Irish Property Market chat II - *read mod note post #1 before posting*

That line does not extend to what is just an arbitrary advertised price. The guide price has virtually no bearing on what buyers will bid, if you raise it, there is nothing to stop buyers going above it.

When referring to Australian legislation, perhaps you should take a bit of time to look at housing stats there, prices are booming, so I’m not sure why you think it makes any difference. In a shortage, buyers will bid more, the asking price doesn’t matter.

The going rate is approx 1.5%, which given the average house price is approx €340k, means the fee is approx €5,100

Not bad for a glorified secretary who doesn't know about about how to value and correctly price a house. What the **** are they trained in so?

The Australian market is made up of many different markets. House prices in places like Adelaide and Perth are doing well, but Melbourne, not so well.

But the reasons for that are more to do with tax incentives for investors, high migration levels, and a shortage of housing, as well as much easier access to credit than here.

However, under-quoting is against the law there and for very good reasons. I believe they are not the only jurisdiction to ban this.

It is a well-known practice used by shady real estate agents. You support shady practices it appears.

This goes back to my question about phantom bids. You would have no issue with it once they get the 'top price'.

It seems the king of the transition here is the seller and the estate agent with the buyer having little to no protection.

No wonder Estate Agents are looked upon with so little esteem and worth, given the view that they are leeches, in an industry that thrives on vagueness, poor protections and little transparency.

they are selling higher than guide price because of a lack of supply and huge demand due to rents…..you could also argue that inflation has creeped into buyers thinking so if they put off purchase price will only rise…the same thing happened with houses prices after the euro was introduced…maybe it’s just correlation but the short supply is definitely a causation.

Let’s not forget it was common practice to bid under asking when there was a choice due to more supply…. Does Op want that made illegal as well.

Ok so by same logic Tesco club prices should be illegal… they are for essentials and similar marketing techniques used…. At the end of the day if you think the price is right you buy if you don’t you either look elsewhere for better value. If you’re way off the mark then you either overpay or end up never buying because you believe houses should be at 2012 prices.

The real issue is lack of supply and huge demand due to rental situation.

Perhaps the EAs valuation is right, that is what the property is worth, and unscrupulous buyers are bidding more to secure the property.

To quote yourself "In case I haven’t been clear, asking price is just some arbitrary price point, the market/bidders will set the price."

So how can the market/bidder set the price, yet the EA valuation also be right?

There shouldn't be a case where multiple houses go for way more. One or two maybe, but if EAs are consistently wrong, they're bad at their job. Which leaves the only conclusion that they are not wrong, and it's a sales tactic.

My question is this, why is the guide price set by the EA nearly always low, often by tens of thousands? the answer is that it's a tactic. There's no getting around it, no point obfuscating or trying to explain it as anything else. It's a tactic to get people in the door and encourage a bidding war.

10 years ago houses regularly went for under asking and what they were really worth….its all down to supply and how badly someone wants that house…..you have a lot of people who will overpay just so that kids don’t need to move schools etc…

Sellers should be required to list a proper advertised minimum value which, if exceeded for a given time period, they cannot refuse except for a higher offer.

e.g advertise your house for 400k, get one bid for 420k, then it must be accepted after say 2 weeks. There would then be, say, another 2 weeks for the agreement to be made legally binding.

advertise your house for 400k, get one bid for 420k, 10 days later a bid for 500k, then the 500k bid becomes binding 2 weeks later.

advertise your house for 400k, get one bid for 380k, seller can decide whether or not to sell.

With this scheme there is no disadvantage to the seller who is open and honest. Under the current system, a buyer can pay to have checks done on a property advertised for 400k, be the only bidder at 450k and not have that bid accepted because the seller was never going to settle for less than 500k in reality.

So how can the market/bidder set the price, yet the EA valuation also be right?

One of the requirements of an Estate Agent in Ireland is to value a property. That is why a real estate agent will provide a valuation service for a mortgage or a bank.

But apparently, they don't need to as "The Market' will do it for them.

We have this paradox in the argument.

Either EA's are glorified secretaries doing a bit of admin, or they are a professional body who are charged with valuing and selling properties.

If they are the latter, then why can't they value properties correctly given they seem to go over asking many many times? Are they incompetent and simply bad at their job? Or are they devious and underquote deliberately to manipulate the price of a property?

If it's the former, why are they paid so much to provide such a basic service in doing a bit of admin and why do they need to hold a license and be registered with the PSR?

Apart from a poor understanding of the metaphor you are using, I said no such thing. What myself, and others have tried in vain to explain to you, is that EAs do not have a crystal ball to see into the future, and foresee what people are willing to bid on a property. As a result, the asking, and sale price can differ by quite large amounts. But that is easy to see in hindsight, not in advance.

An EA is a sales person, this should not come as a surprise to you, sales people are paid to sell, be it by using their insight of the product, convincing buyers to pay more, making the product look great value, but ultimately, it is the buyer who decides what they are willing to pay. Ideally, the vendor wants multiple bidders bidding against each other, and if the guide gets them interested in bidding, then the EA has done their job well. If the buyer doesn’t understand that the EA is there to sell the property on behalf of the vendor only, doesn’t understand that they are bidding against other equally determined buyers due to lack of supply, doesn’t understand that prices are rising, but there is a portal where they can check what previous houses went for, doesn’t understand that the asking price is some arbitrary figure that even if the vendor didn’t use an EA, they could pick a lower price than they are willing to accept, then that person really has no one to blame but themselves if they overpay for a property.
Banks really should ensure that borrowers understand the basics of bidding on property before they hand over huge sums of money.

But you don't get checks done on a property unless you are sale agreed?

The argument about EAs is a bit mad the price is the price. A property is worth what someone will pay for it. The asking price is not an agreed set in stone price but it would be something the seller and EA will more than likely press ahead with a sale providing it is reached or a bid comes in at a higher amount. I am not sure about phantom bids years ago I would of thought it but for the EA to risk their careers for 1% or 1.5% of the increase is not really a risk worth taking. I was sure they put measures in place to stop the phantom bidding and the buyer always has the option of saying that's too much for me I am not bidding any more so any one moaning about the bidding price need to understand that the way the market is at present is simply supply and demand and some gov manipulation and the bad news is prices are not coming down for the next decade with the way our emigration policy, housing building strategy and government intervention is going. In 10 years I reckon prices will be on by another 40/50% on what they are today.