%, second hand urban homes are down 18.4%, new rural homes are down 22% and second hand rural homes are down 20%.
“While these figures are very disappointing there is a view amongst IAVI member firms that, although prices have not hit the bottom yet, they are extremely close to doing so.“IAVI members, particularly those in urban areas, believe that activity levels have increased with competitive bidding on well-priced houses occurring once more. However, it’s fair to say most activity is at the more affordable end of the market. The lack of liquidity in the banking world appears to be restricting activity in the middle to upper end of the market.
To breathe life back in to this sector, it is crucial that banks increase their lending levels, whether this is enabled by the introduction of NAMA or other means,” he said.
Click on the image for full-size view.




Here is the Q1vs Q" result. Again, click on the image to view.







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Banks not open for business

House prices are at their lowest for 5-6 years, while interest rates are lower than seen since the foundation of the State!
Despite innumerable adverts, running almost all day, proclaiming that the “banks are open for business”, it is almost impossible to secure finance on anything.
Since the start of the year, it has not been possible for those wishing to trade-up to get finance.
Now, even first-time buyers cannot get approval.
Banks used to give 3-6 month approval letters to prospective home-buyers.
Where they can now get approval for a much-reduced amount, it runs for only one month.
This is totally impractical.
If you get approval at the start of the month and look at homes in that first week, it would be very unusual for you to reach agreement on the purchase of a property within two weeks.
It will take at least a further two weeks for the solicitors to look at and approve a contract before it will be presented to you for signing.
The month is up before you sign the contract.
You then have to go back to seek approval again.
This can take 2-4 weeks.
If it comes through for you!
In the meantime, the vendor has assumed that you cannot proceed.
Your friends have gone from congratulating you on your intending purchase to planting seeds of doubt in your mind about the house, its location, the price etc.
You end up thinking that this is all way too much hassle and you do not proceed.
Which is what the bank really wants.
While politically, they are supposed to be “open for business” they do not want to do business at all.
Homebuyers get this message.
They are human.
They do not want to suffer rejection.
So they drop out of the buying process.
Just as they are doing now.
Young purchasers are passing up on the chance to buy substantially reduced homes, at substantially reduced interest rates and instead, continue to pay rent to fund a landlords mortgage.
Because the banks are not open for business.

www.pfq.ie

How much is it worth?

How much is it worth?
I am asked this question nearly every time I visit a house, sometimes even by friends when on a social visit! Many factors affect the value of a home. Many other factors have no impact at all on the value. Some people find it hard to distinguish between these two sets of factors.

The most important things that impact on the value of a home are:

Location – The old adage “Location, location, location” always holds true. Houses with the same accommodation and design in one estate will have a different value in another estate. Even within the same estate, different locations will have slightly different valuations. Sub-factors such as orientation, a green area to the front, nearby parking or the condition of adjacent houses have an effect.

Condition - The condition of a home can have a large impact on the value. Buyers will sometimes offer thousands less for a few hundred euro in necessary repairs. People are afraid of having to hire builders to fix problems as they think the cost might be much more than it actually is, so it isn't unusual for them to offer €5-10,000 less when the home needs repairs that might cost €1,000. That said, it is unwise to embark on a large project if you are thinking of selling your home. You rarely get the value of it back. Minor renovations or redecorating to spruce up are ok though. They can pay back many times over.

Size – Most valuations will take note of the square footage of a home. However, not all space is equal. Most buyers want good living space in both the kitchen/diner and the sitting room. Bedrooms are a secondary consideration, as long as there is one larger one. Location aside, a poorly-designed house, with larger bedrooms and a constricted living area does not have the same value per square foot as a better-designed house.

Supply and demand – Sometimes global factors affect the demand curve more than anything else, but mostly, all property is local. At the moment in Clonmel, there is a demand for 3-bed homes in good locations...that are properly priced. For the first time in ages, we are now seeing multiple offers on homes that meet these criteria, with mortgage-approved bidders starting low, but bidding up towards the Guide Price due to competition. Last year there were too many homes on the market, but now the overhang is gone. So expect more competition for properly-priced homes.

Many people have differing views on what affects the value of a home, here are some things that don’t:

How much the last owner paid for it - People always say “But I paid €x for it a few years ago.” Sorry, this does not matter whether the market is going up (as it was up to 2006), or down (as it has since!).

Special Features – This can be very personal. Some people can get offended if the sauna, (which cost a lot of money, takes up the third bedroom and nearly crashes the local electricity grid), is not fully appreciated by a prospective buyer. Home gyms are another like-it or hate-it feature. If investing substantial money in creating a putting green in your back garden, remember that you do it mainly for yourself. Do not expect a buyer to pay you more for it. Some might, but the majority won’t.

The value of a neighbouring property as listed on an agents web site - Don’t believe what you read is the best maxim here. Lots of houses are currently vastly overpriced. Combined with the Internet and almost every agent having a listing site, this has lead to entire neighbourhoods being over-valued, as the new to the market owner decides to pitch his house at the same level as his neighbours, even though his neighbour’s house has not sold for the past 18 months. The best comparison is an actual sale. A lot of agents have sold very little in the last 12 months. Make sure that the information you are being given is backed up by results!

