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The Art of Bidding

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  • 05-07-2020 3:36pm
    #1
    El Gato De Negocios
    Registered Users Posts: 6,704 ✭✭✭


    Looking for some advice. We went to view a property yesterday and both of us really liked it. Its a vacant sale, owners are deceased, one of their children is selling it, probate almost concluded. Decent condition inside but very dated aesthetically. It does however have huge scope for redevelopment, good sized garden and most of the houses in the estate have been extended so no concerns about PP. Most importantly it is livable almost immediately with only some kitchen appliances needing immediate upgrade.

    Its guiding at 385 and we want to try and make a deal with the sellers without getting into a bidding war. What kind of figure should we go with? We are thinking of offering 390 with the understanding it would be taken off the market. Its only just come on the market so its possible the sellers will want to leave it for a few weeks to see what interest there is but our thinking is that by going a little over guide initially they could come back with a counter. Any advice about how to approach it would be appreciated.


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    #2
    guyfawkes5
    Registered Users Posts: 291 ✭✭guyfawkes5


    Your stated approach seems logical and there's no harm in finding out what they think, although I don't know if going barely above asking would be so tempting as to immediately take the property off the market. Although you never know - the seller might be eager to just close a reliable sale.


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    #3
    KilOit
    Registered Users Posts: 2,986 ✭✭✭KilOit


    Worth a shot but personally as a seller you'd be mad to not leave it on the market for a while, no loop so why would they be in a rush? if you come in straight away with 390k after a few days on the market they are going to think well if we can get that why not 400k

    If it was me i'd hold back for a week


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    #4
    Dav010
    Registered Users Posts: 14,112 ✭✭✭✭Dav010


    Agree, I wouldn’t take house off the market because someone went €5k over asking. If you are concerned that others are interested, then if you want it taken down, your bid would have to make it worth it to the owner.


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    #5
    guyfawkes5
    Registered Users Posts: 291 ✭✭guyfawkes5


    Agreed also that coming in immediately with an over asking bid may make a statement you don't want it to make.

    There's no right answer here as everyone can interpret this stuff differently.


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    #6
    El Gato De Negocios
    Registered Users Posts: 6,704 ✭✭✭El Gato De Negocios


    Thanks all. Interesting point about going straight in with a bid and something I hadn't considered but on reflection it makes sense. We would go at least 30k over asking but obviously don't want to shoot ourselves in the foot either. Will let it simmer for a few days, contact the EA later in the week and see what lie of the land is.


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    #7
    lawrencesummers
    Registered Users Posts: 8,495 ✭✭✭lawrencesummers


    If it’s an old house, and sounds like it is then I would be thinking about the things that’s you cannot see from a quick viewing, it may take 500-1000 to get an engineers report, get drains checked etc etc so proceed on an older house in the knowledge that you might have to walk away from it.

    If I was you I would offer 20k or so under asking price citing the cost of refurbishments that needed and that a very similar property you are interested in ticks more boxes at that asking price.

    When bidding on a house the only way is up, so starting low isn’t going to rule you out, maybe your lucky and They sell for that price, maybe you have to eventually go to what your thinking now.


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    #8
    Claw Hammer
    Registered Users Posts: 6,163 ✭✭✭Claw Hammer


    The starting point in biding is to decide the market value first before you consider a bidding strategy. What if the place is only worth €320k to begin with? What if it is really worth €420k?


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    #9
    Dav010
    Registered Users Posts: 14,112 ✭✭✭✭Dav010


    Claw Hammer wrote: »
    The starting point in biding is to decide the market value first before you consider a bidding strategy. What if the place is only worth €320k to begin with? What if it is really worth €420k?

    How do you decide the market value before the bidding begins? You might be able to put a price on what you think it is worth, but the market value is what the highest bidder is willing to pay.


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    #10
    El Gato De Negocios
    Registered Users Posts: 6,704 ✭✭✭El Gato De Negocios


    lawrencesummers wrote: »
    If it’s an old house, and sounds like it is then I would be thinking about the things that’s you cannot see from a quick viewing, it may take 500-1000 to get an engineers report, get drains checked etc etc so proceed on an older house in the knowledge that you might have to walk away from it.

    If I was you I would offer 20k or so under asking price citing the cost of refurbishments that needed and that a very similar property you are interested in ticks more boxes at that asking price.

    When bidding on a house the only way is up, so starting low isn’t going to rule you out, maybe your lucky and They sell for that price, maybe you have to eventually go to what your thinking now.

