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Sealing the deal: how to buy a house at the right price

Do thorough research, be upfront about your finances and know when to play it cool

Start low. Offer the asking. Sit tight. With so much conflicting advice on offer, it’s a wonder any house gets sold. Finding a home and making the biggest financial commitment of your life brings big emotions. Knowing the market – and your own mind – is the art of the deal.

Do your research

Viewing houses and making bids without research is wasted effort, says Brian Dempsey of DNG Stillorgan. The property price register provides real-time prices, and a Google trawl will yield sales brochures galore. There's no excuse.

“If you do your research, you’ll know if a house asking €650,000 is worth it,” says Dempsey. “If it’s worth €650,000 and you can afford to pay it, and you are willing to pay it, then pay it.”

A bid based on solid data can help keep emotions in check. “If you do your research and you bid €500,000 for a house asking €575,000 – if you are right, they will eventually come to you,” says Dempsey. “If you are wrong, they will come to you and tell you that you are wrong because they will have another bid.”

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Be a good buyer

It’s no fluke that estate agents are often chatty types. Single or married? Thinking of kids? Job? Finances? Hardly across the threshold of a viewing and they’ll have you sussed. But playing it cool isn’t always the best tack either.

On a hot property with lots of interest, being open and overtly keen can win the day. In a recent Dublin 8 bidding war for a €400,000 to €450,000 house, a keen buyer who laid her cards on the table beat another who had €5,000 more to spend, says estate agent Owen Reilly.

“She had visited the house four times. She said she was in love with it. She had offered the asking price early in the process, she had done a full structural survey and she was a cash buyer and completely transparent with us on everything,” says Reilly. The other bidder had visited less, hadn’t yet done a survey, and their finances comprised a mortgage and a loan. “Their bid was €5,000 higher, but we went for the lower bid.” She was simply keener to get a deal done.

DNG’s Brian Dempsey agrees the top bidder doesn’t always clinch the deal. “The viewer might say, ‘We live in London, but we’re moving back to Stillorgan because we’ve just had a child and our parents live around the corner.’ The chances of them bringing it all the way are better. You want someone who shows that they really want that house.”

For Nigel Bennett of Bennett's Auctioneers in Sandymount, a good buyer is a renter with proof of loan approval. "If they have a house to sell, that's normally the end of the conversation," he says. "We had someone who was 'sale agreed' on their house, but contracts weren't signed. We couldn't really accept their offer. We sold it to someone else who was renting because they were ready to go."

And cash buyers aren’t always the holy grail. While they can sign faster, their clout can make them more blasé than those who have been through the mill of mortgage approval and for whom the clock is ticking.

Mind the gap

Think you’ve got your finances sorted? Think again. Approval in principle and mortgage approved are not the same. Beware of house hunting and bidding beyond your means.

"People are coming in with approval in principal and are saying that they have 'x' amount of money. Then they go for full loan approval and they are only getting a portion of it," says Susan Turley at Turley Property Advisors.

For some borrowers, their approval in principle may have expired, they’ve done something to spook the bank, or they’ve simply failed to factor-in stamp duty or legal fees. Of course for others, it’s just plain denial about their budget and they need to wise up.

“In my experience, 90 per cent of people are approved for amounts below what they are bidding,” says estate agent Owen Reilly. “When it goes to contract, they are coming back to renegotiate. You’d be amazed at how many people make bids with us and when we go through the process, it turns out they don’t have the mortgage approval in writing yet or the cash hasn’t come through because they are still waiting on a will to be sorted out.”

Ask the right question

While a shrewd estate agent will size you up pretty quick, there’s nothing to stop you doing the same.

“Definitely ask how long the house has been on the market, how many people have bid, when was the first bid – how long that bid has been sitting there – and if that bid has been there three months, is it still active or has that purchaser gone off and found something else,” says Susan Turley.

“If something is on the market for €500,000 and they only have one bid of €420,000, that would tell you it has been overvalued.”

