Trying to understand bidding strategy

blue note

I'm bidding on my first house and listening to a lot of people tell me a lot of things about how to bid. One of the bidders keeps upping it by €1k after we put in a bid. It's just annoying! But, I can see why they're doing it. Some people are telling me to blow the other bids out of the water and go in €10k above them. That just sounds dumb to me.

But is there actually any strategy to bidding? I would have guessed that everyone sets their absolute limit on the property and makes one or two bids above that when it gets there. I've set my limit on it and if someone made a bid of less than that I'd come in higher than it, even if it was a jump from where it's at at the moment.


The only strategic thing I'm thinking is that I'd like to slow it down to make sure my mortgage application goes through. The mortgage we'd be looking for for this property is about €200k less than what we could get judging from 3.5 times our salaries, but I really hope it doesn't take unnecessarily long anyway.

And on an aside - I've looked at 30-40 houses. Does anyone else find that they're looking around people's houses making up lives for the people selling? I find myself walking around someone's house lamenting the break up of a family / relationship and being forced into selling the house or thinking this looks like a lovely family who just outgrew this family home. Or thinking it's sad that someone has passed away.

listermint

If they are going up in 1K you go up in 2500 increments, This will slow out the other bidder. but be firm with the agent that you want this brought to a close quickly.

ted1

This happened me , I made a song and dance about wanting it and going off to family members seen if they could help out as I’m at the top of my limit ( which I wasn’t)

Then a day later rang up agent and offered 500 more. Which was accepted.
Moral of story don’t be so fast raising and make it look like a struggle

wersal gummage

I sold recently and would not have accepted an offer from someone without mortgage approval to be honest. Even if they were offering several thousand more than the mortgage approved people... I was tempted to accept a cash offer of slightly lower than mortgage approved people but in the end I took the mortgage approved offer..... I wasn't in a hurry to sell... So all of this is just to say that even if you end up as the highest bidder, your offer might not be accepted!

metricspaces

Show the auctioneer you have an alternative, make it explicit that you are looking at another property that is same\lower price (of course you don't actually have to have any interest in going with the alternative!). They may blink first.

tuskacz

<SNIP>

Mod Note

Off-topic ranting deleted.

blue note

wersal gummage wrote: »

I sold recently and would not have accepted an offer from someone without mortgage approval to be honest. Even if they were offering several thousand more than the mortgage approved people... I was tempted to accept a cash offer of slightly lower than mortgage approved people but in the end I took the mortgage approved offer..... I wasn't in a hurry to sell... So all of this is just to say that even if you end up as the highest bidder, your offer might not be accepted!

That's not entirely surprising, but quite a worry all the same!


As I say - the mortgage should be no problem. We'd have half it in a deposit anyway and based on the 3.5 times your salary rule we'd be more than 200k clear of the asking price. We've also got honest faces, but I'm not so sure that a seller will care about any of that.

wersal gummage

Just speaking from my experience, honest faces etc doesn't come into it. I haven't met any of the bidders. The estate agent rang me every few days and kept me updated on bidding situation. The bidding just looked after itself to be honest and then it was clearly reaching its conclusion and I was presented with :
Offer A (cash)
Offer B (mortgage approval).

The estate agent didn't recommend which to accept but in discussion I was happy, based on the estate agents sense of things, that the mortgage approved were serious and likely to go through with it.

To tell you the truth, I don't think the estate agent would even have told me about an offer from someone without cash or mortgage approval.... And I wouldn't have been interested in the offer as why bother (if you can see it from the sellers side, what's an extra 1000 euro on a few hundred thousand euro transaction, one has an element of certainty and the other could be a time waster. I'm not suggesting that about you at all, but just telling you how a seller might see it) But I guess if you can demonstrate to the estate agent that you have no problem getting the mortgage and have applied etc then it might be fine.