    House was built early 70s so not too old. Of course if it came to it and an engineers report threw up a serious issue we would walk away. We had a friend who is in the construction trade come with us to view. He said there was nothing immediately concerning and that structurally it looked tip top. Some of the wiring would need replacing and new windows would be needed but that would not be an urgent issue. What we are thinking is if we were to end up buying it we would be looking at doing a double extension around this time next year so would do everything - garage conversion, new windows etc at that time.


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    #11
    lawrencesummers
    Registered Users Posts: 8,495 ✭✭✭lawrencesummers


    Statutory Ape wrote: »
    House was built early 70s so not too old. Of course if it came to it and an engineers report threw up a serious issue we would walk away. We had a friend who is in the construction trade come with us to view. He said there was nothing immediately concerning and that structurally it looked tip top. Some of the wiring would need replacing and new windows would be needed but that would not be an urgent issue. What we are thinking is if we were to end up buying it we would be looking at doing a double extension around this time next year so would do everything - garage conversion, new windows etc at that time.

    Sounds good, but the only way with bidding is up, so start low.


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    #12
    tricky D
    Closed Accounts Posts: 9,700 ✭✭✭tricky D


    What incentive is there for the vendor to agree? I can't see any.


    While Probate is still in play they can only go sale agreed and there is no incentive to halt bidding while they can't actually sell it. Why not keep it on the market.

    Sounds like an empty house so if that is the case, the vendor is unlikely to be dependent on it for accommodation, so again no incentive.

    You don't say if you are a cash buyer which might help speed things up.

    Some vendors might view the 'take off the market' request as an indication that you really want it, so again why close to further bidding if there is a possibility of others wanting it as much/more. Some might view it as cheeky or some thing else. I reckon such a request would work against you in most cases.

    The property could well be opening at a low price if they are confident of a decent amount of interest and a subsequent bidding war. We started ours, which was desirable, at 80% of what we and our EA were confident of getting, and it worked perfectly at plus a bit on our estimate.

    lawrencesummers is onto what to do. Bid below, know and stick to your max, and see what happens while expecting to be bid against and act accordingly.


    hth


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    #13
    Bass Reeves
    Registered Users Posts: 18,212 ✭✭✭✭Bass Reeves


    If you are sure of your pricing and values you have two choices bid 350 see what happens or bid 410 through a solicitor and give them 24 hours to accept the offer.

    Or you could do both

    Slava Ukrainii



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    #14
    Claw Hammer
    Registered Users Posts: 6,163 ✭✭✭Claw Hammer


    Dav010 wrote: »
    How do you decide the market value before the bidding begins?

    The same way as any valuation is done. The price the property might reasonably be expected to achieve if properly marketed.
    It might of course sell for less or more on the day.
    It is not a question of making a forecast but finding a starting point. has the property been advertised at an undervalue to attract interest with the intention of pushing a number of bidders forward or an overvalue with the intention of discounting.
    The o/p is taking the starting price and adding to it, it sees in ignorance of what a realistic value is.


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    #15
    Dav010
    Registered Users Posts: 14,112 ✭✭✭✭Dav010


    Claw Hammer wrote: »
    The same way as any valuation is done. The price the property might reasonably be expected to achieve if properly marketed.
    It might of course sell for less or more on the day.
    It is not a question of making a forecast but finding a starting point. has the property been advertised at an undervalue to attract interest with the intention of pushing a number of bidders forward or an overvalue with the intention of discounting.
    The o/p is taking the starting price and adding to it, it sees in ignorance of what a realistic value is.

    So you are able to look at a listing and know what the final selling price will be before the bidding starts? That is impressive, personally I think the best anyone can do is decide what it is worth to them. Houses regularly go for above and below the valuation price so using that as an example of how you decide on market value in advance of the bidding is hardly scientific. The banks want to know that the value of the house exceeds the mortgage amount being applied for, but a cash buyer may pay more than that amount, hence the market value is above what a value assesses it at.

    You really can’t expect someone to decide market value before bidding, you can expect them to decide what it is worth to them and the max they are willing to pay. You can’t influence what it is worth to someone else.


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    #16
    Claw Hammer
    Registered Users Posts: 6,163 ✭✭✭Claw Hammer


    Dav010 wrote: »
    So you are able to look at a listing and know what the final selling price will be before the bidding starts?

