Peter Bills: Tale of Jillian's country house shows folly behind market's tumble

Jillian Godsil has lost at least €1 million after purchasing an Irish country house. Photo / Thinkstock

Jillian Godsil thought she was living the dream. She and her husband had discovered Raheengraney House in the village of Shillelagh in County Wicklow, Ireland, and they had been smitten from first sight.

A big, old Irish country home, it dated to the 18th century and had eight bedrooms, eight bathrooms, three reception rooms and two acres (.8ha). Ideal for the country house hotel they wanted to open.

For sure, as they say in Ireland, the place needed some work done to it. But ah, it'd be grand when finished. And so it was, the epitome of elegance. Yet even before they had opened the doors and welcomed the first guests, alarm bells would have been ringing for many people.

The house had cost €1.6 million ($2.9 million) and the bank had provided a mortgage of €900,000.

Still, these were the good times in Ireland and everyone assumed they would never end.

And for a while, all went well ... until the day Jillian and her husband announced they were splitting up. There were, by now, two young children but divorce meant they would have to sell the house. It was the start of their worst nightmare.

They advertised the house at the price they had paid, €1.6 million, but alas ... the property market was already on the slide. Worse still, big old houses of this size were now seen as over-priced liabilities. No one offered anything, until a woman revealed she wanted to buy.

Trouble was, her offer of €1.1 million would leave Jillian and her husband, who had by then gone back to the UK, with only €200,000 to split with which to buy themselves separate homes. No matter, she decided in a declining market to take the offer and swallow the loss.

The deal seemed to be going through until, almost at the last minute, Jillian had a call. Her buyer told her that because of private issues, sadly she could not proceed. So now, with mortgage payments crippling and a declining business in the midst of a declining property market, Jillian knew she was in trouble.

Two or three years passed with no other offers. The asking price fell in line with the market, down to €900,000, which was still about the size of the mortgage, then into negative equity at €800,000 and even €750,000. Still no takers.

Property prices have crashed throughout Ireland in this recession.

Today, agents estimate that prices have dropped 50 per cent, more in some cases. Out in the country, the decline has been even more marked.

As her plight deepened, Jillian resorted to an extraordinary method to try to sell. She had found a job with a technological company which put together clips for the internet. So she helped create an advert for the house which told the story of her dream and how it had collapsed. This was posted on YouTube.

The effect was remarkable. The "advert", with its little story, attracted 13,000 hits. The house and its sad tale were even reported in the New York Times. By now, the asking price had tumbled to €495,000 and a buyer who saw the video clip called from England and announced he would buy at that price.

Jillian and her two children, who have since gone back to living with her parents, accepts she has lost everything. She is not bitter, just realistic about a fairy tale that went horribly wrong.

Yet even after all that, there is one final twist. It has now emerged that she may not be able to sell to her English buyer ... because the Irish bank may yet refuse the deal and hold out for the full €900,000 debt it had on the property. But Jillian has no means of making up the extra €400,000.

A simple tale of the alarming lurches of a property market and the folly in which human beings traded.