Phantom Bidders?

sapper

Hi

Has anyone out there has ever suspected that they were bidding for a house against a non-existent bidder? Estate agents acting as middlemen don't have to justify, investigate or keep written records of any bids except for the final successful one so whats to stop them, the seller, or a friend/relative of the seller trying to push up the bid?

I'm in the middle of a bidding war for a property with an asking price of 430K. When I got interested there was already a bid on the table of 430K, so I bid 432K (keeping it small as I was expecting the estate agent to go to "sealed bids"). She didn't and instead accepted an offer of 434K. I then bid 442K trying to nip it in the bud, but again she came back with an offer of 443K. So, exasperated I bid my max price 445K. Now she has come back with an offer of 446K.

Why would an estate agent keep accepting bids of an additional 1K a month after it came on the market? - after all it only means an extra EUR10 commission for her...I thought normal practice was to ask people in a bidding war to give best and final offers when the bids got so small.....

LegacyUser

yup, bought a gaf about 6 months ago with a mate, and we got into a bidding war with an "investor"

the estate agents words, not mine.

it all seemed a bit too shady.

there's fcuk all transparency, but hey, it's just another one of those 5hitty things i've learned to expect with this place.

FX Meister

Call their bluff. This happened to me last year. I bid just under the asking price after the house was on the market for about 3 weeks with no other bidders. Within a few hours I got a call saying another couple who had viewed the house put a bid in €5,000 more than mine. I said I couldn't really justify paying any more but I'd have a second look at the house. After the second look I said I wouldn't bid any higher. A few hours later I got a call that the other couple had pulled out and they would accept my original offer. Douche bags.

iguana

I was in this situation twice last year. The first time I was bidding for over a month on a house with an asking price of €350k, we were told that two other parties were bidding on it. We suspected that there wasn't really another bidder but weren't sure what to do. After a month of bidding we pulled out as the house had gone beyond what we felt it was worth. We later heard that after a further two weeks it went sale agreed at €389k, so there really had been at least one other bidder.

The next house we bid on began at €330k and we were again told that there were 2 other bidders. After spending several weeks bidding back and forth, the bid going up by €2k at a time, we bid up by €10k. Then we were told one bidder pulled out but the other bid up. After 10 weeks we finally settled at €367k, but a problem with the survey meant we pulled out. The house was then offered to the 2nd builder who bought it for €365k.

I do believe there can be phantom bidders, but I'd guess that quite often there genuinely are a number of parties interested. Is the property you are looking at in a popular area? If for example it is in a reasonably central area of Dublin with good transport then the chances are that there is a greater demand than supply. Any time I've gone to see a house in Dublin I end up on a viewing with at least 4 other parties. The agents seem to arrange it that way in order to make sure they get rival bidders.

I guess they don't go to sealed bids as when people are faced with losing a house they want for the sake of a couple of thousand they will do what they can to get it. And maybe they find this way results in a much higher end bid than if they go to sealed bids. Both houses I bid on went over €35k above the asking price, would many people go that much higher in a sealed bid?

dochasach

sapper wrote:

Hi
Has anyone out there has ever suspected that they were bidding for a house against a non-existent bidder?....

It happened to me once long before this property bubble. I made an offer, a magical "sealed bid" offer happened to come in the same day. I didn't budge on my offer, the phantom bid disappeared and I got the house for 15% below asking price.

Yeah I know things have changed, but stay tuned. The balance of power is shifting back towards the buyer, if you have the b811s and brians to take advantage of it.

If the government ever made and enforced laws agains shills, they'd lose too much stamp duty revenue.

lomb

the power is coming back to the punter, but in a bad way. there were 70000 units built last year? well 70% of them were of a low standard, the multi occupancy type. and some of the poorer versions of therse(mostly in dublin) are selling slowly new, never mind used. so u can negotiate for these.
im afraid if you want to buy a house at the desirabable level, there is no substitute for money. and u are going to get ripped off,maybe 5 grand, mayb 50,mayb 500000 (depending on house of course) but its just part of the crap that you can come to expect from the whole thing. property is a dynamic asset that has no real fixed value. no one knows what its worth to the nearest 5%
and i am nearly positive phantom bidding does exist, i dont think estate agents make them up, but who knows? i always thought the vendors family arranged for someone they knew to make bids up to increase the price. i dont think anyone is whiter than white tbh.

deisemum

I've come across this before, 2 years ago with put an offer on a site that had been for sale for months. We got a call the next day to say another person had just offered the asking price, We decided to let it go and not increase the offer, surprise surprise it was still for sale months later.