    That is not what I am saying at all. It should be possible to look at the listing and check comparitor properties to obtain the likely range in which the final price will be. A completely different thing.
    Dav010 wrote: »
    That is impressive, personally I think the best anyone can do is decide what it is worth to them. Houses regularly go for above and below the valuation price so using that as an example of how you decide on market value in advance of the bidding is hardly scientific.
    Houses go above the asking price. The valuation price is different.
    Dav010 wrote: »
    The banks want to know that the value of the house exceeds the mortgage amount being applied for, but a cash buyer may pay more than that amount, hence the market value is above what a value assesses it at.
    The banks carry out the exercise I have suggested and check whether or not their borrower is overpaying. The fact a cash buyer or any buyer may pay more is irrelevant.
    Dav010 wrote: »
    You really can’t expect someone to decide market value before bidding, you can expect them to decide what it is worth to them and the max they are willing to pay. You can’t influence what it is worth to someone else.
    I would expect someone to get a fix on the going rate before biding so that at leat they know where they are. If the price is being pushed up for whatever reason they can make a decision as to whether to stay in the hunt or not. If it is being driven up from a high initial starting point, it is quite another.

    The o/p is starting with an asking price, which could be anything and trying to devise a strategy. He meeds a realistic anchor to start off with.


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    #17
    adocholiday
    Registered Users Posts: 1,840 ✭✭✭adocholiday


    When we were house hunting we found a house that we fell in love with. It was on the market 12 months with no open bids so we put an offer in for well below asking. Bit of negotiation later and we end up about 15k below asking which was initially well received but not sale agreed. We were then outbid and had to walk away devastated.

    The next house (which we had to wait months to find) we were a lot more aggressive. We thought it was underpriced anyway so didn't mind paying the asking. We were first viewers and made a bid the same week for the asking price but the terms were sale agreed within 24 hours and all ads removed. Proof of funds was provided with the offer so they knew we were serious. They were delighted to accept the offer and we still feel that we got good value.

    A house is worth what someone is willing to pay. If you can afford it and think the asking price is reasonable then I'd recommend being aggressive on it. If you think there's opportunity to get a bargain here then bid low but be prepared for it to drag out a little and possibly lose out. Of course that could happen in the aggressive bid scenario but probably less likely. Best of luck whatever option you choose.


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    #18
    Pkiernan
    Registered Users Posts: 4,315 ✭✭✭Pkiernan


    Bass Reeves wrote: »
    If you are sure of your pricing and values you have two choices bid 350 see what happens or bid 410 through a solicitor and give them 24 hours to accept the offer.

    Or you could do both

    ???

    Poor advice to put a timeline on an offer for a house thats being sold as part of an estate.
    Makes no sense whatsoever.


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    #19
    drunkmonkey
    Registered Users Posts: 28,119 ✭✭✭✭drunkmonkey


    I'd put it to the estate agent you want to buy the house today and your ducks are in a row and ready to go. Rather than start above asking I'd go in with lower offer but make it quite clear you don't want a bidding war and would like to go sale agreed today if you can agree a price.
    I went with this strategy on my last purchase, went in 15k below asking, ended up paying 10k over asking but the house was off the market within 24hrs. There was no bidding war except for a mysterious one in the last few hours to jack up the price.
    It's the estate agent you need to get excited about a no nonsense quick sale. The seller might be happy to run with you, the money could be split a few different directions so even getting you up another 20k might be of no major advantage as they may only be seeing 5k of that.
    It's worth a shot, don't go mad outbidding yourself. Just get it through to the estate agent you want this closed today, before you even put in a bid ask the estate agent are they in a position to close today at the right price and do they know what that price is.

    I'm a little concerned at the price though if it needs to be done up and extended you wouldn't feel 100k disappearing quickly after new kitchen etc.


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    #20
    Bass Reeves
    Registered Users Posts: 18,212 ✭✭✭✭Bass Reeves


    Pkiernan wrote: »
    ???

    Poor advice to put a timeline on an offer for a house thats being sold as part of an estate.
    Makes no sense whatsoever.

    Not so. OP said that probate is nearly complete. At this stage executors will know beneficiary's of the house sale( more than likely part of residue. Executors need to contact beneficiary's to see if it's an acceptable offer.

    When it's done through a solicitor with a timeline then if executors are stalling or cannot complete the transaction then you withdraw the offer and your lower bid is in place.

