Buying&Selling:It took a long time for some house sellers to realise that the market has changed, and now they're counting the cost, writes Bernice Harrison
HOUSEHUNTER "Dieter1" is the sort of buyer who makes cold sweat run down the backs of sellers and gives estate agents migraines. As he revealed last month on the personal finance website askaboutmoney.com, he had just gone "sale agreed" for €100,000 less than the asking price - a massive 24.7 per cent markdown.
Talking to The Irish Times - and wanting to keep his anonymity - he turns out to be typical of a large group of buyers who have spent the year biding their time, surfing the net to familiarise themselves with price drops, and honing their negotiation skills through bidding for several houses.
"You become battle hardened," said the 30-year-old. He sold his apartment in September 2006 to trade up to a period house, ideally in Dublin 8. A salesman by profession, he went in hard on a house in Kilmainham last January, offering €600,000 - €50,000 less than the asking price. It took until March for the vendors to decline his offer, with the agent suggesting that €625,000 would secure it. He withdrew his offer and the house, a full year after going on the market, is still for sale.
The period redbrick he has just gone "sale agreed" on was, he knew from the start, a different proposition. The owners had already bought and nine months after putting their house up for sale were, he felt, in no position to decline his offer of €100,000 less than the original asking price. Since making that offer in July he has been calling the estate agent constantly, pointing out that not only was his price a good one but that, as we were now living in a very different world, the sellers wouldn't do any better.
It took them until November but they eventually cracked and accepted what must be for them a painful reduction.
It's not just in the second-hand market that buyers are flexing their muscles. One agent tells of a deal currently going through on a new house in a small development in west Dublin. The price tag for the four-bed family semis are €495,000 and business, to say the least, has been slack. But a buyer has emerged for one of the houses - he offered €485,000, conditional on an impressively long list that was more shopping than snag. It included full landscaping front and back, all the major appliances, hardwood floors throughout, extra and upgraded tiling and even curtains. The builder, quite understandably, said a quick yes. Interestingly, the estate agent wasn't particularly surprised by the list - he was more amazed at the price as he had expected the buyer to offer €460,000. An offer of around 7 to 10 per cent less than the asking price being, in his area, now the norm.
For agents it means dusting off their negotiating skills. Pat Mullery, based in the Terenure branch of Douglas Newman Good, has seen his share of wildly low bids from buyers on second-hand properties this year. "In one case, someone offered €1.5 million on a house that was on for €2.2 million," he says. "There could be no negotiation in a situation like that because the gap is simply too wide." Buyers, he says, typically have been offering between 5 and 10 per cent less than the asking price, and with a gap like that there are grounds to talk.
Negotiations have been as much with the seller as the buyer. "If someone's house was priced in late 2006, then the first six months of the year have been difficult to accept," says Mullery. They saw their neighbour's house selling last year for, say, €2 million, and they in turn expected to sell for more than that but now are being offered €1.8 million. "It's taken many sellers the best part of this year to realise that the market has changed," he says.
Buyers on the other hand started off the year knowing full well that they are in the more powerful position - but it's not all buyers. Only those whose finances are in place and who crucially don't have to sell a property in order to buy are the ones who can drive the negotiations.
"We have seen some good sales in the past three to four weeks," says Charles Broadhead from Lisney's Dún Laoghaire branch. "The sales have been from people who are realising that the offer they threw back earlier this year might now be the best they'll get." He predicts some sellers at the upper end of the market who have endured a year of little or no interest will withdraw their house from sale and rethink their plans.
Experienced agents have seen this before and don't have to go back to the 1980s for examples. "It hasn't all been easy for the past few years," says Broadhead. "After 9/11 in 2001 we didn't' sell a single property in the entire autumn." Eoin O'Neill at Sherry FitzGerald New Homes talks of a "stalemate" in the market. For every potential buyer that comes in with a below-the-asking-price offer there are hundreds of others, particularly first-time buyers, who are too nervous to make any sort of offer.
That's on one side, says O'Neill, on the other you have vendors who after a year of holding out are just beginning to soften on prices. "We are in the business of selling," he says, squaring up to the newly-empowered buyers. "We want people to make us an offer and we will look at every offer that comes in. If there are cash buyers out there, they should be making proposals to builders. If you don't ask, you won't get."