MorningStar

iguana wrote:

I was in this situation twice last year. The first time I was bidding for over a month on a house with an asking price of €350k, ... We later heard that after a further two weeks it went sale agreed at €389k, so there really had been at least one other bidder.

The next house we bid on began at €330k and we were again told that there were 2 other bidders. .... 2nd builder who bought it for €365k.

Both houses I bid on went over €35k above the asking price, would many people go that much higher in a sealed bid?

This is an education aspect on your side. Most asking prices are 10-15% what the vendor expects to get. If you want to buy a house for 360-370 you should be looking at houses for 330.

dochasach wrote:

It happened to me once long before this property bubble. I made an offer, a magical "sealed bid" offer happened to come in the same day. I didn't budge on my offer, the phantom bid disappeared and I got the house for 15% below asking price.

As you say that was a while ago. Gettting property below the asking price in Ireland is as odd now as selling over the asking price was then. ANother point is there is no bubble proven it is just your opinion there is and you never said when you think it started.

The problem is there is no way to have trasparency and people to keep their privacy.

While I am sure there are stories where people will say they show phatom bidders but that doesn't make it fact. I don't trust estate agents but I have heard of people syaing they thought there was a phatom bidder and lost a house because they wouldn't be tricked and been proved wrong and there were real bidders. I have pulled out of offers after an acceptance too and the person bidding behind me may have thought I was phantom.

sapper

I suppose if the market was slack and houses regularly went for under the asking price, the presence or non-presence of phantom bidders wouldn't be much of a problem and I could just go off and get my hands on another bargain somewhere else, problem is there doesn't seem to be such a thing these days.

I am actually selling a house as well and the estate agents offering to sell have all been saying things like "we expect to get 317K but we'll put it up for 295 to get the punters in" one also said that although he likes to check out bidders and their situation (ie. first time buyers, investors etc) he still accepts offers from - his term - "messers" because they can squeeze a few grand out of the genuine bidders.

As to what a "messer" is, and how he can identify them, I'm not sure...

I just don't see why someone would counter every bid with EUR1,000. Its like someone is trying to encourage a higher bid rather than discouraging it. Who would ever give up on a house for EUR1,000. Oh well, I'm gonna keep on lobbing EUR500 in there until the estate agent puts a stop to it...

vibe666

We're FTB's, and we lost out on a house that was on the market for €280k cos we were outbid past what we thought was reasonable for the place, our bid was €300k, and someone else jumped in with €317,500 right off the bat, but it really wan't worth that at all.

we held our ground and refused to go higher and 3 weeks later we got a call saying that the bidder had dropped out, and that we were the highest bidder, but that the seller was looking for more money, and would we bid higher to secure it. we wouldn't on principle, considering it was down at €280, and we held out for a week, until someone jumped in at €305 and then that was that.

we also started bidding on another place at €285k, but this was much nicer, by a long way, and our first bid was outbid that day by the next viewer, so we went for broke with a bid of €317,500 because qwe saw that the house as it was was worth almost that much, but had the potential to be worth a whole lot more with a little work. we were outbid by another FTB who offered €2500 for fixtures and fittings, and after some thought and calculations we went all out and blew most of our moving budget with a bid of €317.5k + €5k for F&F, and we stayed as the top bidder for a month, but the seller was demanding more, which neither we, nor any other FTB could provide.

the agfent eventually let slip that when she had initially valued it at €285k she had said that given the market she might get as much as €315k for it, and the seller was delighted at the time, but as soon as the bidding kept going up, he saw those € signs, and kept wanting more.

last we ehard, he was wanting another 10k on top of our best offer. after leaving us hanging for even longer, we found out off the agents that the other bidders had all dropped out and found other houses, and that the next bid below us was for €299k, so with the seller continuing to be stubborn, we withdrew the €5k F&F right there and then, and said our €317,500 offer was only going to be on the table til COB at the end of that week. we didn't even hear back from the agent to let us know either way, so we left it at that and started looking again.
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iguana

MorningStar wrote:

This is an education aspect on your side. Most asking prices are 10-15% what the vendor expects to get. If you want to buy a house for 360-370 you should be looking at houses for 330.

