~ Originally published in the Sunday Business Post, 18 November 2012
Active buyers in the market at the moment will have experienced a shift over the past two to three months. As pent up demand unleashed itself upon the houses in prime residential areas, bidders found themselves exceeding asking prices by up to 10 per cent. The only explanation for this latest flurry of activity is that home-buyers, particularly first-time buyers have been fighting among themselves for the best of the houses currently available in their chosen areas. Multiple bidders on a property is becoming common place again, where we have not seen it in many years. This is undoubtedly good for sellers and arguably good for the market, but it raises a few unpleasant questions for the buyers – how can I be sure that I am not bidding against myself? Or how can I other bids? The reality is that while the Irish property market has made great advances towards market transparency, with the publication of the national property price register, we still some archaic practices going on.
I am not now, nor have I ever been an auctioneer or estate agent so I cannot speak for the industry, however, it would appear that a verifiable system of written bids would most likely benefit the profession in terms of both buyer perception and buyer participation. It would eliminate any suspicion or doubt in the mind of the buyer as to the true interest in any given property and it would further help the estate agent to distinguish between genuine rather than flippant bids and bidders. This week, I spoke to a handful of agents to ask how they would feel about a system of open recorded bids. None were in favour of this, but their objections were not for the reasons I might have suspected. They argued privacy issues and how appearing on a list of bids, detailing the value of the bids, could potentially hinder a buyers bidding strategy on further properties i.e. it would disclose budgets in some instances. I did not find myself convinced by this argument. On the other hand, I did meet some agents who are actively trying to deal with this issue and have found simple ways to show good faith towards buyers. Phil Thompson, Senior Negotiator with Des Lalor Auctioneers based in the South County Dublin area described how offers sheets are now kept on every property, in accordance with new Property Services Regulatory Authority rules, and he even allowed me to look at a few – taking care to hide the buyers names. The bid sheet is very detailed and he spoke of his company policy to show this bid sheet to the successful bidder after a sales agreement had been reached, thereby reassuring the buyer of appropriate practices all the way through. Thompson also uses the practice of texting all interested parties when an offer on any one property comes through. This means that the buyers are notified of competing offers in writing, making the agent more accountable and ensuring no any unsavoury practices. This seems like a reasonable approach that any estate agency could implement to reassure buyers that competing bids are real and as described.
If any buyer fears that they are bidding against themselves or that other bids are not as described, there are measures that can be taken. For instance, when the buyer is advised that there is an offer in place, usually at the viewing stage, it is sensible for the buyer to ask the estate agent when was that purported offer made. If it was not made within the last two to three weeks, disregard it. The seller may or may not realise it but the other bidder may well have moved on to another property by now.
It is also important to know whether in fact the other offer is unconditional. If the other offer is conditional upon any event i.e. sale of existing home or obtaining finance, the buyer is advised to disregard it. Finally, buyers should ask, what the status of that offer is. If the offer was, in fact made, the owner’s response will be very telling. If the offer was accepted, the estate agent should not be accepting further bids at this time. If the offer was rejected, buyers should ask why. It might not necessarily have been due to the amount, perhaps the bidders could not complete in time or perhaps the other bidders attached onerous terms and conditions to any future purchase that were unacceptable to the seller. If, on the other hand the offer is under consideration, the buyer knows that the offer figure falls within the likely price range at which the owner is willing to sell. If there is a genuine, unconditional offer, the estate agent should have no difficulty in confirming all of these facts in an email. The power of committing this type of information to paper (or electronic form) is very real and will prove beneficial for all parties in the transaction.