To be honest as well regarding another person who says to talk tough, that is just nonsense. I don't know in other cases, but I was selling in Dublin and had over 5 people bidding within 2 days of the property being advertised. Someone ringing the estate agent and saying they are looking at another house..... That kind of nonsense wouldn't even make it to the seller. I was told about one conditional offer, and the condition was that I had to accept or reject the the offer the same day it was made. Some kind of strong arm tactics I guess, and maybe they works if a buyer is desperate to sell. Within a few days the other people bidding had gone 30k above the "take it or leave it right now" person...

annoyedgal

Yep we tried to make an offer withowithouht mortgage approval and it wasn't entertained at all. When I went to sell I understood why! Wouldn't accept an offer without approval even if it was higher. Defìnitely get your paperwork in order first.

awec

It's all just guesswork really, there is no real strategy.

If this 1k bid has been happening for a while then maybe stick it out, as it might be an indication that the other bidder doesn't have much room left in their max budget to bid.

You could go in with a bigger bid of 10k above your current, but you risk overspending by 9k. I guess that might bother you depending on how big a figure this is relative to your complete outlay. On the other hand you could be messing about forever with this other guy.

TheChizler

annoyedgal wrote: »

Yep we tried to make an offer withowithouht mortgage approval and it wasn't entertained at all. When I went to sell I understood why! Wouldn't accept an offer without approval even if it was higher. Defìnitely get your paperwork in order first.

About to start this whole buying lark in about 6 months myself, trying to figure out the process now. Do I take this to mean that people actually make bids without having approval in principle??? So you could be there with your carefully prepared approval in principle bidding against someone essentially making an offer with monopoly money??

wersal gummage

I think you need actual mortgage approval, not approval in principle. I think you can get mortgage approval in principle on the Internet in about 5 minutes, but actual mortgage approval takes longer and you have to submit evidence of employment, payslips, p60, bank statements, mortgage statements etc etc etc.

blue note

TheChizler wrote: »

About to start this whole buying lark in about 6 months myself, trying to figure out the process now. Do I take this to mean that people actually make bids without having approval in principle??? So you could be there with your carefully prepared approval in principle bidding against someone essentially making an offer with monopoly money??

I've been asked for no evidence that I can back up my bid. I would fully expect that some people bid on houses that they don't have a realistic chance of getting a mortgage for.

Approval in principle is fine - you can get that very easily. Actual approval I hear is more difficult and I've an appointment in the bank tomorrow about that.

awec

wersal gummage wrote: »

I think you need actual mortgage approval, not approval in principle. I think you can get mortgage approval in principle on the Internet in about 5 minutes, but actual mortgage approval takes longer and you have to submit evidence of employment, payslips, p60, bank statements, mortgage statements etc etc etc.

You can't get proper mortgage approval without having a property to get it against. Proper mortgage approval is against a specific property.

Some banks seem to get approval online these days, but whether or not they will provide you with an actual AIP letter without providing payslips and statements etc I am not sure. I know we had to give all this info to get AIP.

annoyedgal

We applied for a mortgage without having a specific property in mind. Think it's called a house hunters mortgage. This was boi. Put in the max amount we thought we would need and got full approval not approval in principal. Just needed to update it then with property detail when found the house. Would recommend doing this before bidding as would be stressful finding house of your dreams and then running into a problem with the mortgage.

awec

annoyedgal wrote: »

We applied for a mortgage without having a specific property in mind. Think it's called a house hunters mortgage. This was boi. Put in the max amount we thought we would need and got full approval not approval in principal. Just needed to update it then with property detail when found the house. Would recommend doing this before bidding as would be stressful finding house of your dreams and then running into a problem with the mortgage.

Every single person applies for a mortgage without having a property in mind these days. Most developers and vendors will not entertain anyone who hasn't.

Maybe some banks like to play around with how they market it, AIP vs full approval etc, but either way before you get a real offer of a mortgage the bank will need your new address and send a valuer to ensure it's something they're willing to lend against.

