It is becoming clear that auction season is the route of choice not just for commercial properties, but for family homes too
Auction season is well and truly upon us. Although in practice, one of the consequences of a property market in turmoil – either rising or falling – is that seasonality is no longer a significant factor. How ever we refer to this prevailing trend of auctions, it is clear that this is the preferred route of sale not just for commercial properties and receiver properties but also for many family homes suitable for all home-buyers.
In terms of volume, more properties have sold at auction in the last year than have sold this way in the years since the boom – combined. It is no longer an option for buyers, regardless of whether they are home-buyers or investors, to opt-out. This is particularly true in the Dublin market where strong demand and chronically low levels of housing stock have been driving up prices for the last few years. While many new players have com into the auction market, stand out industry giants Allsops Space have led the way by introducing minimum reserve prices and reinforcing their policy to sell in the room. Prior to their entry in the Irish market in 2011, most residential and agricultural auctions transitioned into private treaty on the day of the auction, after bidding, by way of the auctioneers retiring into talks/negotiations with the highest bidders rather than accepting the highest bid in the room. That was unfair to genuine bidders and caused first-time buyers to avoid this method of purchase. But the market has evolved, all buyers need access to all available properties. And with that in mind, house-hunters will be interested to learn of the next Allsop Space auction happening on July 1st. Would-be home-buyers and investors will only have a matter of weeks to research the 184 lots on offer and while it is not a lot of time,it is sufficient for well prepared buyers to make enquiries, confirm finance, assess value and have the property or properties in question structurally surveyed. The main hurdle is the time and expense to have the legal title checked. Defects and issues with title can be more costly and time-consuming to put right than many structural issues, yet, hidden structural problems are what would-be auction bidders fear most. I would suggest that both are important and to scrimp on either could be a very costly mistake.
Earlier this week I was discussing the residential market with one of Dublin’s most respected and knowledgeable auctioneers and he expressed his dismay at the sheer number of family home type properties being offered for sale by way of auction. He felt, as most people do, that inexperienced buyers are ill-equipped to buy well at auction and while I understand where he is coming from, I found myself disagreeing. It is not experience but rather research and preparation that lead to success in the auction room. Far from being mysterious, auctions are the most transparent method of sale that we have in Ireland and all buyers, including first-timers who have their due diligence done, can buy well. I have seen increasing numbers of so-called professional investors go into the auction rooms all around the country, not just in Dublin, lazy and unprepared. There is still the old – and now greatly disproven – belief that any property is better than none and any cheap property is a bargain. This is utter nonsense and generally, it is not a belief held by home-buyers. On the contrary, they tend to be over-prepared to the point of paralysis. A good balance of being technically prepared, financially ready and psychologically willing to accept prevailing market conditions is essential. Buying property always carries some level of risk and it is the buyers job to reduce that risk to a personally acceptable level and yes, this level will be different for everyone.
For home-buyers who are ready to run the auction gauntlet, upcoming houses that are certainly suitable as family homes are available nationwide in areas like Loughrea, Letterkenny, Mallow, Nenagh, Cavan and others from €25,000. Likewise, Dublin buyers can choose from houses in areas including Lucan, Dublin 7 and Dublin 24 from €95,000. A house in Milltown, Dublin 6 with a mimimum reserve of €375,000 is likely to attract strong attention and might motivate buyers into the auction room. One particularly interesting lot coming under the hammer on 1st is a live/work unit in Dublin 3, with a maximum reserve price of €140,000 to €150,000. This will be of particular interest to self-employed first-time buyers and even for investors who will find this a unique option to bring to the rental market. The total square footage is almost 2,500sq ft and the commercial or work portion of the unit has great potential for many professional uses.
The opportunities exist; most lenders are accommodating auction purchases and safeguards can be employed. Certainly, any current house-hunters who have had negotiations and bidding on private treaty properties spiral into sealed tenders – that is, best and final offers by a set day and time – will appreciate the transparency of the auction process.