Irish Independent Property Plus
Friday June 10 2011
Unlike in other countries, Irish estate agents have no requirement to deal with the offer process in a transparent and verifiable manner.
This means first-time buyers don’t know who else is bidding how much so they are unsure how to determine how much they should offer when trying to buy a home.
The first step is to assess a price range and make an offer and it also is important to give that offer every chance of success. Buyers can ensure that they are not bidding against themselves by seeking confirmation of any competing bids from the seller or estate agent in writing.
There are a few golden rules for buyers when it comes to making an offer:
Not because it is a good strategy, but because the seller and their estate agent expect it.
In time, when the market evolves further, it should be possible for the buyer to offer the price that he feels the property is worth.
Always in writing
It is crucial for the buyer to put forward the offer to the seller or the estate agent in writing, an email will do.
Subject to structural survey
All offers should be made subject to a structural survey. This does not count as a conditional offer unlike other conditions such as subject to finance or where some buyers make a condition that they sell their own house first.
A timed offer will focus the sellers mind on the offer, that is to say, the seller cannot wait for weeks and use the offer as leverage to pressure other buyers. The offer should be valid for a period of 48 to 72 hours. An offer that is not accepted during that time frame is deemed to be rejected.
Price is just one factor which sellers consider. Access to finance, first-time buyer, 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. These qualities of the buyer might just compensate for not making the highest offer.
One at a time
It is not unusual for bidders to put an offer on more than one property at the same time. This is a tactic commonly used by investors. However, as a bidding strategy, it is not very effective.
The element of competition does not pressure the seller into accepting the offers, in fact, it may put the seller off as he will know that the buyer is not committed to securing the property. By only putting an offer on one property at a time, but applying a time limit, sellers know that if he accepts, the buyer will complete.
Don’t make threats
Buyers should not 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.
Another fear that buyers have is the threat of being gazumped. Gazumping is where vendors agree to sell at a certain price and then change their minds after receiving higher offers.
This was never particularly common in Ireland and is much less common in the current market. In reality, this is a buyer led issue.
It is an absolute myth that estate agents encourage this practice to increase fees as the amount of the fees involved is usually very small and no agent is foolish enough to lose a potential buyer in this manner, especially in the current market. Instead an agent will try to entice the two buyers to bid for two different properties, thereby doubling his chances of success.
With buyers treading carefully you can see why some call it house hunting!
Carol Tallon is author of the recently published Irish Property Buyers Handbook 2011 and MD of Buyers Broker Ltd.