In your case it seems BOI called it full approval but really it was just AIP. AIP is what you need to start shopping for your house.

Samuel T. Cogley

We did the blow them out of the water bidding, worked for us but I think the time has passed for that strategy. +1 to ted's strat. Show how interested you are (which we did) keeps the vendor and EA interested. Make out every €1000 bid is you selling your granny and wait them out. Never make more than one bid a day, ideally no more than 1 a week but these things can move faster.

You may end up a best and final then you're really fecked :P

Marcusm

Samuel T. Cogley wrote: »

We did the blow them out of the water bidding, worked for us but I think the time has passed for that strategy. +1 to ted's strat. Show how interested you are (which we did) keeps the vendor and EA interested. Make out every €1000 bid is you selling your granny and wait them out. Never make more than one bid a day, ideally no more than 1 a week but these things can move faster.

You may end up a best and final then you're really fecked :P

But as the price is rarely reinvested in new social housing it essentially means jumping in the lifeboat and pulling up the ladder. For all those who benefited from the sell off of U.K. council housing stock, their children and grandchildren’s generations suffer.

limnam

It's very difficult to give any sort of strategy as there is so many "it depends" elements



Bidding on houses in the 400-500k+ range outside of Dublin for example is completely different ball game to bidding on a 300k house in Dublin.


Bidding on the same house/apt a couple of years ago is comptley different then today.

Frilly Knickers

annoyedgal wrote: »

We applied for a mortgage without having a specific property in mind. Think it's called a house hunters mortgage. This was boi. Put in the max amount we thought we would need and got full approval not approval in principal. Just needed to update it then with property detail when found the house. Would recommend doing this before bidding as would be stressful finding house of your dreams and then running into a problem with the mortgage.

This. Applied for max 3.5 times our salary and got approval to go bidding. Wasn't actually asked for proof until I was sale agreed but my sale agreed offer would never have been accepted without proof.

In the time OP spent viewing 40 houses he could easily have just applied for a mortgage. It's a lengthy process and no vendor will wait 4-6 weeks waiting for approval to come through and risking losing serious loan approved buyers

limnam

Frilly Knickers wrote: »

This. Applied for max 3.5 times our salary and got approval to go bidding. Wasn't actually asked for proof until I was sale agreed but my sale agreed offer would never have been accepted without proof.

In the time OP spent viewing 40 houses he could easily have just applied for a mortgage. It's a lengthy process and no vendor will wait 4-6 weeks waiting for approval to come through and risking losing serious loan approved buyers

There seems to be a bit of misunderstanding of what AIP and loan offer is.


A bank cannot approve a loan for a home without been valuated etc etc.


You can't get a valuation done if you have no house to purchase.


There's AIP that you can get in 3 seconds and there's AIP from a a mortgage application. One requires 6 months bank statements/credit car/check p60/wage slips etc where the other AIP takes a few minutes on the website.


Once a "real" mortgage application gets to AIP you can go and and put offers. Moving from AIP to loan offer is normally a fairly quick process.




So I'm not sure who these "real" loan approved buyers would be. They'd all need to go back to thier bank to go to loan offer moving from AIP assuming they'd done this all ready.


Unless there's a new bank doing things no other bank is doing, it's the same for anyone going for a mortgage

my undrstanding is the new regulations done away with any, sure here's a loan offer before hand craic

Frilly Knickers

No, it it didn't take 30 seconds, it took 6 weeks and involved submitting full documentation and kbc going through it with a fine tooth comb - 3 years of accounts, revenue submissions etc

It was full Underwriting, not the indicative thing that anyone can get online in 30 seconds

Then we got approval. After that we found a house.

2 people on this thread have had the same experience so we are not confused.

limnam

Frilly Knickers wrote: »

No, it it didn't take 30 seconds, it took 6 weeks and involved submitting full documentation and kbc going through it with a fine tooth comb - 3 years of accounts, revenue submissions etc

You didn't read what I wrote. I said there's different types of AIP. One is in 30 seconds anyone can do on a website and one is AIP from a full application.


