Phantom bids: a real or imaginary problem?

DivingDuck

How common do people feel the issue of phantom bids is? Considering that bids in this country can be made verbally, there's no paper trail to prove that any bid did or didn't happen, so none can be demanded... Which does leave the possibility of phantom bidding as a price-driver open.

I'm wondering how likely people feel this is in general, but also in the specific scenario which follows:

Let's say a couple are bidding on a (Dublin) house guided at 425. Another house on the same road sold for 390 last September, so they offer 370. It's rejected. They ask if there is a figure which is likely to get the deal done, and the agent says he will ask.

The following day, they get an email saying there is now a bid at 410.

How genuine would you consider that information? Would you believe there is a legitimate bid of 410? Would you be concerned that the agent is lying?

When you're informed of a bid on a property you're interested in, how genuine do you consider that to be?

MrDerp

I believe that phantom bids exist in some cases.

A far bigger problem, in my opinion, is people bidding what they can't afford. We were effectively the third bidder in our house purchase. When the top bidder couldn't access finance, this affected the ultimate price we paid, which was north of the asking. The second bidder had been bidding away happily on many houses and was already locked into another sales process. I'm hoping this is happening less now that formal rules have been established around what people can afford to bid.

Whether you're dealing with a genuine bidder, a phantom bidder, or an idiot/over-excited bidder, the result is the same. You will pay more than you would like to. Ultimately it comes down to strategy:
1. Don't get too emotionally attached to a particular house
2. Set yourself a ceiling for that house
3. Don't get upset by counter-bids, wherever they are coming from.

Ultimately, you will feel cheated, or some buyer's remorse, if you pay more than you thought the house was worth, or more than you wanted to spend on any house. If the EA and vendor are conspiring to create a phantom bidder, they are using this to discover your ceiling. Ultimately the vendor doesn't have to sell to you at below the asking. They don't even have to sell to you at asking + 10% if they don't feel like it.

While the phantom bid is an unfortunate mind game, it's ultimately no different to you than the vendor anchoring at the asking price and only budging a little. It is useful though, in getting you off of your anchor without the vendor having to move, and it's an efficient way to discover your ceiling.

So what to do? Ask yourself "how much do I want this house, what's my ceiling" and don't get emotional. You are in a guessing game as to whether or not a counter-bid is phantom or real. Either way, for any bid there's 3 possible outcomes:
- Another bidder ups the bid
- The vendor accepts your offer
- The vendor/EA counters with a phantom bid

If you're under the asking, the vendor probably won't accept your bid, leaving you with two options: Re-anchor and hope the other bidder is a phantom, or raise within your comfort zone. When you get to your ceiling, stay there. If someone else bids 5k more and get the house, you might have regrets, but was your ceiling real? Move on.

If the other bidder is real, you've gone to your ceiling. If the other bidder is phantom, they may come back with a counter-offer and say the phantom pulled out. At the end of the day bidding is price discovery. You'll either get there or you'll pull out. There's no strategy to get the house, only a strategy to try and get it at, or close to, your anchor and be prepared to fail.