Auction or Private Treaty?

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elainem

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Hi! I've posted on askaboutmoney many times re. the difficulties of dealing with my period property. I'm now about to put it up for sale. AMV 2 million. Auctioneers are trying to persuade me to put it up for auction. It's in D4. However, I note now that houses are not selling at auction, though some appear to be selling afterwards. I was wondering about selling through private treaty. The advertising costs for auction are about 7k. Is it cheaper to sell through private treaty. I can't help feeling that auctions have had their day, and that the cost of advertising does more to publicise the auctioneer than my property. Am I being cynical? Any advice, as usual, greatly appreciated.
 
You are quite right. There's virtually nothing selling at auction ie 4 out of 30 properties in IT report this week - a couple more sold afterwards. While it does not reduce your chances of selling, the days of auction room premium on price is definatley parked for the moment. The risk of spending the extra 7k (upfront) , with the possibility that it might still take 3/4 to sell afterwards generally suggest that the private treaty route is just as effective now - and less exposure to upfront costs. In addition, punters are not bidding at all at auctions generally now, and if interested, going into private treaty negocations afterwards - negation the auction purpose in the first place!
 
On the other hand, auctions do have advantages if you're selling a premium period property - many properties don't sell under the hammer, because when there are a couple of bidders around the right level, they may be taken aside and an agreement reached (this is why you often get a note saying "sold after for higher").

Ask your agent about comparable properties in the area - whether they've gone by auction or private treaty, and what kind of prices they've made. The upfront money is a lot, but it'll get you a level of exposure which will stand to you even if the property doesn't sell at auction. Realistically, at the level you're looking at, you'll need newpaper ads with pictures (in my entirely lay opinion!), no matter what route you take, and that's expensive.

There are other reasons to go to auction as well, to do with the nature of title/ ascertainment of title, though I don't know a great deal about this. I'm sure one of the solicitors on the site can tell you, though.
 
Dreamerb said:
Ask your agent about comparable properties in the area
Click to expand...

One of the main reasons for going by auction is where there are no comparable properties or if they come to market infrequently. This makes it harder to judge what a fair market value is and set the asking price for a private treaty sale accordingly. So, for example, houses in an estate of very similar houses would rarely if ever be sold by auction. In your case, it could be worth allowing the market decide in the auction room.

Other advantages of the auction process include the fact that if the house is sold under the hammer, the buyer must sign binding contracts and pay a non-refundable 10% deposit there and then, compared to private treaty negotiations which can drag on and on. The weekend open viewings mean you have few viewings outside those times, meaning less hassle, and the auction campaign is short and sharp, usually complete in three to four weeks.

Disadvantages include the possibility your house may not sell, although I think the recent poor results at auctions have at least as much to do with vendors being unrealistic in their expectations as buyers not wanting to buy via auction. Advertising costs are higher - in the order of €3,000 more than a private treaty sale and are payable whether you sell or not (also true of private treaty).

The decision which way to go depends on what your motivation is. If it's just to maximize price, auction may or may not offer an advantage, depending on how unusual and/or desirable your property is. If it's to get the house sold with the least hassle, auction is probably the way to go, provided you are realistic in your price.
 
Thanks to everyone for your replies. Much appreciated. Following the advice I feel the auction route is probably the best. I want to get the house sold, with the least hassle. Also, auctioneers have suggested that I put the attached mews to the rear, up for auction with the main house, as this would likely attract a premium (two parking spaces also with selling this way). They have said that no property has been offered on the street with a mews attached and parking before. This would bring the total to 3 million. I just hope they sell. Tried and worn out from being a landlord, and want to invest in something else. However, I just saw the Sundays today, about the downturn in prices. Just wondering whether this is a good time to sell, or should I wait a bit. Advice again much appreciated.
 
Many people avoid auctions because they waste a lot of money on surveys and legal fees etc only to find out after the auction that they were never at the races. This can happen a couple of times and after losing out emotionally and financially a couple of times they no longer want to waste money and pay for the preparation of a bid at auction. Once they come second at the auction, or as frequently happens the property is withdrawn at auction, they get absolutely nothing at all for all the money, time and energy they have spent so far.

Shane Ross sold his house at auction fairly recently and tried to help the buyer by preparing a buyers pack in advance.

I would suggest that you get a full structural survey of the house done by one of the major companies which do this type of work and give this to all potential purchasers. This means that they can see what needs to be done and can get a builder to price any work that is needed. Likewise if nothing is needed they will know this and can increase the price they are willing to pay for the house at auction on this basis. Why should I waste my money on this you might ask, but can you see anyone parting with a couple of million without having had a full structural survey done themselves first (I suppose there are one or two who will).

Likewise I would go to a firm of solicitors and engage them to act on behalf of the buyer and do all the paperwork and searches for them in advance. The buyer can then use this solicitor for the sale or if they so wish they can employ their own solicitor. The solicitor you have engaged for them will have the same qualifications, insurance, experience and indemnities etc as their solicitor so they have nothing to lose by using the one you have engaged.

