It’s been an interesting few months for property. After several years of galloping prices, last year saw the market hiccup and many house sales stall or drop their prices.
These price drops are greatest at the higher end of the market with the asking price for the luxury estate of Liss Ard in Co Cork, for example, falling from €7.5m to €5m last month. In Dublin 6, a property at Dartry Park that went to market in September 2018, reduced its asking price last month from €1,895,000 to €1,750,000 – a drop of 7.5pc.
“If you take the luxury end of the market in south county Dublin,” says Owen Reilly of estate agents Owen Reilly, “there are quite simply too many houses for sale at the moment, targeting a very small number of buyers, and that is why things have pulled back a little bit.”
The volume of transactions is up – at 44,449 – an increase of 10pc year-on-year to December 2018. Still, nationally, house prices are rising even if the rate of increase is no longer in double figures (according to CSO figures for December 2018, by 6.5pc over the previous 12 months).
So in a market where prices are unsteady, and where there is the ‘known unknown’ of Brexit, how can vendors ensure they get the highest price? We asked some experts for their advice.
1 IT’S ALL ABOUT THE DATA
“Everything starts with the price,” says Owen Reilly. “It doesn’t matter what you do if the price isn’t right.” Of course, in a market where prices are in flux, fixing on the right value is tricky. “This is where data comes in, says Reilly. “You can’t argue with data.”
Traditional wisdom is to check the Residential Property Price Register (PPR) to see what price other houses on your street or neighbourhood achieved. But, says Reilly, “the PPR still only tells you the selling price”.
Rowena Quinn of Hunters adds, “The PPR doesn’t give the exact square footage of the property, the extent, the orientation, so that can be a little bit distorted as well.”
Vendors often make pricing mistakes, she says. “One is to look at a neighbour’s house that is for sale but that is not a good barometer because that house is still for sale. It hasn’t transacted. You can’t judge its value based on that.”
When you’re comparing properties, do your own research, advises Reilly. “All the information is out there. You need to know the asking price [of similar properties], the selling price and then you need to know the statistics on the house, what side of the street, how big the garden, what condition, how big is the floor area. A really useful benchmark in any neighbourhood is the price per square foot.”
“What I always recommend,” says Quinn, “is to get two or three agents to inspect the property and quote. Say to them, ‘Don’t tell me, show me the evidence to back the price that you’re suggesting.'”
“From the vendor’s point of view,” adds Reilly, “any agent giving an opinion on value should have logic behind it. Some agents are so keen to get business that they will just roll with the punches, so to speak.”
Of course, at the luxury end of the market, there is a lack of comparable properties. “If you are selling a property that is truly unique and there are no comparables,” says Reilly, “then you’re reliant on the agent to come up with a price that someone will pay for a unique home.
“Everything needs to start with the value and then you need to look at the target market for your home and who is the agent suited to that market.
“You can argue with an opinion,” says Reilly, “and everyone has an opinion – but you can’t argue with transactional data. Do your research.”
2 THREE MONTHS AND NO SALE? REVIEW YOUR PRICE
In January, the Society of Chartered Surveyors Ireland (SCSI) published research that said ‘excessive and unrealistic expectations’ about price were the main reason that properties were failing to sell.
“Anything on the market longer than three months is over priced,” says Reilly.
Rowena Quinn of Hunters estate agent agrees that properties have been priced too high, “Last year was challenging and that was because pricing was pushed up. Agents and vendors alike have to take part of the responsibility for that,” she says.
She took a long hard look at their pricing strategy for 2019. “We decided we had to be very practical in our pricing, to be both realistic and optimistic, which would result in stronger viewing numbers and hopefully stronger interest – because the challenge we had last year was that we had single digit viewing numbers. If you don’t get them through the doors to see what’s on offer, they are not going to bid.”
It’s a strategy that has worked for Hunters, she says, citing two recent sales that sold for above asking price after less than three weeks on the market.
Quinn is keen to stress that she is not saying to fix prices unrealistically low. “You have to take the average of recent sales, not the highest sold in your area or development, and pitch your property at that price.
The main issue Reilly faces with vendors, he says, “is what the neighbours were selling for at the end of 2017. What vendors have to understand is that markets can move in different directions at different times because there are so many factors deciding the market. So this thing of what the neighbours sold for 18 months ago is a completely different market.”
This peak in pricing is probably what encouraged the vendor to come to market in the first place, he says, and they expect to get a similar value for their home. But prices have fallen, and similar does not mean identical.