Which requires the full she bang.

Frilly Knickers wrote: »

It was full Underwriting, not the indicative thing that anyone can get online in 30 seconds

It's called a mortgage application. Everyone does it. You go AIP. Then go to loan offer.



Anything else is marketing gimmicks playing on words or is ilegal and against legislation.

metricspaces

Each application and each bank will be different. Some get processed in a week. Some a lot longer.

From personal experience, once I had all the paperwork, one bank took many weeks of messing around. Another got it all done in less than two weeks. The competency of the staff dealing with your application can have a big impact on timelines.

awec

Frilly Knickers wrote: »

No, it it didn't take 30 seconds, it took 6 weeks and involved submitting full documentation and kbc going through it with a fine tooth comb - 3 years of accounts, revenue submissions etc

It was full Underwriting, not the indicative thing that anyone can get online in 30 seconds

Then we got approval. After that we found a house.

2 people on this thread have had the same experience so we are not confused.

Even if it goes to the underwriters that is still just approval in principle. Providing all the details, going through all your statements and going to the underwriters is the standard process for approval in principle.

Any approval that doesn't go through the above process is completely worthless. I bet the online ones that take a few minutes do not result in you getting an official AIP letter from the bank. When people say online, do they just mean those things where you enter your salaries, other incomes, kids, loans etc and it provides you with a number?

Lumen

blue note wrote: »

Some people are telling me to blow the other bids out of the water and go in €10k above them.

What happens when two people with this strategy bid on the same property?

IMO it's more important to set your own limit and stick to it. It's very easy to get emotionally attached and just keep going higher.

I bailed on one house a couple of years ago that I could technically afford to keep bidding on, but now my circumstances have changed and I'm happy I went with a cheaper house. I'd have been eating beans for 20 years.

davo10

There is no rules on bidding (apart from one, if you put a time limit on your bid the EA will see you as a novice/knob and ignore you), no method of bidding that always works. But you can learn a lot from the way others bid.

The first thing you should do when bidding is set your own max amount that you can afford to pay without stretching your finances. Factor in that you will need to spend money on repairs/refurbishment, there is no use in spending all your money then finding that the boiler packs up. Remember, it's a seller's market, accept that if you want the house, it's reasonable to assume others will also so the price is likely to rise. Then bid sensibly, don't go up in hundreds, go up in €2k increments, or 5's if you can afford it, if the other bidder goes up in 1s then they are at their limit.

blue note

davo10 wrote: »

There is no rules on bidding (apart from one, if you put a time limit on your bid the EA will see you as a novice/knob and ignore you), no method of bidding that always works. But you can learn a lot from the way others bid.

The first thing you should do when bidding is set your own max amount that you can afford to pay without stretching your finances. Factor in that you will need to spend money on repairs/refurbishment, there is no use in spending all your money then finding that the boiler packs up. Remember, it's a seller's market, accept that if you want the house, it's reasonable to assume others will also so the price is likely to rise. Then bid sensibly, don't go up in hundreds, go up in €2k increments, or 5's if you can afford it, if the other bidder goes up in 1s then they are at their limit.

The other went up by 1 at 455 and 470. We're now at 473 and I'm waiting to see if they go to 474.

metricspaces

blue note wrote: »

The other went up by 1 at 455 and 470. We're now at 473 and I'm waiting to see if they go to 474.

Blow them outta the water, 500!

happyfriday74

This happened to me. I had three people bidding one chap kept upping bids in 500 increments. It pissed off the other bidders who soon gave up.

Was getting fed up but apparently purchaser was cash and would close in 4 weeks. He promptly went cold an sale feel out of bed.

