I am currently bidding for a few properties and can’t just wonder if this bidding system over email taking weeks and months is even legally sanctioned ?
It is extremely opaque and the estate agents won’t disclose how many bidders are there at any stage. They just come back in few days with some new higher offer and asking if I am willing to offer more. Rarely I may get a phone call instead of the same nature if I don’t reply within a couple of days to the emails.
This looks rather like an auction style sale but just (illicitly??) organized over weeks or months and with no transparency for the ppl involved.
I also can’t imagine this happening elsewhere in EU but here alone.
Not only is there nothing illegal in this process of bidding, our economy depends on it!
Price discovery is the essential feature of a free market. Estate agents have professional obligations e.g. to report all bids to the vendor, but there are no rules limiting the time this process may take.
Nor is there any law against creating a phony bid in an effort to drive up the price but it is viewed as sharp practice and I don’t believe professional estate agents engage in the practice.There was talk of making it illegal but I don’t think it got anywhere
If our economy depends on it, why is it not transparent to the buyer? Arent’ there rules regulating the auction style sales ? Aren’t there defined registrations process for the auction and defined timeframes for the auction to take place ?
And yes, all the big names and professional EAs are in this - SherryFitz, DNG, Churches, and few others I’ve had to engage with - they all do it, and with no time limit – and we’re talking about several weeks to several months (and at times the respective property goes back to the market within 2-4 months or so, as the highest bidder that went sale agreed had “personal reasons” to drop) . And in this terrible lengthy process anyone can enter at any time to increase the bid (either to puff or with actual interest to purchase).
While I understand why they do it (so to “maximize” their profit and to inflate the bubble) I can’t understand why is this not regulated to offer a legal framework for the buyer as well.
The bidding system you are engaged in is not an auction as I would understand it, even if you were in an actual real auction, there’s very little stopping me getting my mother going in to bid against you simply for the purpose of driving the price up.
Any ‘thing’ is worth what someone is willing to pay for it - if you are willing to bid higher then at that moment in time that’s what that ‘thing’ is worth… any other system fixes prices at a level which may be below the cost of producing ‘things’ then the producers of ‘things’ bugger off and make something else that is worth their while, unless you’re in communist Russia when the continued making stuff and eventually bankrupted the place…
It would be better from a market perspective if the sales process was transparent but that’s the vendor’s choice (who is pleased not to have accepted your initial bid!).
It would be hopeless to enforce transparency legally. The Property Price Register now provides a degree of transparency about actual prices but the time lag and the lack of vetting diminishes its value, especially in a volatile market. CSO series is much more useful.
If you’re tired of the process, make a “best and final” offer with a time limit for acceptance, but you need to be ready to walk away.
Except nothing is being produced in a second-hand property sale. Indeed, that’s the reason our economy went down the toilet last time – money that could have gone to productive economy-boosting uses was used to inflate a giant asset bubble. As someone said, “we thought we could get rich just by selling houses to each other”.
I don’t see why the bidding process couldn’t be open to scrutiny. It would be a relatively simple matter to register every bid along with a statement of any non-arms-length relationship of the bidder to the seller. A process of random reviews (like Revenue does on tax returns) would discourage any skullduggery and increase the confidence of market participants.
Ireland is a nation of stroke-pullers, and Irish business has shown itself to be extraordinarily bad at self-regulation time and time again. Why do we think this is any different?
I don’t either, but doing this you won’t discover what someone might be willing to pay, you discover if actor a is willing to pay fractionally more than actor b.
What is the value to society of this price discovery is I suppose what we are asking here? The value to a capitalist / investor is clear. Is there an argument that it stimulates more economic activity because returns are maximised?