Property - Asking Prices

[EMM]

THe bank Mortgageable values are a good rule of thumb guide.

Take a typical 200m2 villa the bank will lend up to E240,000 euros, or 70% ( max ) , which gives a rough value of

E320,000 euros before you factor in such things as location, facilities etc.

[widge]

THe bank Mortgageable values are a good rule of thumb guide.

Take a typical 200m2 villa the bank will lend up to E240,000 euros, or 70% ( max ) , which gives a rough value of

E320,000 euros before you factor in such things as location, facilities etc.

A meaningless statistic I fear.

Would I pay €2million for a 200m2 villa overlooking the 13th tee at San Lorenzo .........YES

Would I pay €200k for a 200m2 villa overlooking the autodromo F1 track................NO

"Take a typical villa" is like the average house price in the UK............nobody owns one!

[Farol]

If you are trying to sell in order to then buy another property you have to follow typical market values because you can't be sure that if you take a big drop in price to get a sale that you will then be able to negotiate a corresponding drop in price of the property you are buying. This applies in both the UK & Portugal.

If you are at the bottom of a chain with available funds then you are in a strong bargaining position.

If you are at the top of a chain and taking your money out of the property market then you are in a position where you could take a significant drop in order to speed up the process but equally may have no pressure to sell so could keep the price high on the basis that you don't need to sell other than for "the right price".

Yes it's true that the housing market is like any other and it's down to supply and demand but it is a market that responds very slowly to market conditions. In good times many people choose to move for a variety of reasons. In bad times the market slows down and is centred on just those people that need to move rather than choose to move.

[cereza]

The value of anything is only the price that a buyer will pay for it. In the UK there is a constant market which varies hugely from area to area and asking prices have to be realistic to attract buyers. In the Algarve there is no market for villas at the moment because there are no buyers at all and therefore asking prices have very little meaning. If I had a villa for sale I would price it lower than anything else comparable so that any possible buyer would look at my place first and if others reduce their villa below my price I would react accordingly and reduce again. However, since there are no buyers at all what is the point in reducing my price by say 20% or more ? - I'm sure there would still be no buyers! By keeping a higher asking price I will be in a position to reduce heavily if a buyer did pop his head up because you can be certain that the buyer would expect a heavy reduction.
It's a question of strategy and I don't see any point in heavily reducing asking prices when there are no buyers at all unless there is a desperate situation which obviously there isn't in the Algarve at the moment - this may change in time though

[shanagarry]

since there are no buyers at all

Don't agree with that - I know of 5 sales that have been completed in the last 2 months - (1 British - 1 German - 3 Russian) the average asking price of the Russian transactions was €1.1M - don't know the end result.

I accept that 5 sales in the overall scheme of things is not good - but there is movement - albeit slight

[cereza]

Fair enough although I am talking about mid and lower ranges. Were those sales in CVO?

[EMM]

We were involved in the sale of an apartment last month which went for 13K euros below the asking price.

Yes activity is low ( but higher than last year ). Nothing compared to 2007/8 when they were selling an average of 1 property/week.

[shanagarry]

Were those sales in CVO?

Yes - 1 in Golfemar - 1 in Carvoeiro Clube - 1 in Pestana - 1 in Caramujeira - 1 in Pressa da Moura (Vale de Pinta) my reliable informant tells me and in the 12 years I have known him he has never mislead me

[Matryx]

MC I guess? A super chap, who we bought our house from a couple of years ago. The value of our property has no doubt dropped (don't suppose all of the bad press about house break-ins at ADM will help!), but it was primarily a lifestyle purchase for us rather than an investment. However, it's a little worrying to think what it might fetch in todays market if in fact we were forced into selling?

I don't think there is a market price in CVO, it just comes down to how needy the seller is to dispose of the property, but the massive dispartiy between asking prices and selling prices doesn't half cause confusion. Same goes in the UK, as I have recently sold may late fathers house for 30% below the original asking price. Was I being greedy with the original asking price, or was the agent trying to secure the best possible commission for himself, or is the market really in free fall who knows?

[shanagarry]

I don't think there is a market price in CVO

That remark applies everywhere - a piece of real estate is only worth what the buyer is willing to pay - not what the agent suggests it's worth.

is the market really in free fall

If the media is to be believed - there are some areas in the UK where prices are not in 'free-fall' (central London being one). I don't believe there is anywhere here in Portugal where that applies - especially along The Algarve coast. If the current mortgage famine trend continues its downward spiral - it's only a matter of time before the market is non existent - for the average 'man-in-the-street'. All the time there is little or no funding available - there is no market and certainly no such thing as a market price.

If there is a need to sell your 'nest-egg' to raise capital or reduce your outgoings and assuming you are not in negative equity - breaking even is about the only luxury available - if your property is in the affordable price range and your buyer is not dependent on a large mortgage.

I remember when all this doomsday gloom started its rounds - the suggestion was that the situation would right itself within months -that was in 2007 when Northern Rock hit the 'rocks' - here we are about to start 2011 and there is no end in sight.

Happy New Year one and all

[Matryx]

I'll go and get the rope out of the garage.

[shanagarry]

I'll go and get the rope out of the garage.

Don't bother - it's not long enough for all of us

[MrsB]

I’m not convinced the buyers aren’t out there. Trouble is, the Portuguese way of selling houses is lagging so far behind what we are now used to in Britain that prospective cash buyers like ourselves are put off from taking the plunge.

