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

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.

Best solution then might be that a buyer can hire their own EA consultant to value a house for themselves. Then they can base their bids on what that person who is employed by them advises them its worth.

I think i know what my next job is going to be :)

I'm not disagreeing with your choices. You did the correct thing. I indicated as much in the post you are quoting.

But there are plenty on here that choose option A and then whinge that "shur one of the other options would make me more money anyway". It likely wouldn't.

The process just isn't transparent.

My own story.

I was looking for a house and got myself into a bidding war at the last minute. The EA was a bit of a slime ball given his unethical comments to me about who he would or would not let do an engineering report on the house.

It was my choice who I got as an engineer, he had no say and no right to tell me who to use.

Anyway, won the bidding way, but was uneasy about the process and was not 100% on the house itself anyway.

Another house came up, so I pulled out of the sale. The Guy rings me up, but I ignore it.

Low and behold the house is sold for €30,000 lower than the price I was willing to pay as I see on PPR.

Snake oil salesmen have a better rep than some of those out there.

That is not to say they are all like that. The EA I dealt with for my current house was transparent and above board, but people are dead right to question slimeball antics.

according to the cost to rebuild to the same standard.

There were a good few years where houses were being sold for a lot less than it would cost to build them. I remember thinking that many times but i was afraid to buy at the time.

I shared my own story about my dealings with a particular EA, who acted unprofessionally in denying me my right to get the engineer of my choosing to go over a house.

The same EA then sold the same property for less than 30k than I 'bought' it for, due to a bidding war, which appears to have been fake.

I understand perfectly well what a EA does. They sell property and act in the vendor's interest, and some use every dirty trick in the book to get as high a price as possible, using questionable, morally dubious and possibly illegal behaviour to do so.

But ah sure its grand once the vendor is happy, am I right?

Buying and selling property is done so in a free market. Neither participant is forced to participate in same. if either party feels there is immoral/unethical activity then don't do business with them pure and simple.

This is the fundamental principle of any business transaction we all undertake every single day of our lives. Why do you feel the sale/purchase of a property should be any different. The fairest way to decide what an item is worth is let the market decide.