house for auction

********Looking at a house that is up for auction. The amv is above our budget, approx 70k, and the EA said the reserve would be set close to the amv price. So due to the nature of an auction where you must pay 10% on the day and you are bound to complete the sale, is it worth paying for a survey and getting a solicitor to check titles, therefore running up costs if its unlikely that the property is within our reach?

Not worth it. You’d need a survey and legal in advance and sounds like it might be a waste of money. I assume you are a cash purchaser - if not you’d also need to know you have a mortgage on this property. Go to the auction by all means and if it doesn’t sell you can enter into negs at that stage.

The problem with an auction is that you can pay your solicitor and surveyor fees, only to find that some clot is outbidding you something serious.

Surely that’s your problem and no one else’s?

That’s what I meant.

A full structural survey could cost you as much as €1k, because you spent so much money, you could easily find yourself bidding more than you would have ordinarily to justify the massive cost.

€70k on much?

Could be a big difference between €70k on a property priced at €100k and another priced at €1m.

Run away.

The point of getting an auction purchase is to get a bargain.

The job of the auctioneer is to get you into a frenzy to spend too much.

You’re starting at the wrong end of the spectrum.

Since the reserve seems to be above your maximum price, your best bet is to look at the house.
Identify a solicitor and surveyor, but don’t actually do anything.
Attend the auction. DO NOT BID.
If the house doesn’t sell at auction, express your interest to the auctioneer and arrange a second viewing.
Proceed as you would for a normal private treaty house sale.

If the house does sell at auction, it will have sold for over your maximum bid anyway, so you’ve lost nothing.

Hmmm. Good advice that.

As long as title is fine you can prices in any structural work. Price in the worst with every auction property. If you are not getting it priced at your worst case scenario then you are better off going private treaty. Particularly in this market.

The key question for you is whether you have a chance of getting the house at auction for at least €70k below AMV.

The answer lies in what other people are willing to pay for the house, either at auction, or, if the house fails to sell at auction, as highest bidder (if the reserve is not reached, the highest bidder at auction has exclusive negotiating rights, and unless you were the highest bidder you will be shut out of that negotiation unless it falls through).

So you should search for the most similar houses for sale in the area and make an estimate of what they might fetch; asking price minus 10-20% is a fair assumption if the pricing seems about right, and the pin might be a useful guide. You can also search myhome.ie for those that have gone sale agreed in the past six months or so, and make a similar estimate based on the last asking price. And you should check whether any other houses in the area have been auctioned recently and find out what price they fetched; people tend to go down the auction route if they saw a successful auction of another local property.

If this research tells you that the house will at least reach its reserve, then don’t waste your money. If it tells you it could well be 70k below, get on the phone to your surveyor and solicitor.

Surely this ‘exclusive negotiating rights’ is just a marketing ploy to get the highest bidder to close quickly and has no legal standing. At the O’Donnellan Joyce auctions in the Galway it used to be announced that the high bidder had exclusive negotiating rights for one hour only but even that hasn’t been mentioned at any of their more recent auctions that I have attended. I think if an auctioneer was aware that there was another realistic buyer waiting in the wings he’d be doing his best to play both potential buyers off against each other rather than giving one a free pass just because he was the highest bidder in the auction.

By trying to be the highest bidder at auction, you risk actually buying the house.
You’ve no idea what the actual reserve is, only the AMV.
Wouldn’t risk it.

When the reserve has been reached, the auctioneer typically announces that the house is going to be sold to the highest bidder (or is ‘on the market’ or something like that). Different auctioneers may follow slightly different approaches - if in doubt about the process, ask them well before the auction. So at the auction listen carefully, because once the auctioneer announces that the house is on the market, the highest bidder is obliged to buy. If the reserve is NOT reached, the highest bidder has no obligation to buy.

But I find the above comment a little puzzling, because if you’re a serious buyer and you want the house, then as long as you remain within you’re comfortable spending limits, surely your objective IS to actually buy the house. Of course plenty of people at auctions are just window-shopping, just as many people at open viewings are slack-jawed tyre-kicking house tourists dragging their kids from house to house for a gawk, so I’d advise anyone in that category to either keep quiet at auction or stay away altogether.

I can’t tell you if it’s a legal requirement, but it’s certainly common practice; just ask any auctioneer or estate agent. And of course they should be trying to jack the price up to the highest level possible - that kind of comes with the job description. If I were auctioning my house I’d be pretty browned off if they didn’t do their utmost to extract the highest possible price.

On the whole I’d hate to see a widespread return to auctions because they place us buyers in a much more difficult position than do private treaty sales. The success or otherwise of these upcoming auctions (by which I mean single-property auctions rather than super-auctions) will determine whether more vendors choose to go down this route.

thanks for all the responses, all interesting reading. Just to be more specific the house for auction is a single auction sale around €600k amv, its not a fire sale and in my opinion the reason its for auction is because the EA wants to make a name for himself where he wouldn’t be an established player in the market, also he wants to sell as the clients are elderly, but i suppose not desperate!

my questions are;

is it possible to establish roughly what the reserve may be set at close to the date of auction? i.e. between 550k -600k or is this totally not the done thing?

if a property is not sold at auction is it only the highest bidder that has exlusive rights to negotiate afterwards, would seem like this should be set in stone rather than left to the EA’s decision

if a property is withdrawn at auction and you enter into negoitations directly after, does that mean you fall back under private treaty rules? i.e. deposit refundable and not tied into a contract?

Thinking about bidding at auction for a house near me.

Wonder if anyone can answer the following:

If the auctioneer takes bids ‘off the wall’ and that becomes the highest bid, what happens then?

I have a fixed max limit but fear the auctioneer will just bid me to it.

Also, I have heard of some trick that is pulled where the imaginary bid can be ignored after it is made by the auctioneer…

I gather the form is that if the imaginary bidder ends up winning you will get approached by a staff member asking to take your details ‘just in case the deal doesn’t go through’ or because ‘they have another similar house coming up soon which they want to let you know about’. Then you get contacted the next day and you are told the high bidder didn’t sign the contract and the owner is prepared to let it go for your own highest bid.

An auctioneer will take bids both imagery and from the floor until the reserve price is reached.

Should the property not reach the reserve bid it will be withdrawn. As such it does not matter whether you are bid to your fixed max limit or not if that limit is below the reserve price.

If you are the highest bidder on auction floor it would be unusual if a member of staff did not approach you after the auction.

For single auction properties the auctioneer will normally inform the room when the house is on the market.

For Allsop type auctions the property is on the market once it reaches the guide price.