What I would be trying to do is to avoid the situation where 4 or 5 interested parties all engage and pay for their own solicitor and surveyor, when one solicitor and surveyor can equally do the job for them all. You want the money used for the purchase of the house coming to you, not needlessly lining the pockets of the various professions involved in the property game, duplicating exactly the same work for different potential purchasers. You want them to use their money to bid up the price of your house.

Naturally you will have your own solicitor.

Finally, you might consider disclosing the reserve in advance. If the property reaches that price you will sell. This stops people doing the above work and getting loan approval without realistically having a chance of buying the property as it is way out of their reach. How often have you seen a property which exceeded its AMV and was still being withdrawn at auction. You should therefore attract serious players to the auction. All that the serious potential purchaser has had to do now is secure the finance and this won't cost them anything until they actually buy the place.

I can just see the queue of surveyors and solicitors looking to take on something like this.


Murt
 
A lot of sense there Murt - well said!
Personally would not go near auctions at the moment. Last week a property went to auction at a ridiculous AMV. Mrs Runner wanted it! Spoke to ES week before and they were swamped by surveys and legal checks on property - all wasted money for interested punters as it sold at auction at 40% above AMV. The ES thought it was great!
 
Thanks all for your replies. I'm still thinking of going the auction route. Murt, what you said is interesting, in terms of avoiding all the wasted expenditure of the various interested parties. Runner, I did not think properties now made 40% over the AMV. Was this property near my neck of the woods? Just interested to know.
 
This is getting like the future of Irish house prices thread by stealth. Elainem, I sympathise with your predicament, but you have already decided to sell so you have to make the best call you can based on the information you are receiving from the EA. If property prices are falling -arent you better off getting out anyway. Were you not saying that the yield was awful, you could do more with the money elsewhere, and the upkeep and maintence bills were crippling for you?
Time to sell.
 
Hi! Runner, was that the house with the large garden - I didn't think anything was going above the AMV these days - there's hope for my properties still then.

I am also interested in purchasing a house in Clonskeagh (when I have sold my D4 props) foor the kids. I looked at a 3 bed in the Maples. Auctioneer told me I should follow the Luas line, that as the Luas wasn't going to Clonskeagh, there wasn't going to be much appreciation in the near future. I'd be interested in your comments, and also what you think of The Maples, and any similar developments in Clonskeagh. Thanks.
 
Elainem, it was a fab house and as new condition built around 10yrs. 2800sqft. 3 storey , town house design , small garden, gated enclosure with 3 other houses. My point was that the AMV was way too low and it mislead a lot of punters who thought innocently that they could maybe get it for 1.4/1.5M and went ahead with the expense of surveys, title inspections and auction finance, when it was never going to sell for that price.For that experience, there may be at least 20 people that will never touch an auction again - thats my main point.
Regards living in clonskeagh - im there 20 years now. There is no location that is realistically adjacent to Luas - we would like to be closer ourselves! You could get within reasonable walking distance from Maples in Bird Avenue - but the bus propably handier. Depends more on where your kids are in school, are they male/female or where you might intend to send them. You should probably check this issue first as the area is generally excellent family wise. And yes, most houses will have good privacy and gardens that are family friendly. You get what you pay for however, and you would need to indicate how much you intend to spend before I could offer a definitive view.
R
 
Hi! Runner, thanks again for your reply. I am not really looking for a house to live in for all of us at the moment. What I am looking for is a modern, preferably four-bedroomed house, as an investment, which I could rent out, and which my children could use if and when they go to college, (I have two young children 3 and 5). I would hope they could also rent out a room or two. At the moment I am happy living down the country. However, it would also be important that the house in Clonskeagh or thereabouts would have good schools locally, in case we ever moved back to Dublin. I'm hoping to start Phd when my son goes to school, so if a resulting good job opportunity arose then I would move back to Dublin. I guess the house I buy would have to cover an area for investment, rental and also good schools. It would have to be modern, easy to maintain and with a city garden, as there is only myself and the children and I don't want to have a large garden to maintain. If you can offer any advice on this scenario I would really appreciate it. I also looked at a property in The Heath in Stillorgan on the Upper Kilmacud Road which was also a possibility. Thanks again. Elainem
 
Elainem, instinct would suggest you should look in the areas such as Maples which are walking distance adjacency to UCD. This way it will always be easy to rent out and convenient for personal and children college when needed. The Upper K/M Cud area is fine but not as convenient - the only exception here is that it is actually near the Luas, but you would otherwise need your own transport as bus service is irregular. Areas such as estates off Goatstown Road and Roebuck Castle off Roebuck road is 5 minuteswalk into UCD. The latter actually borders with UCD grounds and I think the type of quasi townhouse format might suit your needs. Also the No 10 bus from UCD runs on the bus corridor to town every 10 minutes or so - the best bus service in dublin i'd say. If you need advice an any specific house in the area, PM me and will offer an opinion.
R
 
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