Turns out the chap was an investor and would routinely put sale agreed deposits down on multiple properties at once just to secure them, frighten off other bidders and then go through the motions on multiple sales process to bid time and then go back and cherry pick the properties he wanted and let the rest fall out of bed.

If I was selling again Id be careful of seeing this approach.

Generally find the buyer who makes a big bid jump the most serious.

davo10

blue note wrote: »

The other went up by 1 at 455 and 470. We're now at 473 and I'm waiting to see if they go to 474.

Are you still within what you can afford?

s7ryf3925pivug

We bid asking price with a hard time limit. The EA tried to ignore time limit but we insisted. Offer was accepted.

My perception is that EAs sometimes like to use bids as leverage to seek larger bids. Time limit seeks to pre-empt that.

blue note

davo10 wrote: »

Are you still within what you can afford?

We're way within budget but just don't want to overpay. It kind of makes it more difficult to stop bidding when we could go higher without putting ourselves under strain!

TheChizler

blue note wrote: »

I've been asked for no evidence that I can back up my bid. I would fully expect that some people bid on houses that they don't have a realistic chance of getting a mortgage for.

Approval in principle is fine - you can get that very easily. Actual approval I hear is more difficult and I've an appointment in the bank tomorrow about that.

Cheers, I mean the more serious approval (before the loan offer) where they've gone through all your payslips and reviewed work contracts and stress tested your possible payments, but you don't have a specific house in mind to get a valuation or structural report on yet, not the online calculator that just multiplies your income by 3.5

davo10

blue note wrote: »

We're way within budget but just don't want to overpay. It kind of makes it more difficult to stop bidding when we could go higher without putting ourselves under strain!

What is overpaying? A house is worth what the highest bidder is willing to pay, if that's you then you paid what it is worth. If it isn't you, then someone paid what it is worth to them. Prices rise and fall, if it rises in the years to come, you got a "bargain", if it falls then you "overpaid" but today you paid what it is worth to you.

Lumen

davo10 wrote: »

What is overpaying? A house is worth what the highest bidder is willing to pay, if that's you then you paid what it is worth. If it isn't you, then someone paid what it is worth to them. Prices rise and fall, if it rises in the years to come, you got a "bargain", if it falls then you "overpaid" but today you paid what it is worth to you.

Yes, to buy a house you have to pay more than anyone else thinks it's worth.

It's best not to think about this too much.

ted1

metricspaces wrote: »

blue note wrote: »

The other went up by 1 at 455 and 470. We're now at 473 and I'm waiting to see if they go to 474.

Blow them outta the water, 500!

That may involve spending 17k more then he needs. While it may work it would also be foolish

metricspaces

ted1 wrote: »

That may involve spending 17k more then he needs. While it may work it would also be foolish

Well as the saying goes, fortune favours the brave. If really you want it, go get it.

Alkers

Is it just you and one other party or are there a few parties in the bidding?

Captain Flaps

Are you going through a broker for the mortgage or dealing with the bank direct? We did the former and the broker was able to supply us with a letter saying our application had gone in and there was absolutely no reason to assume that we would be denied, he was happy to speak on our behalf. That was fine by the agent and we had formal approval by the time the bidding process started slowing.

M.Cribben

Lumen wrote: »

Yes, to buy a house you have to pay more than anyone else thinks it's worth.

It's best not to think about this too much.

That's only true with respect to people currently in the market to buy, in the area the property is for sale, and looking for the exact property type (semi-d, apartment, bungalow, etc).


For example I can easily find 100 properties sold this month alone on the PPR that I would have paid the sold amount (or even higher) for, but I'm not in the market to buy at the moment. Even though I think those properties are worth what was paid for them.

daheff

I think one of two things are going on here


1- buyers is near the top of their limit...so small increments.
2-buyer is smart and only offering minimum increase...and will keep doing so until you reach your limit (or they reach theirs). whose ever limit is reached first loses.


