This week questions on buying abroad and guide and reserve prices?
Buying away from home
It seems that every week another part of the world is "sold" to Irish investors as a place to invest, the latest seems to be Dubai - but what are the practicalities of buying somewhere so far away and foreign?
Not entirely sure what you mean by "practicalities" but this column has received several enquiries about Dubai in recent weeks and all have roughly the same queries.
Dubai has appeared on the property investment radar for several reasons. It's in the middle of a building boom making whole areas of the emirate a great big, building site. It's become a holiday destination because of its year-round sun (though July and particularly August, can be too hot) and it is a safe, prosperous and attractive part of the Middle East.
Prices are appealing when compared with the home market. You can get into the apartment market for anywhere from €100,000 upwards and any building plans that this column has seen are smart and contemporary.
Residential properties are freehold and buyers automatically get a visa that allows them to run a business from the emirate. Buyers will be expected to have a deposit of 30 per cent of the purchase price and there are no local taxes to be paid although you should allow for around 5 per cent for fees.
If you buy off the plans (the most likely option given the building boom) make sure you pin down the price before you commit to the property and try to get an accurate idea of the completion dates - the fast rate of construction mean that it's not unusual for buildings to be completed ahead of time. Other costs investors should consider include a 20 per cent management fee and also allow for void periods.
Guide and the reserve
As a newcomer to the business of buying a house I am confused by what the following terms mean when a house is sold at auction: the guide and the reserve - and why is there such a huge difference between the two?
The "guide" is a fairly artificial term in that it should only be viewed as a starting point. Agents have rightly been getting a lot of flak lately because of the often vast disparity between what a house "guides" for and what it eventually sells for.
It is common practice for agents to guide around 15 per cent less than the expected price - a peculiar and frustrating way of doing business - so factor that in to what you are told is the guide.
The reserve is the price at which the house owner is willing to sell the property. As an illustration, if you see a house guiding €200,000, it is highly likely that the agent has told the seller to expect the final price to reach around €230,000. On the day of the auction it is up to the seller to decide on the reserve. He could decide that he won't sell for less than €250,000 which is a long way from the guide you saw on your first viewing.
All highly frustrating and expensive for potential buyers but that, unfortunately, is the system.
Send your queries to Property Questions, The Irish Times, 10-16 D'Olier Street, Dublin 2 or e-mail propertyquestions@irish-times.ie.
Unfortunately, it is not possible to respond to all questions. The above is a representative sample of queries received. This column is a readers' service and is not intended to replace professional advice. No individual correspondence will be entered into.