We were reluctant to go into the realm of 7% stamp duty so we were looking for something under €380k. The first house was priced at €350k so we thought we were in with a chance. After seeing how high the price for that went, we dropped back to looking at houses priced at around the €330k mark.

Eoin

sapper wrote:

Why would an estate agent keep accepting bids of an additional 1K a month after it came on the market? - after all it only means an extra EUR10 commission for her...I thought normal practice was to ask people in a bidding war to give best and final offers when the bids got so small.....

Not that I am defending them, but they are acting on behalf of the vendor, so they should be doing their best to get as much for the property they can.

Dellgirl

Do you believe in phantoms?:D

Gerry_J

In the past bidders have often made similar remarks more so out of confusion or due to emotion than actually believing that there was a phantom bid in play.

The best advice is that if you feel there is a bid that you are not prepared to top or exceed, walk away and make it clear to the agent as to why you are doing so, after all if the bid is not genuine the agent will have egg on his / her face.

To avoid this whole issue I introduced the following as my offices Sales Requirements to firstly create a paper trail, and secondly to be able to at the end of a Sale produce a clear and accurate tracking of all offers either to the final bidder or to the vendor should the need arise.

But bear in mind, that offers placed can and frequently are reengaged upon by proposed purchasers because they have found another property, orb that they are no longer interested.

You have all focused on the fact that it’s the agents fault, unfortunately there are occasions whereby people cant proceed with offers or purchase through no fault of their own, either due to personal circumstance or financial situations this can have a impact on the sale and the agreed price at the end of the day.

JWE Sale Requirements

1.Offers are to be faxed or e-mailed to the office.

2.All offers are made Subject to the Following *Contract / Contract Denied. *Proper Title. *Loan Approval *Structural Survey

3.The property must be surveyed and valued no later than 7 days from the receipt of the deposit. If Survey is not required this office must be informed in writing, that you are happy to proceed with the proposed sale and that the survey is no longer a condition of proposed sale now or at any future point.

Disclaimer / Note:(1) Jacob Walsh Estates for themselves and for the vendors or lessors whose agents they are, give notice that:-(i) The particulars are set out as a general outline for the guidance of intending purchasers or leesees, and do not constitute part of, an offer or contract. (ii) All descriptions, dimensions, references to condition and necessary permissions for use and occupation, and any other details are given in good faith and are believed to be correct, but any intending purchasers or tenants should not rely on them as statements or representations of fact but satisfy themselves by inspection or otherwise as to the correctness of each of them. (iii) No person in the employment of Jacob Walsh Estates has any authority to make or give any representations or warranty whatever in relation to this property. (iv) They are issued on the understanding that all negotiations will be conducted through this office.

Disclaimer / Note: (2) Please note that no agreement shall be deemed to be in force and binding on the parties until formal contracts have been signed and returned, and under no circumstances shall this letter be deemed to constitute a Memorandum under the Statute of Frauds.

sapper

If anyone's interested - my phantom bidder continued to top every offer I made by EUR1000's and eventually EUR500's until at the end we had bid up from the original asking price of EUR430K to EUR465K(!)

As it happens my sister works in the head office of this particular estate agents and got in touch with the negotiating agent, and they readily confessed to being as exasperated as we were at the bidding tactics, but that yes, the bidder was genuine and really wanted the property.

In the end we threw up our hands when the other bidder finally topped our offer by more than EUR1,000 - a 2k jump from our EUR466K to EUR468K. I reckon in todays market and 20-30K worth of refurbishment it would go for EUR500K, so I reckoned it wasn't worth the hassle

The agent got a lot friendlier when she found out I had family in the company and offered to give me a bidding history as mentioned above if I wanted proof...

