CityLivingA private treaty purchase can be just as traumatic as buying at auction when the price won't stop rising, says Jane Suiter
Thinking of buying a house in Dublin for less than €500,000? Tempted maybe by the thought of a short commute even if you do have to give up the garden or an extra bedroom?
You have found the house, done the homework, perhaps got a surveyor's report and are finally prepared to put in an offer. It's for sale by private treaty, not by auction, so you should feel safe from the galloping insanity that can prevail in the auction room.
After all, you tell yourself, this is an "asking price" not a guide price. So you make an offer to the agent. A day later you hear that someone else has offered more. You up your offer yet again and once more the estate agent is back with news that someone else has topped you.
This can go on for weeks and is soul destroying for the anxious buyers as the price soars out of reach, often well out of line with the original asking price. Some buyers have even been known to wonder if there is a phantom bidder at the other end of the agent's line.
While auction guide prices have been considered a joke for some time, private treaty prices are, also, it seems, subject to the same upward swings. Many homes in the inner suburbs of Dublin are regularly going for up to €100,000 more than their asking price and sometimes even €200,000 above.
Last week this supplement featured a house on Dargle Road, Drumcondra asking €450,000 by private treaty. By Friday the asking price was up to €470,000, by the viewing on Saturday it was at €520,000. It is now asking €550,000 - a full €100,000 over the original guide price.
Martin Doyle of Douglas Newman Good, who is selling agent for the house, admits that there was a phenomenal level of interest in the property, which pushed the price above expectation. He insists that some homes in the private contract market do go for close to their guide.
"We had a four-bed semi-detached in Glasnevin, Dublin 11 asking €500,000 and it sold in that region," he says. "It is difficult to value in a strong market, you never know what people will pay." But of course that is exactly what people expect an estate agent to know.
And the Dargle Road house was not a one-off. Ken Keller, in a letter to The Irish Times earlier this week, highlighted a "small, utterly dilapidated house in Dublin 4, with the kitchen ceiling falling in and a lean-to toilet that you wouldn't house cattle in, was advertised recently with a guide of €320,000 (originally €290,000)".
This was an auction but Keller still returned "dazed" when the gavel brought the sale to a conclusion at €505,000. That was a full €215,000 above the original guide.
In the private treaty market the sums can be similar. Meanwhile the people trying to buy these houses go through hell, bidding up-and-up-and-up over the phone, though in some cases they are asked to submit a best and final offer in writing. It's an awful way to buy your home.
But agents insist it is simply that demand in the market is very strong, although they admit that asking prices are always put at what they call a "reasonable level" in order to get people through the door.
The problem, says Declan Cassidy, residential director of Gunne, is that all the inner city areas are seeing rapid price rises, as there is little supply on the market. "Most people are waiting until after Easter to put their home up. Now you may be able to see two or three homes in your price bracket on a Saturday; later in April, it will probably be 10 or more.
"People are waiting for the longer days or for their garden to look a little fresher or even in some cases they are planning to do a paint or clean-up job over the Easter holidays."
He insists that asking prices in general are being exceeded by around 10 per cent. "We may guide a house at €575,000 and it will go for €630,000. Around 10 per cent over the price is usual."
Perhaps potential buyers should take the advice of Aidan O'Hogan, past president of the IAVI and chairman of Hamilton Osborne King. He says this serial bidding should become less common as more homes come on the market after Easter.
"In a sense, this is of the buyer's own making, if they participate in the process. Buyers should not get completely carried away, they can pull out and should remember there will be more supply after Easter."
Agents also point out that the offer is generally subject to survey and in fact, many offers are withdrawn. The person generally has three weeks to do a survey, get a bank valuation and check the title.
At that point they pay a deposit of around 10 per cent. "It is not the same as at auction when you are paying no matter what an engineer or surveyor later tells you," says DNG.
And remember that, as O'Hogan points out, for the past three or four years all those who have sold in the first few months of the year have generally achieved higher prices than those selling later.
You can say you have had enough. Another house will turn up.
... jsuiter@eircom.net
