Q. My husband and I have recently started looking at houses. The price of the first house we viewed rose by €60,000 two days later. The second house we viewed online. We emailed the agent and asked for a viewing only to be advised that the price was €60,000 more than advertised. We then viewed a third house and received a follow-up call three days later to say that the price had risen by €15,000.
I understand that bidding wars are going on for these properties but what I don’t understand is why the estate agents in all three cases persist in advertising the property for sale at the original price, both online and in print. It is blatantly untrue and is a waste of everyone’s time. Is this a query for the Advertising Standards Authority?
A. Buying a house is a major decision and involves one of the single greatest outlays of money that an individual or couple will, most likely, undertake in their lifetime. First-time entrants to the residential property market generally lack the experience and know-how to prepare for buying on the open market and that can result in a frustrating and disappointing experience. While the seller engages a property professional to guide them through this stressful process, the buyer generally has to rely on their own life experience and resources.
As the price rises mentioned above do not specify the percentage increase for the properties in question, I will address the principal of sudden price rises.
It is important to understand the process that the seller follows to determine an asking price. To establish a realistic price and to assist them in choosing a selling agent, a seller will typically get more than one auctioneer to value their property. Local auctioneers have local knowledge of the market. They have information on recent sales, previous unsuccessful bidders and how much buyers were prepared to pay for the different property types in the area, for example a three-bedroom house or an apartment.
At this point, it serves no purpose to undervalue the property as in doing so the auctioneer runs the risk of losing the sale to a competing auctioneer who puts a higher value on it. The best practice is to value it at a level they feel they could achieve after a reasonable period of advertising and viewing.
As all of us are now aware, it is very much a sellers’ market. There has not been sufficient numbers of residential units built over the past decade to satisfy demand. In addition to a limited stock, there are an increasing number of buyers who are competing for this now scarce resource. Mortgage credit is not as tight as before and this factor with the new Help-to-Buy Scheme introduced in January 2017 has brought an increased number of first time buyers to the market. As a consequence, there are a reported 20,000 mortgages approved this year to date for the 10,000 houses currently available for sale.
As you have seen first-hand, all of these factors have given rise to aggressive and rapid bidding on certain entry-level/first-time buyer type properties. What were formerly viewed as realistic asking prices are currently being exceeded at an accelerated weekly – if not daily – rate, leaving little time to make appropriate adjustments on advertising material.
However if you feel that the estate agent is not acting in a professional manner in some way, you could bring it to the attention of the Property Services Regulatory Authority (PSRA), www.psr.ie who issues selling agent licences
Edward Campbell is a chartered valuation surveyor and member of the Society of Chartered Surveyors Ireland, scsi.ie
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