I’ve been following the prices in Carvoeiro for a couple of years now and Shanagarry has only confirmed what’s concerning me - the asking prices are not reflecting the state of the market so buyers living overseas have great difficulty in establishing what is a fair price.

In the UK, all sales from 2000 onwards are registered and the price details are available free on line. This means buyers (and sellers!) can have confidence in the price paid.

Add in the completely out of date attitude of many of your local agents – tell me your requirements and what you want to pay and I’ll (nudge nudge wink wink) see what I’ve got on my books. Where is the villa/apartment? Oh, can’t tell you that - you have to make an appointment first and then I’ll give you a personal tour.

Are they having a laugh? Overseas buyers are there for a limited period and most of us want to do much of the groundwork before we go. I want to know the location so I can look on Googlemap and see if it’s close enough to the shops for me not to use a car. Agents/sellers need to realise that this is really difficult to do when you’re over there as most visitors don’t have the easy internet access they’re used to at home.

I want pictures, internal and external, that are a decent size and quality. Lets face it, a 2cm x 2cm low res image isn’t going to persuade me to look favourably at your property, especially as so many Algarve properties are so similar – white!

I want to be able to sort the listings into some sort of order so that I’m not having to scroll through a huge jumbled up list.

The technology is out there. The agents need to help the buyers by embracing it and sellers need to insist that they do.

[sunman]

a big problem for the agents Mrs B is that they have had little or no turnover for some while now so they're desperate for business and equally desperate that if you do buy that you buy through them; there have been some private sales and some sellers advertise through multiple brokers, tough times indeed for the agents. Which is good news or bad news depending on which side of the fence you sit.

I don't think the process needs to be as difficult as you make it sound; there are hundreds of apartments, townhouses, villas both small and large for sale most of which you can see online; I'm not an agent so I don't want to promote anyone in particular but if you look at someone like Palm or Winkworth then you'll see all their properties are in price order and have have multiple picture galleries.

They will also tell you the general area the property is in, close to town centre; between CVO & Benagil etc etc so you have a good idea where things are.

Now, IF the big issue is price then I agree, much of what is for sale is at unrealistic asking prices, ie. pre credit crunch levels. There are bargains around, there are are regular stories of properties being sold for 'half price' by people desperate for cash flow.
Your post doesn't actually say what you are looking for; if you want a massive property for a fraction of it's asking price then identify 10 on sale & make the same offer on all of them, I heard of a big villa in 18,000sqm that was for sale recently at €1.8m that the owner would or did accept €1m for as he needed the money.

I suggest you think of what you want, apartment/ villa, private/ shared pool etc etc, identify some targets on the agents sites, have a look round & make some bids, there's a good chance you'll get somewhere.

There are indeed buyers out there, but there are a lot more sellers & the banks aren't lending so a bargain is only a bargain if it's something you really want for a price that is good value for you.

[shanagarry]

Both Mrs B and Sunman - you have both made some very good points but Mrs B's point regarding property particulars being sent to her prior to leaving the UK would be a lot more helpful than making random 'offers' in the hope you strike lucky - only to find when you get here the location is not what you want.

Certainly UK agents have had to sharpen their act in the face of formidable competition and now do tend to offer all that Mrs B suggested. Unfortunately the agents here are stuck in a time warp and have failed (in my opinion) to address the primary rule in selling - determine the client's need and their ability to pay. I have noticed in some agent's advertising their addition of an affiliation with a particular bank with comments like 'Mortgages Available'. What they fail to grasp is that mortgages are available but only if you satisfy the lender's rigorous underwriting criteria - not many do. I believe a lot of 'heartache' could be avoided if an agent took the time to carry out a financial fact find once a prospective buyer shows genuine interest in a property. The secondary rule in selling - helping the prospect to buy - then comes into play.

The fees agents charge here (average 5%) is enough for most of them to get by on by selling a couple of properties each year and as a result they don't try too hard to provide a complete house buying service. Their advertising costs are not that great (a website) and perhaps a little PR in the newspapers and the occasional ad - for which they expect you to hand over 5% of the sale proceeds. Nice - if you can get away with it.

They (agents) need to get smart and realise that the internet will increasingly encroach on their comfortable existence and the 5%'s will rapidly diminish to UK levels and they will have work a lot harder to get that.

Over the Christmas period we have had friends and family here - who window shop when we walk through the village. The comments they made when they looked in the windows of the two agents mentioned - were priceless. One friend in particular has been watching the market here for 3 years and has a list of 8 properties he has followed throughout - the prices have not altered in the 3 years. He knows where they are and drives round to see them - he told me on Sunday that 3 of the properties are using dated photographs and that most are in need of an external coat of paint - one has a pool that is partially full and has a film of slime across its surface. Wouldn't a proactive agent take the time to visit all the properties on their books to make sure they are promoting properties that are 'up together' and immediately saleable?

All the time agents are preoccupied with filling their windows with badly taken photographs and unrealistic values - the market will continue to stagnate. They need to alter their stance and become 'investment managers' helping people to acquire the investment of their choice and then guiding them in the best way to maximise their returns. This approach would also take the 'cowboy' property management organisations out of the game. I'm fairly sure that any investor would willingly pay for that kind of service - based on the performance of the 'manager'.