Selling in the recession: it can be done

Getting the price right is the key to attracting buyers in a deflated market - even if it makes your neighbours mad, says Edel Morgan

IT'S A TOUGH market out there and for the most part, people who don't have to sell are staying put until things improve. For some, however, waiting around for the economy to perk up isn't an option - they're having to play the hand they've been dealt as best they can now.

Liza and Donal Brown belong to one of the more active groups in the market - young families trading up regardless because their need for space overrides the instinct to play it safe.

Their story isn't one of woe. In the space of 10 whirlwind weeks they became proud parents, sold a house, bought their dream one and moved into it, in a period Liza calls the "perfect storm".

"Everyone was telling us selling would be such a nightmare and that it's the third most stressful event of your life. But we had something else going on, the biggest life change ever. We were bringing our son Simon home from Russia so the house thing was somehow a sideline issue."

Ignoring all the advice, in January they decided to sell their semi in Castlerosse in Baldoyle, Dublin 13, and buy a bigger place with a garden for Simon whom they were bringing home in February.

They asked estate agent Conor Gallagher of Douglas Newman Good to value their house and says he didn't mince his words.

"He told us: 'Look, the market has dropped, there's a number of houses in the area that've been on the market for quite a while asking €570,000-€575,000 and you won't get that'." They put their house on at €525,000, 9 per cent below the competition, which Gallagher advised them would get viewers through the door.

"We were prepared to take a hit on the price and after 10 years in the house there was still substantial equity in it. The equity release enabled us to purchase the new house and not take on an overwhelming mortgage."

In February, the day before they went to Russia for the formal adoption hearing, they viewed their dream home, a refurbished art deco house on the Howth Road in Raheny near where Liza grew up, and the next day, put in an offer on it.

They also instructed Douglas Newman Good to put their own house up for sale.

While on a 15-hour train journey to Saratov, 800 miles from Moscow, for the hearing, they ended up in a bid situation and "having to hang out the window to try and get a signal".

Although their own house went on the market at €525,000, it had two interested parties and sold at €547,000, 4 per cent more than the asking price - just two weeks after they brought 10-month old Simon home.

They encountered "incredible opposition" in their area from locals who took their pricing tactic personally.

"Donal was approached by someone who told him he was bringing down the market and prices in the area."

They have "no regrets at all" about their approach. "It was a dream move, but you do have to look at market and be practical.

Before approaching anyone, we got mortgage approval, had a deposit ready-to-go, and knew our limits financially. It helped us in our determination to purchase that we had all the ducks lined up."

They paid €1.025 million for the Raheny house, a beautifully restored art deco house with a big garden for 18-month-old livewire Simon to run around.

"Six months previously it would have been €1.25 million and a year before that €1.4 million.

"OUR advice to people considering selling in this challenging market is seek, listen to and act on good advice and be realistic about the value of your house.

"If the market is down 20 per cent, the value of your house will be as well. Be practical and have your mortgage and legal requirements in place and remember you only need one buyer to make it happen."

More sage advice comes from estate agent Jackie Connolly who says if price isn't the motivating factor "a property won't sell". And we're not talking about taking a few thousand off. With many buyers convinced that house prices haven't stopped falling, vendors need to be brave, dangle that carrot and "price into the future" she says.

After they've priced into the future and cut the legs from under the competition "it very much depends on the buyer's situation and what they require".

She agrees that trader-uppers are more in evidence than other groups.

"They are selling for less than they would have a few years ago but also are buying for less so often don't have as much to lose as other buyers, particularly if they don't have to take on a large mortgage and still have equity left in their home."

Agent Louise Kenny of Lisney says that while houses priced up to a €1 million have a chance, as long as they are competitively priced, anything over a €1 million is struggling.

Houses are selling better than apartments: "People who were previously only able to afford an apartment are finding that a small house is now in their price range."

Another group who are buying in small but noticeable numbers are people "who have already sold their own house, have been renting for a while and now feel it's time to buy" says Kenny. "Often those who are now in a position to purchase aren't lumbered with a big mortgage."

Brian Dempsey of Douglas Newman Good says some agents have been finding it difficult to value appropriately in a changing market.

"It's a learned perception so maybe for a while agents were a bit aggressive on price, but now more are singing off the same hymn sheet."

He says to sell it's essential the vendor bites the bullet on price. "If there are five similar houses for sale in an estate and you get one €20,000-€30,000 cheaper, then that one will probably get an offer."

If there is any action in the market, he agrees the middle sector is where it is. The typical profile of this group is late thirties to early forties looking for property in the €400,000-€800,000 price range. Most will have an existing property more than four years old, which will still have some equity in it."

Dempsey believes if there's competition on an estate among houses priced similarly, the well presented one will go first.

"There was a time when carpenters, electricians and other tradespeople would buy a place and their mates would help them do it up cheap but these people are hanging back and won't buy unless it's really good value."

Sold - but lost his life savings

Not everyone under pressure to sell up is managing to do as successfully as the Browns, however. A 57-year-old man, who declined to be named, told Property that although his house is finally sale agreed, he has lost his entire savings in what became a protracted process.

Three years ago he bought what seemed to be a great little prospect, a terraced house in Harold's Cross, with a view to doing it up and selling it.

It cost him €537,500 including legal fees and stamp duty and he subsequently spent €250,000 refurbishing and extending it. A number of estate agents promised him the earth with one predicting it would fetch over €1 million.

It finally went on the market in March last year at €899,000 but after six months had its first price drop to €799,000. It later went down to €750,000 then €699,000 and €600,000 before finally becoming sale agreed recently at €565,000.

He had to sell because his deal with the bank wouldn't allow him to rent and stipulated he repaid them within a certain period. He feels lucky not to have lost his own house because he used his AIB shares as collateral.

"I lost all my savings but there is nothing I can do about that. My plan was to buy one or two houses every year and pay capital gains tax to keep the Government happy but it turned out to be a disaster."

With a surprisingly stoic attitude to his financial loss, he is more worried about his ailing cat who he believes doesn't have long to live.

He's had to sign on for social welfare, but says while he's had his troubles, he really feels sorry for some of the big developers who "are in awful trouble with the banks".