Property auctions are growing in popularity in Ireland, driven primarily by companies like Allsop’s who have revolutionised the Irish auction market. We always had auctions but there were never guaranteed clearing prices and there was still issues like high asking prices which if not met meant the property didn’t sell.
The whole area of private treaty is a mess, you have gazumping (somebody placing a late bid that knocks you out), gazundering (a person makes a lower offer right before they sign contracts which shafts the seller), phantom bids, no transparency, no law requiring bids to be logged where others can see them and many other problems.
You have no idea of when the process will end, a person can market a property for a long time – something common in receiver sales, and which personally turns me off even getting involved, I have seen more receiver deals come to nothing in the last two years than I have seen deals go sour in my whole career.
I don’t think estate agents like some of the negative views that go with their trade, most of it is not of their making, it’s a structural problem with how ‘private treaty’ works. We do have a price registry but that does little to give you any further knowledge into the process when trying to close a property.
But how do you buy at an auction and not make a mistake? To answer this I decided to get in touch with Robert Hoban of Allsop and talk about the advice I give clients on auctions and compare notes.
Suffice to say, as always, I learned more than I imparted and today I am going to reveal the secrets to auction success from an insiders perspective.
The things I would start with are standard wisdom, rule number one, have your price, the one you will not go beyond, write it on your hand if you must. Whatever you do, don’t go above that number, you made it when you were thinking rationally.
Auctions are about ‘winning’ they are about ‘buying’ and the two are not the same. If you go over your price you’ll regret it.
Also don’t be afraid to be near the back where you can see the whole floor, and don’t be the first bidder, I think a good method is to stay out of the bidding until you see what other people are doing, get involved too quickly and all you might be doing is pushing up the price.
So when it starts to quiet down a little (and assuming you are not over your pre determined number) get your bid in, and be willing to bid fast, after the momentum goes quick bids help turn it in your favour, if you are up against somebody who doesn’t really want the property then you have a higher chance of winning.
You might not be though, and for that reason always be willing to stop bidding, remember that number, I keep saying that but it’s the golden rule.
Another method to screw with the competition is to come in with a bid that is higher than what the agent is asking for, if they say ‘do I hear €100,000?’ you could yell out ‘€115,000’ and that again plays havoc with the other bidders. If you get a counter bid after that you are up against a motivated buyer, or somebody who is caught up and will make a reckless decision against which you will lose (if you go beyond your number!).
If you truly don’t have the mettle for these things you can do what’s called a ‘proxy bid’. The way this works is that you get the agent to take power of attorney for you and bid on your behalf.
They’ll run the auction as they normally do but will then bid for you if somebody else doesn’t. This doesn’t let you narrow your margin (when the price is going up by smaller numbers that normally means you are close to the finish), because they’ll continue with a higher raise than you might do if you were there.
Having said that, it totally depersonalizes the process and ensures you don’t go beyond your number and in that respect it should be considered.
I’d like to finish with a special thank you to Robert Hoban and the team at Allsops, they are changing our property market for the better and that is to be commended, it’s no wonder almost no estate agent has anything good to say about them, but as consumers we should realise they are doing the job in a transparent manner that should have been done long ago. Total kudos to them.