Brian Dempsey agrees that it’s not about how many bids, but how old they are and whether they are still live. He advises prying about the bid type too. A bid subject to the sale of the bidder’s own home must be taken with a pinch of salt. Bidders for properties for sale with Owen Reilly use the firm’s online bidding platform where the date and the value of bids is visible to all contenders in real time.

Who is selling is pertinent too. If it’s an executor sale, ask if it has gone through probate. If it’s a private sale, ask if contracts are ready. If the seller is a receiver, particulary a US one, the onerous paperwork can mean delays. A long, slow administrative process might suit a first-time buyer living with Mammy, but if you are a family gone “sale agreed” on your bursting-at-the-seams three-bed, you will need that five bed fast.

Pricing strategy

Knowing how prices are set can inform your strategy too. Pricing something low can be an estate agent’s way of getting footfall through the door. Where there are already three, three-bed semis for sale at €700,000, marketing a four-bed detached home on the same road for just €20,000 more is one such ploy.

“It will end up probably at the €800,000 mark, but there is no point in me putting it there when everything else is on for €100,000 cheaper,” says Turley of a recent south Dublin pitch. “I’m expecting 60 or 70 people at my first viewing because of how I’ve priced it. You are not going to sell a house if nobody comes to look at it.” However, if price looks enticing, others will have spotted that too. Expect a packed viewing and competition.

Bidding above the asking

If you’re seriously keen, is bidding above the asking a sure-fire way to nab the home of your dreams?

“Honestly, I think it’s daft,” says Turley. “If you have fallen in love with it, so has someone else and you are making life difficult for yourself.”

The heat generated by a bidding war can soon evaporate, leaving bidder and seller burned. “People can get excited and giddy and then they go away and think about it and they change their mind,” she says.

Bidding over the asking isn’t a scenario that happens often, says Owen Reilly. But if you do make a good offer, the trick is to move fast. Describing a recent property priced at €895,000, on the market for four months with no offers, a cash offer of €850,000 was made. “We said [to the seller]: you have 48 hours to accept. It’s not a negotiation, it’s an offer and it’s ‘yes’ or ‘no’.” The seller accepted. “Don’t leave a good offer open-ended,” he says. “You have to attach some conditions to it.”

Low-balling

While no one wants to be the mug who paid too much, if you think going low is smart, don’t bank on it. “If you are looking at a place for €300,000 and you think it’s worth €300,000 don’t offer €250,00 for the sake of it,” says Owen Reilly. “That can antagonise the vendor. Make a reasonable bid, maybe €280,000.”

While those may be the rules up to the €400,000 mark, successive surveys show a softening at the upper end. “At the upper end of the market in particular, vendors have to be open to all bids,” he says.

Do nothing

When your heart is a flutter, it’s difficult to sit tight, but one buying tactic is to do nothing. “If you love it and you think it’s fabulous, and it’s your forever home, find out what the timeline is and then sit on your hands,” says Turley.

She advises keeping in touch with the estate agent, phoning Monday and Friday and asking to be kept informed. “Check-in and ask if there have been any viewings, is there a viewing this weekend, have there been any further offers.” All before putting in an offer of your own.

“It’s like a game of chess: watch all the other pieces, see what everyone else is doing and then make your decision.”

Ignorance is bliss

Where there are multiple bidders, a “best bids” process can force contenders to do some soul searching, and some wallet searching. Nigel Bennett of Bennetts Auctioneers recalls a doer-upper on a prime southside road priced at €675,000. With bidding at €735,000 and seven bidders in contention, it went to best bids. “Forty-eight hours later, we got seven envelopes – the lowest bid was €740,000 and the highest was €805,000, the next highest was €785,000.” Did the successful bidder pay too much? They may enjoy their purchase more by never knowing.

A good time to buy?

With supply now catching up with demand, the days of swarms of panicked bidders pushing up prices on a small pool of properties appear to be on the wane.

How do you know if you got your house for the right price? If you’re not happy with the property, the price may never seem right, even if it was a bargain. Pay a little over for a home you love, though, and it’s unlikely to cost you another thought.