How much the current owners owe on their mortgage - This is obvious. It may stop them selling at the real value, but it does not affect the value.

Sellers can price a home at any level they want to but if it is priced too high buyers will ignore it. Lenders are being very conservative. Buyers can only borrow 85-92% of the purchase price. At current local price levels, a twenty-something first-time buyer is expected to have their own independent funds in excess of €20,000 to secure a mortgage! Sometimes the buyer can’t borrow enough money to buy the home. Sometimes they do not have enough savings.

How much is it worth?
At the end of the day, the market decides. Whatever the owner or their agents think, a home is worth as much someone will pay for it. Buyers drive prices, no-one else.

www.pfq.ie

Negotiation!

I am all for negotiation.
I am involved in it every day, working and non-working.
Without the possibility of negotiation, upwards or downwards, us agents would be out of a job.
We all negotiate in most aspects of our lives.
With our spouses.
With our children.
With nearly everyone we meet.
And in these times, almost every time we have to part with money.
At our recent First-time-buyer seminar, I stressed that the bidder should not be put off by the asking price.
I said they should research the market.
View homes similar to the one they liked.
compare prices.
They should make an offer they thought reasonable.
If it was rejected, ask for the logic behind the rejection.
If none is forthcoming, move on.
Make an offer on another property.
Repeat the process, it will work.
If you do it often enough, you will buy a home.
But principally, research the market.
No point in making an offer that is not at least nearly reasonable.
You need to get the seller thinking about your offer.
To do this it must be at least nearly reasonable.
The seller must think there is a chance of doing a deal, otherwise they will not engage.
No-one will make progress.
Nothing will be sold...or bought!

Yesterday, I showed a home to a couple, listed at €350,000.
It is a 4-bed detached.
They liked it and asked about making an offer.
I explained the process.
I suggested they research the market and make an offer.
I gave them details of similar properties.
They live in a 3-bed semi.
I suggested the value of their home was around €200,000, based on recent sales.
They said €200,000 would be the lower end of their expectations.
This morning, they rang me and made an offer...of €200,000!
I thought I had misheard and asked did they mean €300,000?
No, they meant €200,000.
They essentially want to swop a 3-bed semi for a 4-bed detached at no cost.
Clearly, this is going nowhere.
Negotiation is part of life.
But both sides need to feel that they have benefited.
Research, research, research.
www.pfq.ie

Why pay €10,000 a year in rent...that could be coming off your mortgage?

We had a great seminar last Thursday night at the Park Hotel, Clonmel.
About 50 people attended. I would estimate there were 10-12 parties interested in a purchase soon.
Claire McCarthy of Binchy Solicitors spoke on the legal process involved in the purchase of a home.
John Butler of Friends First spoke on Life Cover, Mortgage Protection, Critical Illness and Income Protection, one which is becoming more important in these uncertain times.
Frances O’Hanlon of FOH Mortgages spoke of the various types of mortgages that are available. She said that sadly, Tracker Mortgages were no longer available, but that for the moment she would have to recommend variable. With falling interest rates, this seems the most sensible current option.
I spoke about how it is now much cheaper to buy than to rent. A combination of falling interest rates and falling house prices have combined to make monthly repayments on house purchase cheaper than it has been for years. Most homes can now be bought with mortgage repayments (over 30 years) for approximately €200 per month less than the cost of renting the same house! You could sum up my presentation in one line:

Why pay €10,000 a year in rent...that could be coming off your mortgage?

A great Q&A session took place afterwards, with many questions of a legal nature for Claire. Eventually talk came round to the market and my forecast for it. Lots of buyers are fearful that if they buy now, prices will continue to fall and they will “lose money.”
I do not have a crystal ball, and if I did, would not know how to use it!
What I do know is that you buy your first home as just that, a home, not an investment.
Most people will pay a mortgage for 30 years of their life.
Why not start that process as soon as you are able?
Why pay €10,000 a year in rent...that could be coming off your mortgage?

Sure, house prices may fall...they may rise, who knows? But you need a home. You will be paying for it any way. Why not start now?
Why pay €10,000 a year in rent...that could be coming off your mortgage?

People who bought two years ago are facing a drop in value in their home, but they do not have less cash.
If prices fall, your “loss” will only crystallise if you sell.
If you sell your home, you will probably be selling to buy another one.
Logically, that will have reduced by the same amount in percentage terms.
So the sum will be the same.
What you “lose” in selling, you “gain back” in buying.
Why pay €10,000 a year in rent...that could be coming off your mortgage?

Prices are at 2002-2003 levels.
Interest rates are at unprecedented levels.
You can get insurance to protect your mortgage payments on an average house (in the event of unemployment) for €40 per month.
Why pay €10,000 a year in rent...that could be coming off your mortgage?

At the risk of sounding repetitive!
Why pay €10,000 a year in rent...that could be coming off your mortgage?
Think about it...today.
www.pfq.ie