While you may have a good reserve of cash, don't be tempted to keep bidding to win the house. Set yourself an upper limit as to what you would be happy buying the house at and don't go over that limit. Otherwise the only winner is the seller.
In any case you might be better served bidding on another house (if possible with the same auctioneer).

listermint

Third one,

Is the house really worth the money. I have seen first hand experience of bids for houses that are just NOT worth the money. When the bank comes to release the mortgage time you do know they have to send their own valuers. And it doesnt matter a jot what you've been approved for. If they dont see the value in your bid . i.e There is equity in the purchase then no mortgage.


Dont overpay. Dont fall into the negative equity trap straight out the gate.

ted1

metricspaces wrote: »

ted1 wrote: »

That may involve spending 17k more then he needs. While it may work it would also be foolish

Well as the saying goes, fortune favours the brave. If really you want it, go get it.

I could think of other sayings

“I pity the fool”

“ a bird in the hand is worth two in the bush”

metricspaces

ted1 wrote: »

I could think of other sayings

“I pity the fool”

“ a bird in the hand is worth two in the bush”

Absolutely, it depends on your viewpoint. It's a sellers market, so pick your upper limit of what you can afford and if you really want the house then go for it.

If you get it then happy days as you got the house for what you were prepared to pay. If you didn't get it then you couldn't afford it, so it wasn't for you and move on to the next one.

You won't gain much from trying to second guess bidders and worrying about whether you go up in 500s or 1000s. You are just over complicating it.

ted1

metricspaces wrote: »

You won't gain much from trying to second guess bidders and worrying about whether you go up in 500s or 1000s. You are just over complicating it.

Well You could gain 17,000 Euro which if borrowed could be 25,000 Euro.
So maybe you mightn’t consider that to be much. But others do

metricspaces

ted1 wrote: »

Well You could gain 17,000 Euro which if borrowed could be 25,000 Euro.
So maybe you mightn’t consider that to be much. But others do

Or you might just lose the house due to taking so long with your bidding, and pay 30k more on the next one as market has moved on.

You won't gain much about trying to second guess other bidders. More to gain by aggressively trying to secure it quickly to try knock out other bidders, avoid more bidders getting involved, and seller holding out for more as market has risen due to bidding taking so long.

kerry cow

It's a little unfair to a buyer bidding against another who has no funds approved .
You may end up bidding up a property against yourself inessence as the other bidder is a non runner , but they still except his offer !!!

metricspaces

kerry cow wrote: »

It's a little unfair to a buyer bidding against another who has no funds approved .
You may end up bidding up a property against yourself inessence as the other bidder is a non runner , but they still except his offer !!!

Yeah so in a sellers market, if you're the seller, you could just get your mate to keep bidding. When the last person drops out, go back to them and say it's theirs for their last bid !?

GingerLily

awec wrote: »

Every single person applies for a mortgage without having a property in mind these days. Most developers and vendors will not entertain anyone who hasn't.

Maybe some banks like to play around with how they market it, AIP vs full approval etc, but either way before you get a real offer of a mortgage the bank will need your new address and send a valuer to ensure it's something they're willing to lend against.

In your case it seems BOI called it full approval but really it was just AIP. AIP is what you need to start shopping for your house.

We had a full credit assessment from AIB, to get full mortgage approval we needed the property but we were fully assessed financially and we had proof that this had done, it was not AIP

awec

GingerLily wrote: »

We had a full credit assessment from AIB, to get full mortgage approval we needed the property but we were fully assessed financially and we had proof that this had done, it was not AIP

That is exactly what AIP is.

Mortgage approval where everything on your side has been verified and the underwriters are happy, subject to getting a property the bank are happy to secure the mortgage against.

It serves two purposes:

1. You know definitively what your budget is, unless you have a change of circumstances.
2. The developer / vendor knows you have sufficient funds to buy the house.

Any approval that does not go through the underwriters where you are fully assessed financially is totally worthless.