There are fears that ‘panic bids’ placed in online auctions are driving up house prices amid calls for more regulation of the home buying process in Ireland.
House prices can rise by as much as €100,000 from online bidding wars when a flood of offers is made in the final minutes or even seconds before a “deadline” set by real estate agents.
the Irish Independent oversaw 30 online bidding competitions for houses across Ireland, all sold by a leading national estate agent.
All properties have been sold in the last four months.
The 30 homes selected did not require bidders to provide ID or proof of solvency before bidding on the home.
Auctioneera, which sells homes in Cork, Dublin, Galway, Kildare, Meath and Wicklow, sets a deadline for online bidding on its properties, often resulting in high bidding volumes in the last few hours or even minutes.
The website states that these are not auctions. Homes are still being sold privately via online bidding.
From home sales monitored by the Irish Independent10pc fell through days later because the real estate agent was unable to pursue the sale agreed with the winning bidder.
Auctioneera said this can happen, and in his experience bidders have not made any bids for which they did not have funding.
A three bedroom duplex in Baldoyle, Dublin, which was listed at a target price of €300,000, rose by more than €90,000 after 18 bids on it in the last eight minutes before the final closing.
A single-family home in Ballinteer, in the capital, which came on the market for €790,000, fetched more than €120,000 from 34 bids in four hours.
Twenty of those bids were placed in the last 15 minutes before the deadline.
Apartment seekers who are interested in a property are often notified each time there is a new bid.
Bidders have no information as to who they are bidding against, whether it is a first time buyer or a mutual fund.
Bids are often made in increments of just €1,000.
A small one bedroom terrace in Dublin city center was first listed at €195,000. But 15 bids later, 14 of them in the last five minutes, it was sold for 232,000 euros – a price per square meter of over 7,000 euros.
A three bedroom semi-detached house in Lucan rose by €50,000 from its original asking price of €360,000 in less than three and a half hours after 28 bids. More than 20 of these bids were placed within the last 20 minutes.
A triple room in Castleknock rose by more than €55,000 from its target price of €450,000.
In less than half an hour, more than 30 bids were received for the property and 14 of those bids came in the last two minutes before the brokerage deadline.
Eoin Ó Broin, Sinn Féin’s spokesman for housing, said he believes people are “extending significantly beyond what they should be offering”.
“People are making panic bids and we’ve seen that for quite some time,” Mr Ó Broin said, adding that in many cases first-time buyers were being outbid by small institutional investors.
“All of this goes back to the heart of the matter, which is the level of regulation in the sector.
“The Real Estate Services Regulatory Authority (PSRA), which was set up to regulate this type of activity, is incredibly weak,” he said.
“They operate a voluntary code of conduct. It has no meaningful sanctions and is housed in the Justice Department, which is totally the wrong place for it.”
The opposition’s main spokesman on housing said the PSRA should be brought under the jurisdiction of the Housing Department, giving the Oireachtas Housing Committee the power to study and recommend reforms to home purchase regulations.
Shane O’Connor, a former real estate agent who now works as a buyer’s agent at Eldron, said online bidding wars often gave buyers less time to think about the home they’re bidding on and the price they could actually afford.
“If there’s a chance we won’t get something, especially in a competitive market, that can make us want it even more,” Mr. O’Connor said.
“And because supply is tight, when people see a house they like and they think they’ll never see anything like it again, they panic.”
Eddie O’Driscoll, Auctioneera’s director, said that Irish Independent that its website did not collect proof of money or ID from online bidders.
He said this was due to privacy concerns and “genuine constructive criticism from bidders who said they were uncomfortable showing the hand to the agent during the ongoing bidding process”.
“To suggest that the mechanism by which someone bids has an impact on the amount they bid is frankly illogical.”
Mr O’Driscoll added that his sector is “very tightly regulated by the PSRA” which is “proactive in pursuing deficiencies in real estate service providers”.
“Is the suggestion that bids are placed offline the old-fashioned, opaque way via SMS, email, phone, etc. is less than bids placed through our bidding platform? I cannot follow this logic.
“Auctioneers are price takers, not price makers, as we are simply getting the market price – we cannot control how much people bid or if they bid at all.
“We market the property on the market and then we are committed to the market.
“For Mr Ó Broin to suggest that our bidding mechanism has an impact on the amount people bid is frankly absurd.
“Blaming a real estate agent for high prices is like blaming a doctor for the diagnosis Sickness – you shoot the messenger.”
https://www.independent.ie/news/home-prices-rise-by-as-much-as-100000-in-last-seconds-of-property-auctions-41512780.html House prices increase by up to 100,000 euros in the last few seconds of property auctions