“The fundamentals in the market are so strong and positive,” says Reilly, “that prices will stabilise.”
“The only reason any house is selling is the price. If your price is accurate, you’ll have no issues.”
3 MAKE LIKE MARIE KONDO
“The presentation of houses is important from a sales perspective – and in a market which has got a little tricky, it’s more important than ever,” says John O’Sullivan, chartered surveyor and selling agent with Lisney. Even so, he’s not in favour of big make-overs such as a new kitchen – tastes are so personal that the brand new kitchen fitted in the hopes of securing a better price might just hit the skip when the new owners arrive.
“The most important thing is to declutter,” says Quinn. “You’re not going to bring it with you so do it at the start of the campaign as opposed to after. Clean and clear spaces are much more attractive.”
4 AVOID THE CHAIN GANG
When market prices are stalling, it is not ideal for your potential purchaser to be just one link in a long chain.
“Then, it is not just about selling your house but about them selling their house as well,” says Michael Dowling of mortgage brokers Dowling Financial.
And in the current market, your prospective buyer may have to wait to achieve the sales price needed to buy your home. There is a lot to be said for an unencumbered offer from a cash buyer.
5 CASH BUYER? ASK TO SEE THE MONEY
In the housing market, cash is king. A cash buyer means no delays waiting for a bank to send out a valuer or to process a mortgage and, of course, freedom from a long chain of buyers and sellers.
It can even be worth accepting a lower offer for the security of cash, says Michael Dowling, “though it depends how much the vendor needs to secure if they are buying themselves.” Downsizers, who are typically paying less for their next property, can have an advantage here.
But don’t hold your breath. Figures published this week by the Banking Payment Federation of Ireland (BPFI) showed that cash sales were down to just under 28pc from 32pc year-on-year, for the last quarter of 2018, when REITs and funds were excluded.
As a result, warns Michael Dowling of Dowling Financial, make sure your buyer can provide evidence that they have cash readily available.
“More and more now estate agents are rightfully saying, ‘I do need to see evidence that you are a cash buyer.’ So they need to see cash in the bank account. Or when someone says they are loan approved, get a letter from the purchaser’s bank clearly saying that they are loan approved. It happens many a time that the purchaser says one thing and three or four weeks later, when you’ve had viewings and you’ve turned down other offers, that the person wasn’t actually a cash buyer.”
6 BOOST YOUR BER RATING
The attraction of a high BER rating is growing. “You can’t do anything about the location,” says economist Ronan Lyons, “but what you can do is improve the BER. This is especially relevant for people who are thinking of selling sometime this year.”
Lyons carried out research with the ESRI to estimate how much energy efficiency impacts on property values. BER ratings run on a 15-point scale (G to A1).
“For every one-point step,” says Lyons, “you get an extra 1pc increase in price roughly – if you go from a B3 to a B2 to a B1 each of those is an extra 1pc on your home.”
As Lyons points out, with the average home worth €250,000, improving your rating from an F to a B1 rating could increase its value by €25,000.In south Dublin, where prices are higher, you might see an increase of €60,000.
While a deep retrofit is pricey, there are grants available for up to 50pc of the outlay under the Sustainable Energy Authority of Ireland’s (SEAI) Better Energy Homes scheme (seai.ie).
But there are also many ‘shallow’ retrofit measures you can take to boost your BER which also qualify. For example, adding insulation, draught-proofing doors and windows, swapping in low-energy light bulbs, sealing open chimneys. The best advice is to check on seai.ie for the register of BER assessors who will calculate the best options for you.
“We know from the research,” says Lyons, “that buyers are looking for energy efficiency; they’re looking for lower energy bills.”
7 PREP THE PAPER WORK
There is an unholy amount of paperwork involved in selling a property. In a tricky market, says John O’Sullivan, delays in processing or finding paperwork can lose you the sale.
“When you go looking for the information, it delays the sale. When someone wants to buy and there are delays, they get fed up, they move on. Sales fall through and very often they fall through for reasons like that.”
He advises: “If you’re selling, go to your solicitor before you go to market and ask what do you need to do to make sure that you can send the contract out today.”
The paperwork may include an engineer’s certificate for any structural work, a Land Registry Compliance Map, or a Certificate of Compliance from an architect for any work done to the house.
Even where work was exempt from planning permission, says O’Sullivan, in the case of a small extension or attic conversion, “it’s still important that the vendor gets information as to when that was done. It would be good practice to have a Certificate of Opinion from an architect that it didn’t require planning permission. It gives comfort to the buyer.”
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