Buying at Auction - why??

I’d like to think I have a handle on the various methods of selling property, but I can’t at all understand why auction sales (a) seem to be becoming more common or (b) are at all relevant in assessing property values.

As a buyer, your costs are loaded upfront - investigation of title, surveyors etc - and this before you even bid. Once the hammer falls, if you are not the highest bidder you have incurred not inconsiderable expense and if you are the highest bidder the obligation to complete is absolute so no pulling out of the roof caves in or it turns out that the vendor doesn’t actually own it. Then there’s the added difficulty in obtaining mortgage finance - if the bank thinks it’s a dud, you still have to complete or face losing your deposit or being sued to complete. It’s so stacked against a buyer that unless the property is significantly cheaper than a private treaty sale I don’t understand why anyone takes the effort and the risk.

Which brings me to (b), given that the buyer is taking the effort and the risk in what I assume is the expectation of reduced price why does that have any bearing on what the value of property sold by private treaty is or should be? Surely auction price is a discounted price rather than a “true” value.

In the UK auctions are usually reserved for cheaper or problem properties.

The reason vendors go this route is eliminate completion risk (which is high in the current market).

If that’s the case, then I’d hate to think what the “true” value of this might be:

Because canny.

Personally I see Irish auctions as being just another way to get higher prices. Auctions have been used for the last century, and even before, to sell the most high-end properties, when they weren’t sold behind closed doors in private deals. In more recent years as demand went sky high, even more standard homes in good areas started being auctioned off, all just to achieve higher prices. I’d consider it odd to see a horrible house in an undesirable area up for auction, unless it was with something like Allsops or whatever.

As the sharper1971 linked to, the result of the Beaumont Cottage auction was just shocking (imo) and you can be sure that Lisney are hoping for the same ridiculous outcome for Laragh, 21 St. Thomas Road, Mount Merrion that they listed today … in/1909181

People have a tendency of going crazy at auctions. Doesn’t matter what the auction is for, from my own past experience I always think you end up paying a premium at auction for anything- whether its for jewellery, a car or a house is irrelevant. I don’t know why, but sense goes out the window when people enter an auction house.

I really can’t understand the benefit to the vendor of an auction. Take the example of the property at the link below. I contacted the EA yesterday to arrange a viewing but the earliest I’ll be able to get to it is next week. Apparently the vendor is still living in the property so viewing is tricky. The auction is roughly a week later. So although the AMV is within my budget (although at the very top end of it) I won’t have a chance to do the necessary checks, approvals etc to give me the confidence to bid.
Doesn’t make sense to me as there must be easily a handful of other potential buyers in the same situation as me who won’t view the property now becasue of the auction situation… … 20/1876713

The problem there isn’t the auction, the problem is that the EA/vendor are making an arse of things.

personally very reluctant to take part in an auction from my own experiences.

Really have to know your stuff to be head of the game…

The only real benefit I get from auctions(this is only if you attend) is it igves you a good idea of the depth of the market in relation to certain areas.
Was there much activiety or demand for a particular property at these prices…this will arm you then with the info you require…
For example a property may be guiding 500 but Sells for 550, but there might have being only 2 bidders who really wanted it…
Price tells you it went over the odds but depth tells you a different story…

Much prefer to see a property selling over the odds with multiple bidders to give me an indication of stregth fo a particular sector. (edit Area)

Auctions are not for FTB’s for obvious reasons…

TBH, I think auctions in this country are rigged. The players all know each other and there are a lot of games going on. The only times I have seen buyers win is when they are extremely wealthy and the other bidders are aware of this and will not bid against them.

trying to rig an auction could be costly if you are stuck with the property. It may go on in cattle farming but with more significant assets i would think not.

Also i very much doubt that all players know each other and its not the case that only weathly people win at them.

Good God :open_mouth:

There was a series caled “How to be a Property Developer”?

Today was Lisney auction for Laragh, St Thomas Road, MOunt Merrion.

Anyone know how much did it go?

I was at a factory liquidation clearance about 10 years ago run by one of the well known auctioneers. There was a lot consisting of one bed which had been assembled as a demo for the next two lots made up of 18 and 24 of the same type of bed. Bidding went crazy for the first bed-up to about €700. The next lot of 18 (which I bought) went for €900 in total. I was feeling pretty happy until the final lot of 24 beds sold for €600. All this time the woman who bought the first bed was still there with a look of horror on her face.
To get a taste of strange auction behaviour I suggest dropping in to Herman Wilkinson in Rathmines some Thursday- for €5 you could pick up a really nice set of vintage amp and speakers which would outperform a €700 modern setup, then you’d see old Bargaintown tat going for more than its new price-with comission on top of that too.

Laragh went for 670,000

The point to keep in mind is that the auction (as is true of the wider property market) is not constructed to benefit the buyer at any stage.

As mentioned in the short clip above, if an item at auction fails to make is its reserve price it may be withdrawn, thus offering the chance for a potential buyer to make a lower offer to the vendor. However, IMHO, the lure for many potential buyers at an auction is that it “appears” to be a more open and fairer route to market than the traditional private treaty sale (which is often referred to as a blind auction).

Of course, the widespread practice of Estate Agents and Auctioneers “taking offers off the wall” during an auction (as clearly highlighted in the clip), along with the equally not illegal and questionably ethical tactic of them introducing phantom bidders into private treaty sale negotiations, make both these routes to property purchases for the uninitiated equally unsavoury and often financially sub-optimal.

For the potential buyer, the only benefit I can see for one route over the other is that with the auction, all the bidding, real and fictional, along with the final “sale agreed” is conduced within a matter of minutes.

Blue Horseshoe

That damn dead cat is bouncing again.

05/10/2012 4 St Thomas Road, Mount Merrion Dublin €735,000.0

20 ST THOMAS RD, MOUNT MERRION, DUBLIN sold on 21-5-14 for €1,500k.