The deadline is looming for home-buyers to avail of the current tax relief on mortgage interest scheme, or TRS. Buyers who wish to avail of the relief must complete contracts and draw down their mortgage funds prior to the end of the year. While we have been using the 31st December 2012 as the deadline, the reality is that with the Christmas holidays effecting working days, both for solicitors and for the banks, the deadline in real terms is likely to be the 19th or 20th December.
This is causing a last minute rush among homebuyers, and particularly first-time buyers, in Dublin who are throwing themselves into the offer and bidding process with gusto. This is not a good thing for all buyers; competitive bidding can cause buyers to pay more than they stand to gain by closing on a house this side of Christmas. To avoid rushing unnecessarily, or to limit bidding, each buyer must work out the financial value of the relief, based upon their personal circumstances and those of the property. If the relief is €18,000, it does not make financial sense to bid €10,000 more than the asking price or the value assigned by the buyer to any particular property, just to secure a house at the right time. It may be more cost efficient to wait for the majority of first-time buyers to leave the market, which is probably happening this week, and then wait for the December/January lull to find the right home at and bid at a value and pace that is comfortable to them. At this later stage, there are likely to be less bidders and therefore, less chance of overpaying for the property.
For those who do want to proceed now, they can still bid smartly. The offer process is one of the most daunting aspects of buying a property for many but it does not need to be. The important point for buyers to remember is that price is just one factor that will be considered by the seller. It is usually the most important factor but the overall proposal may not necessarily hinge on money once the buyer is within the right price range.
While every transaction will vary, best practice guidelines are as follows:
1. Start low The advice to start low is not given because it is a good strategy but because the seller and their estate agent expect it. Do note that buyers will not do themselves any favours by putting in an offer substantially below the asking price, without reason.
2. Always in writing Buyers should put forward the offer to the estate agent in writing, setting out the amount of the offer together with the terms upon by which the offer is made i.e. time restricted. This protects the buyer and eliminates any misunderstandings.
3. Subject to structural survey It is always recommend that buyers engage the services of a qualified building engineer or structural survey to examine the property for any structural defects.
4. Time limit The offer should be valid for a period of 48 to 72 hours, this stops the seller using the offer as leverage to pressure other buyers. An offer that is not accepted during that time frame is deemed to be rejected.
5. Sell yourself As mentioned, the price is just one factor for sellers to consider; access to finance, chain free, ready to go, quick decision making and the buyers ability to close the deal will all help the seller assess if the offer is coming from a genuine buyer.
6. One at a time It is an acceptable practice to put an offer on more than one property at the same time, however, by only putting an offer on one property at a time, the sellers knows that if he accepts, the buyer will complete.
7. Don’t make threats The buyers is advised not to make threats unless they are willing to follow through, for example, the buyers should not refer to an offer as the final offer if it is not as they will lose all credibility with the estate agent.
*If you have any queries relating to the bidding process, please contact Buyers Broker directly on Tel: +353 (0) 1 4428 035*