First Time Buyers – What you need to know

first time buyersIf you are considering your first home then you should do a lot of research because today’s market is a tricky one, there is value to be found in 2008 if you look for it and know how to negotiate, however, for the naive it can also be fast method to part ways with your hard earned money.

Some developers are currently knocking up to €100,000 off the price of properties they are selling, this has gotten a lot of media attention, however it also begs the question ‘why?’, are we to believe that they suddenly want to help out first time buyers? Or are they trying to shift stock that they think won’t sell otherwise? The real question is whether properties were vastly over-priced and the prices reflected pure greed or is the developer being forced to sell due to financial reasons or what the underlying cause for something so drastic is.

If somebody offered me an iPod for €50 I’m not sure I’d be interested, I guess I’m a natural born skeptic. I’m not implying that houses with massive discounts are in any way faulty or that there is anything untoward in them, it’s just that taking €100k off the price would make me suspicious. I’m also certain that people who may have bought in earlier phases in the same developments who paid more for there homes are outraged.

Negative Equity can be a genuine risk if you buy without doing your homework, so what does that homework involve? For a start get out and beat the roads, by that I mean quite literally walk around the area you are considering, at different times too. I made the mistake of not doing that only to realise that at night the corner near me is the meeting point for about 50 kids, good kids but nonetheless they are noisy and footballs get smacked off the car etc., that all changed over time but I wish I had known about them when I was buying !

When you find an area you like see what houses are for sale in that area and compare prices, see which ones are getting offers, just because a house gets an offer near its asking price doesn’t mean that it’s ‘worth’ that amount, it just means somebody out there is willing to pay that amount for it. So if you were to look at an area like Dublin ‘X’ for instance, you would pick out the neighbourhoods there that you like and then keep an eye out for houses that come up for sale and also for the ones that are already up for sale. Then go for viewings.

Viewing a house can be hard, its like test driving a car, especially when you find ‘the one’ because what happens is your emotions skew your judgement the same way as they do when you smell the fresh ‘new car’ smell and feel the smooth new wheels on the road, or when you see an item of clothing that is just right but way out of budget! Keep your sensible head on when going for viewings. Look out for damage of any kind, if you find that there is damage you can decide to keep away or make an even lower offer than the lower offer you were going to make.

Yes, I said ‘lower offer’, when you see the term ‘asking price’ its exactly that, it’s what the seller is ‘asking’ for, but at the moment there are more sellers than buyers so you can offer less, indeed I bought my own home for well below the asking price and it was during a time when the property market was booming.

Things that give a home value are often easy to spot, good sized back yards, large rooms, good windows, quality flooring and fixtures etc. any modifications or re-modelling, modernization or extensions are also (normally) advantageous. Another important angle is houses v.s. apartments. Most of the new property on the market, and certainly in the new build arena, is apartments, there are not many new ‘housing’ estates being built, certainly not like the ones they used to build. As most buyers will want to graduate up to a house from an apartment then perhaps a house is the place to start looking, but only if you can get it at a real steal.

first time buyers, look for dealsMy personal theory is that someday the 3 bed semi will demand a high premium because they will no longer be the dominant property type, as well as that, you can do more to affect the value of a house such as extensions, patios, etc. and attic conversions, with an apartment you don’t have that choice and then there are the permanent management fees which you don’t have with a house. However, apartments do have many advantages, if you want a decent location in the city a house may be (even in this market) beyond your reach financially – unless you are one of the lucky ones who have a money tree – and in that respect apartments are very accessible, you don’t have a garden to take care of and management fees cover everything to do with the area being kept presentable, you don’t have to paint the outside of the building or do any of the major maintenance.

Take your time, in the current market the selling times are getting longer so you don’t have to pounce and make offers straight away, nor do you have to get dragged into a bidding war, in fact, if I was back on the market and there was a counter offer I’d simply tell the estate agent ‘let them have it’, in the current environment the negotiating power is with the buyer, it’s a welcome change for buyers because for so long the cards were stacked against them, it’s not so great for sellers because now shifting a property is not a sure thing, nor is getting your asking price. One rule of thumb for the present market: if you get a call from any agent saying something like ‘if you don’t offer X amount you’ll lose the property’ – this was endemic in the last six years – your standard response should be ‘o.k. I guess I have lost it, give me a call if that sale falls through’.

I’m not trying to make out that Estate Agents are not upright business people, they represent their client and are obliged to do as good a job for them as possible, however, they are also masters of persuasion and most of them can read you the second you walk in the door. Their job is to get a good sale price and most of them are good at their job, just don’t be ruled by your heart too much because in the current market savvy negotiation can be the difference between tens of thousands in the purchase price and therefore (potentially) hundreds of thousands in mortgage repayments.

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