So I guess I am exonerating the estate agents of blame! If only it wasn't for other buyers this property lark would be much less hassle....

lomb

maybe the thing to do to buy a sought after house is go for the jugular right away, offer 10% over asking (if its worth something in that region even a little more ) and tell them the offer is only valid for 2 days as you are looking at something else. and if they are interested theyl take the house of the market immediately, give the estate agent your solicitors card, and the approval papers, and walk out the door holding the upper hand. works every time;)
not for the weak of heart though, but its a very strategic tactic, and it does work very well.

AndyWarhol

eoin_s wrote:

Not that I am defending them, but they are acting on behalf of the vendor, so they should be doing their best to get as much for the property they can.

This is the crux. Phantom bidder or not, it's all about getting selling your house for as much money as possible. This is why people hire estate agents operating on 2% commission. Sellers get more money, the agents get their cut and the buyers get the house they want. Everybody's happy. It's called business.

There's nothing 'unethical' about phantom bidders.

Eoin

AndyWarhol wrote:

This is the crux. Phantom bidder or not, it's all about getting selling your house for as much money as possible. This is why people hire estate agents operating on 2% commission. Sellers get more money, the agents get their cut and the buyers get the house they want. Everybody's happy. It's called business.

There's nothing 'unethical' about phantom bidders.

I wasn't defending the phantom bidder thing, I think that is unethical.

My comments were in relation to this post, which implied that real offers were being made.

Why would an estate agent keep accepting bids of an additional 1K a month after it came on the market? - after all it only means an extra EUR10 commission for her...I thought normal practice was to ask people in a bidding war to give best and final offers when the bids got so small.....

Victor

AndyWarhol wrote:

There's nothing 'unethical' about phantom bidders.

Ethicly its one step from fraud.

lomb

Victor wrote:

Ethicly its one step from fraud.

its caveat emptor at the end of the day, buyer beware. the estate agent is acting in the best interests of the vendor,in an ideal world a potential buyer would engage the services of a negotiator/chartered surveyor to protect his interests or do it himself/herself professionally (not that everyone has the experiance to do it as most people will only buy one house in their lives).

thats what the world is about folks protecting your own interest, the day you realise that, is the day you become a man/woman. if u feel the price is too high, walk away. but i think that you will find that property is unique with no real set price, thats the fun in bidding but also the pain;)

sapper

They're at it again! This time a totally different house that was up since before Xmas for 470K. We were told that ours was the last viewing and the vendors were about to accept the offer already on the table of 475K if we didn't make an offer.

We did make an offer of 480K, the estate agent told us the other bidder dropped out and as it happened I knew the third bidder, who confirmed he had been asked to top 480K and refused.

The agent told us that the vendor wanted to talk to his wife before accepting the bid and that we would hear back the next day (yesterday). Then yesterday afternoon, nothing. Got in touch with the agent and this time the vendor wanted to talk with his son overnight. Now today I get a call from the agent to hear that there has been a surprise bid of 492,500, and would I like to better that?

Now is that dodgy or what? They waited 72 hours after they got a bid 5K over the amount they were happy with in first instance, and that bid is 12,500K more that the last one. Why would anyone bid so much more? Is that not throwing money away?

Then again maybe it is too blatant to be a made-up bid and maybe there is someone out there with 492,500 who waited 4 months to make an offer?

What should I do? We can top it, but just about, or do we call their bluff and walk away?

Calina

Me personally, I would walk away.

sapper

sapper wrote:

Estate agents acting as middlemen

Huh?

That's exactly where your point falls down. As eoin s and Andy Warhol point out, the estate agent is not some 'middle man' or honest broker, but an agent of the Vendor whose sole job is to get as much money as possible for the property. They owe you nothing, although a little honesty would be nice. But frankly the Vendor who is totally honest, who goes to the Purchaser and say the neighbours dog barks all night, and the heating system is shot, and the toilet cistern tends to make a high pitched noise after flushing etc. etc. is nuts. I expect the auctioneer to do a little arsing around, because I am perfectly aware that his responsibility is to his client and not the purchaser.

god's toy

I would walk, happed to me last year in 'Woodlands' in Wicklow and just 'felt' it was bull so we walked away but also got a friend to view the house and guess what? he was told no one was looking at that moment but as soon as an offer was suggested a new one came flying in....
... they do it more than you think.