Response to Independent.ie Article
Today, Independent.ie journalist Ellen Coyne published an article that referred to properties sold by Auctioneera. It is available to read online here. Overall, I felt it was a fair and well researched piece, but I do want to address some points raised therein.
Vetting of Buyers
A reader of the article could leave with the mistaken impression that anyone can bid on an Auctioneera property online; this is not the case. We meet every bidder in person and provide them with the property’s unique bidding ID at the viewing. You must attend a viewing to get the property’s ID and you need that to place an offer on one of our properties. It is correct that we do not request proof of funds in order to partake in the bidding, but we absolutely do verify proof of funds before formally presenting the best three offers to the vendor for formal consideration. We only move to sale agreed with a buyer after having sight of their proof of funds. The rationale for this policy, as fairly reported in the article, is that buyers were strongly opposed to showing us their buying power while the bidding was ongoing. We understood this concern and acted on it. We feel our current policy fairly straddles the line between vetting buyers to ensure legitimate bidding while equally facilitating them in keeping their cards close to their chest during the bidding process. I was disappointed that this point wasn’t made in the article so happy to correct it here.
More Regulation Would Reduce House Prices?
We are already heavily regulated by the PSRA. We are regularly audited and having been part of such an audit, I can assure you they are rigorous and detailed. We have to maintain a bidding record of every bid placed on our properties, who placed it and when. Were an agent found not to have this record, serious sanctions would follow. Mr O’Broin claims the PSRA has “no meaningful sanctions”. He just hasn’t done his research here; the PSRA issues our license to trade every year. If they don’t issue it, we have to close our doors and we’re all out of the job. They can literally close us down; there is no greater sanction. Mr O’Broin should read the sanctions issued by the PSRA of late by clicking here.
In any case, what regulation is Mr O’Broin suggesting here? How would you regulate prices downwards? Is his contention that if we ban online bidding, prices will come down? It’s just the usual attack the messenger, populist, ill-conceived nonsense. “House prices are high – attack the auctioneers!” As Ms Coyne fairly published in the article, this is akin to blaming a doctor for diagnosing illness. Maybe we should regulate doctors more heavily to bring cancer rates down?
We’re a Fixed Fee Estate Agent
The undertone of the article is that estate agents are growing rich on the back of hardworking families trying to put a roof over their heads. That is happening in our industry and we are as appalled by it as anyone else. We recently met a vendor selling a property for €1.45m. A leading estate agency quoted 1.75%+VAT to sell the property. That works out at €31k…to sell a house…into a housing shortage. The profit margin on such a service is obscene and hence we have pioneered fixed fee estate agency in Ireland and will continue to do so. We charge a fair fixed fee to provide a best-in-class service. As a fixed fee estate agency, the benefit of high prices, rightly, accrue to our clients not to us in any case. Again, I think the article should have pointed this out but it didn’t fit the narrative of the piece so was omitted.
Online Bidding Causes Sales to Fall Through
This is a classic case of confusing correlation with causation. The suggested logic is that the bidding happened online, the sale fell through, ergo the online bidding caused the sale to fall through - nonsense. Any estate agent will tell you that the benefit and at the same time the drawback of the private treaty process is its flexibility. Bidders can make non-binding bids in good faith and only commit to the expense of due diligence (legal and structural) if and when their offer is accepted. This contrasts with auctions where these expenses must be incurred upfront by all bidders in advance of bidding as bids are legally binding. But because of its flexibility, sales fall through from time to time. This has nothing to do with the mechanism used to process bids or regulation for that matter.
Those contending that there is a causal relationship between the bidding mechanism and the likelihood of a sale to fall through would do well to watch this video clip in which Homer wants to buy a rock from Lisa because the presence of the rock correlates with an absence of tigers; Homer concludes that the rock is keeping them away. Correlation doesn’t equal causation!
I would like to thank Ms Coyne for her piece and hope that it informs still more vendors that the future of estate agency is online, transparent, fixed fee…the future is Auctioneera!