An Irish woman's social, political and domestic commentary
Friday, August 05, 2005
Today's IT front page reports that the government is being asked to regulate auctioneers - a popular enemy. Since people hate paying huge money for houses they choose to blame the estate agents. A bit like people complaining about the CAO for high points even though its the students themselves who achieve the points. Anyway, as the family are auctioneers I feel duty bound to defend their profession.
Firstly there is the thorny issue of gazumping whereby a sale is agreed and the seller gets a higher price from someone else. Please note that it is the SELLER who accepts the higher price. If estate agents are so universally immoral why don't the sellers refuse to accept the higher price and stick by their verbal agreement with the original buyer.
Secondly guide prices. Just last week my brother was selling a beat up old cottage in a nice area. Given that it will have to be completely refurbished he guided it at about €260k. There was a surprising amount of of interest in the auction and the week before hand they increased the guide to €300k. The day before the auction I heard one of the auctioneers on the phone to an interested party who was looking for a specific figure. The auctioneer suggested that since big stamp duty kicks in at €317k that this would surely have to be a cut off point for a lot of prospective buyers. On the day, it went for €360. The staff couldn't believe it and firmly believe that the buyers were all stone mad. But what can they do? I suppose critics would say that the auctioneers should predict the complete irrationality of some people when it comes to buying a house. Rationally, no one should have paid over the guide but on the day they all lost the head. How can you regulate this?
Finally, people assume that auctioneers are simply wafflers. I have always been amazed by the wisdom and cop-on that de family try to pass on to sellers. Their principle skill is in identifying early on so-called buyers who are complete time wasters and who are telling a heap of lies about their ability to pay for a house. Some buyers will claim that the sale of their own house is agreed and they have the funds to buy the next one. My sister in particular is a genius for seeing through the crap and advising sellers to sell to a lower bidder that has funds in place instead of hanging on for months waiting on money that will never appear from a big mouth.
There is nothing to stop anyone selling their house through the classifieds but they don't do it because they want to expose their house to the biggest market possible through the auctioneers. If there is a screw up properly accredited auctioneers have public liability and everyone can sue. posted by Sarah | 10:32 5 comments
two comments Sarah:
1) your argument about guide prices would be more convincing if auctioneers EVER over-estimated the selling price of a house. Are you seriously suggesting that the prices quoted are what the auctioneer BELIEVES the house will fetch? Come off it.
2) the private treaty system that is used in Ireland encourages people to question the honesty of estate agents. I think that's probably very unfair, but nevertheless it is true. There is zero transparency for the buyer and in that situation you don't trust the person you are dealing with. If auctioneers/estate agents want to change that they'll need to campaign to add transparency to the bidding process. What are the chances of that happening I wonder?
I agree with all you say about auctioneers and guide price etc. I think they generally offer a very good service.
Only point I might make is in relation to auctioneer fees being a percentage of selling price. I realise you can usually negotiate and there is competition to encourage this. It's just that the principle of charging based on selling price in an very expanding price market has shoved up auctioneer fees to a huge degree. A fairer idea might be to have fixed fees based on effort required and perhaps percentage bonus's for selling over an agreed amount. The latter might help encourage the auctioneer to genuinely get the very best for the client. At present it is more in the interest of the auctioneer to a get quick sale at a reasonble price rather than having the house on market for months.
For example - let's say a house on private treaty is worth 1 million euro and let's say the auctioneer agrees fee of 1% - 10,000 Euro. It would be very nice for the seller to wait to get 1.05 million Euro (an extra 50,000 euro is not to be sneezed at!) But this would just increase the auctioneers fee from 10,000 to 10,500 Euro. I would imagine most auctioneers would prefer the quick sale and less work to grab the 10K.
Anyway - it's just an observation, auctioneering is a noble profession for sure - but not beyond making improvements.
My only other comment on house selling is how much the govenment grabs - huge stamp duty and VAT on everyones high fees - auctioneers, solicitors, surveyors, removal firms etc. Not to mention the fact that it is often a double whammy - the buyer often selling their own property at same time.
Interesting comments. On the question of over-estimating, believe it or not this does happen. Frequently the brother complains about losing a sale of a house to a rival auctioneer where the rival has convinced the seller that the brother has undervalued a house and if the seller switches to the rival a better price could be got. The brother then has to watch the house remain on the market for months only to eventually sell at the value he originally estimated.
In this case you have a competitive rival and a "greedy" seller. I am not sure how you can ever regulate this...and of course these cases will never be covered by Shane Ross in the SINDO even tho' they are far more common than anyone would believe.
John's suggestions are pretty good. One note. Most people quote figures of 2.5% as being auctioneer's fees, but I know that the market is so competitive that sellers are able to play one auctioneer off another and 1% is a more common fee now. I know in one particularly brutal sale, the vendor and buyer could not agree on the value of curtains. The brother was wasting so much time on the sale that he offered to pay the difference in the value of the curtains himself, just to be rid of the bloody thing. The buyer was so crooked (i.e. moody) they refused so despite hours and hours of time, it had to go on the market again. I think in that case he more than earned his fee.
Let's face it, you're dealing with the public....always a nightmare job.
for a private treaty sale in Dublin nobody has quoted me more than 1%
I don't want to sound smart but anyone who has sold or considered selling a house knows that an agent will say "I'd put it on the market for X and expect to get X+10-15%". The low guide price is just a part of the system, there's no point in claiming that agents don't do this.
of course that makes it reasonably predictable for buyers, so I don't have a huge problem with it.
what I do have a problem with is the way private treaty houses are sold. and like I say, that system is why people don't like estate agents.
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"Let's face it, you're dealing with the public....always a nightmare job."
I 100% agree with you on that point! It's a subject for an article in itself.