    Slava Ukrainii



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    #21
    [Deleted User]
    Posts: 17,728 ✭✭✭✭ [Deleted User]


    Statutory Ape wrote: »
    ..........

    Its guiding at 385 and we want to try and make a deal with the sellers without getting into a bidding war. What kind of figure should we go with? We are thinking of offering 390 with the understanding it would be taken off the market..................

    A mad theory, you can't guess how they'll react.
    Also, if folk are interested and it's priced well folk will bid. Buying a house takes a while........... can't be rushed IMO.


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    #22
    El Gato De Negocios
    Registered Users Posts: 6,704 ✭✭✭El Gato De Negocios


    drunkmonkey wrote: »
    I'd put it to the estate agent you want to buy the house today and your ducks are in a row and ready to go. Rather than start above asking I'd go in with lower offer but make it quite clear you don't want a bidding war and would like to go sale agreed today if you can agree a price.
    I went with this strategy on my last purchase, went in 15k below asking, ended up paying 10k over asking but the house was off the market within 24hrs. There was no bidding war except for a mysterious one in the last few hours to jack up the price.
    It's the estate agent you need to get excited about a no nonsense quick sale. The seller might be happy to run with you, the money could be split a few different directions so even getting you up another 20k might be of no major advantage as they may only be seeing 5k of that.
    It's worth a shot, don't go mad outbidding yourself. Just get it through to the estate agent you want this closed today, before you even put in a bid ask the estate agent are they in a position to close today at the right price and do they know what that price is.

    I'm a little concerned at the price though if it needs to be done up and extended you wouldn't feel 100k disappearing quickly after new kitchen etc.

    Our situation is that we could conceivably buy a house for circa €600k based on deposit, salaries etc. We were looking in a particular area at the higher end of the market but nothing came up that we were in agreement with there. The house that has come on is less than 5 minutes from where we currently live and is in an estate we have always admired from afar. It doesn't need to be extended however we both have an idea on the kind of house we would like to have. Buying at the top of our budget would mean we would have nothing much left to do anything with the house in the future, certainly any capital investment, buying for 30% below the top of our budget (or thereabouts) means we would have capacity in the future to really put our own stamp on the house so an additional 100 to 150k future investment is within our means without completely hamstringing ourselves. With this particular house I'd happily pay €415 for tomorrow if it ment getting the deal done but at the same time, I'd like to avoid paying more than may be necessary.

    In any case, we have decided we are going to keep our powder dry for the moment, i will contact the EA later in the week for a chat and see what the lie of the land is.


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    #23
    JimmyMW
    Registered Users Posts: 695 ✭✭✭JimmyMW


    Statutory Ape wrote: »
    Looking for some advice. We went to view a property yesterday and both of us really liked it. Its a vacant sale, owners are deceased, one of their children is selling it, probate almost concluded. Decent condition inside but very dated aesthetically. It does however have huge scope for redevelopment, good sized garden and most of the houses in the estate have been extended so no concerns about PP. Most importantly it is livable almost immediately with only some kitchen appliances needing immediate upgrade.

    Its guiding at 385 and we want to try and make a deal with the sellers without getting into a bidding war. What kind of figure should we go with? We are thinking of offering 390 with the understanding it would be taken off the market. Its only just come on the market so its possible the sellers will want to leave it for a few weeks to see what interest there is but our thinking is that by going a little over guide initially they could come back with a counter. Any advice about how to approach it would be appreciated.

    If it were me i would simply ask the estate agent what figure takes it off the market today, you will get a good idea on what you need to bid then, also if very high you will know that they will leave the market decide


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    #24
    El Gato De Negocios
    Registered Users Posts: 6,704 ✭✭✭El Gato De Negocios


    Just an update here. We had a second viewing of the property during the week and both like it so have bid €15k under asking. Had a long conversation with the EA and they advised that the vendor is not interested in leaving the property on the market indefinitely (allegedly) and would be happy to accept a "reasonable" offer. We feel that's a fair offer but are not expecting them to accept it. We have set our limit at €15k over the asking (obviously haven't disclosed this) so if we can get it for €400k or less then we will be happy enough.

    Funnily, an other house 10 doors down came up for sale literally a week after the one we bid on went up but its at guide of €410. We have viewed it and it has a much better internal finish but we prefer the first one. Checked the PPR and the last houses that sold in the estate were in 2018, two sold for €410 and one for €354.

    She said she will come back to us early next week so we will see what happens.


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