Bidding Strategy

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Butter

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Trying to buy a house in Ireland sometimes feels like engaging in a psychological war game.

We bid on a house 3 weeks ago which has been on the market for 8 weeks. Our bid was 8% below the asking price and was the only offer until this week. The vendor didn't accept it and was obviously holding out for more and for a competitive bidding process to begin.

This week a second prospective bidder entered the game with an extra €25,000.

I'm trying to figure out why anyone would up the current offer on the table by so much? Trying to psych out the person with the lower offer with a big "loads of money" offer? Could it be their best offer & they decided to put it all on the table?

Is there any point in even trying to guess someone else's strategy or the EA's game?
 
I would suggest that there is no point in guessing. You offered 8% below asking price. If you think this is what the house is worth to you then do nothing else. Despite what you might think now there will be other houses. Don't be surprised if EA comes back to you to tell you the other bidder has dropped out.
 
Butter said:
We bid on a house 3 weeks ago which has been on the market for 8 weeks. Our bid was 8% below the asking price and was the only offer until this week.

This week a second prospective bidder entered the game with an extra €25,000.
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My opinion;

Probably getting near decision time for the seller, you offer an extra €30K now and the house is most likely yours. If there is no new bidder, the house is also most likely yours at your current offer, if you hold your nerve, but of course that is not guaranteed.

To avoid a bidding war with phantom bidders, I think you have to make reasonable offers on several suitable homes, walk away and wait, its head wrecking and bad for the nerves, and there will be several disappointments, but you will eventually succeed.
 
Our first bid was a bit of a speculative punt. We thought the seller might be willing to negotiate and meet us half way. The EA came back at the time to say he wanted more than the asking price.

We don't think the house is worth more than the asking price - so is there even any point in entering another bid? All we are doing is bidding up the price to the point where we maybe pull out & the other bidder ends up paying a higher price (or we do!). It's a very strange system!
 
twofor1 said:
My opinion;

Probably getting near decision time for the seller, you offer an extra €30K now and the house is most likely yours. If there is no new bidder, the house is also most likely yours at your current offer, if you hold your nerve, but of course that is not guaranteed.

To avoid a bidding war with phantom bidders, I think you have to make reasonable offers on several suitable homes, walk away and wait, its head wrecking and bad for the nerves, and there will be several disappointments, but you will eventually succeed.
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So sit tight & don't rush into another bid yet? The new bid isn't over the asking price either so in theory the seller won't accept that one either.
 
Butter said:
So sit tight & don't rush into another bid yet? The new bid isn't over the asking price either so in theory the seller won't accept that one either.
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Well as the second offer is still not over the asking that makes the scenario more believable. It happened me a few months ago and i was the seller. The first offer was about 15% lower than asking and the next offer (the next day) went to asking (up by 30k). I didn't refuse the first offer, I didnt have time to and i have no idea what my estate told the first bidder but i'm sure she said we were waiting for closer to the asking.
 
Is the house in an area where the market is rising or falling?

Butter said:
We don't think the house is worth more than the asking price - so is there even any point in entering another bid?
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This is something that should be considered on a case-by-case basis. You may end up paying more that you think the house is worth. However, if you pull out, you may find that in six months time you buy a different house for more than that house is worth. In the meantime, you've also lost six months. Time is money!

If you're finding this process confusing... well... to whose advantage is this? The EA/seller! The housing market is "a game" (I dislike the use of this term but it was used over-and-over again during the boom). The EA has been here before and is probably familiar with every strategy. He/she knows exactly what he/she is doing and knows (or is fairly confident he/she knows) what is going on. If you know exactly what you are doing and know (or are fairly confident you know) what is going on, then it's a level playing field. If it ain't, it ain't.
 
The market rose really rapidly from Jan to July but there is a definite slow down in it at the moment. Your point is one that I've made to my husband - we may not feel it's worth the asking price but we risk cutting off our nose to spite our face by refusing to bid above that price just because we've set it as an arbitrary "reasonable value" figure in our heads. In six months time we could find ourselves paying the same money for less house.

And yes there is little doubt that the EAs know the game. I have said that in future we go to view houses, say nothing, give nothing away & if we bid then give no explanation or rationale for the bid - just the straight bid. A good poker face as opposed to giving our hand away.
 
Butter said:
The EA came back at the time to say he wanted more than the asking price.
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So the asking price isn't the asking price then? Is there any rules about estate agents setting the advised minimum value that would conflict with this approach.
 
The slow down you refer to is probably just "builders' holidays"; ie August.
I would discuss as little as possible with the EA. Submit bids in writing, i.e. email. This is a huge purchase, possibility the greatest you'll ever make. This should not be conducted verbally.


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I agree Drakon - verbal discussion will be kept to a minimum in future.

A third bidder has entered the market with another €15,000. I'm amazed that people will bid up a price by such huge increments.

RainyDay - are there any rules that govern how an EA operates? Is the AMV only applicable to auctions?
 
Just listening to Gavin Jennings interview with an EA on RTE. EA states that under PRSA rules all bids must be recorded and available for inspection.

Just wondered how often (if) those inspections are actually carried out?
 
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