Lost out on that house? You've been gazumped
Sellers changing their minds at the last minute are costing potential buyers thousands of euro
Desperate house buyers in sought-after areas of Dublin are resorting to "gazumping'' as property prices continue to soar in the capital.
Gazumping is when the seller of a property accepts an offer but later sells to someone else who offers a higher price.
The revelation comes as the Sunday Independent today provides a comprehensive breakdown of the most up-to-date values of houses and apartments across the country.
Our in-depth report confirms the growing divide between house prices in the capital and the rest of the country, where some counties are still seeing a drop in values. But in Dublin prices are continuing to rocket, and many buyers -- and even some estate agents -- are employing underhand tactics to get what they want.
Northside areas most in demand include the coastal stretch from Clontarf to Malahide, while houses in areas such as Glasnevin and Drumcondra are also much sought after.
South of the Liffey, the suburbs of Ballsbridge, Blackrock, Dalkey, Ranelagh, Rathmines and Rathgar remain popular with buyers.
"In a rising market you have people who will change their mind if they can get another €10,000 or €20,000,'' John Kennedy from onview.ie, the real estate portal owned by the Institute of Professional Auctioneers and Valuers (IPAV), said.
"Ethically they have given their word, but they are not bound by law," Mr Kennedy told the Sunday Independent.
Owen Reilly, director of Owen Reilly Property Consultants, added: "I had a case last Friday where someone knocked on the door of a property with a 'Sale Agreed' sign and asked the vendor could they go in and have a quick chat. They were interested in the area, they had a look around and asked the vendor what price had been agreed. The vendor, after five minutes, reluctantly gave the information. This person then turned around and said: 'I'll offer you another €50,000'."
While gazumping is not illegal, it is widely regarded as one of the most unsavoury parts of the property business.
Estate agents insist they do not encourage gazumping but the current gap in legislation provides an incentive to up the final price, thereby increasing their commission.
An indication of the hype underpinning the surge in Dublin prices is reflected in the experience of Graham Dixon at a property auction in Ballsbridge last month.
The auctioneers were forced to delay proceedings for over half an hour because of the unexpected large crowd.
"We just watched the bidding escalate more and more and it went over our budget. It was scary," Mr Dixon said.
However, the sharp-elbowed tactics of gazumpers can cost house-hunters significant amounts of cash.
Sources say the cost of losing out on a property as a result of gazumping leads to an average loss of approximately €2,000, with money wasted on legal, mortgage, and surveying fees.
In some cases sellers are accepting a number of bids on a property in order to get the best possible price.
This comes as competition to buy a house in some of Dublin's most sought-after areas continues to escalate because of a major shortage of suitable properties.
The practice of outbidding rivals who already had an offer accepted on a home was rampant during the last housing boom when the market was rising month after month.
Mr Kennedy would like to see a situation in the future where there would have to be very good reason to withdraw from a sale after a price had been agreed.
"Unfortunately there is no law covering this at the moment.
"In a market where there is no supply you are going to have more people gazumped than would be the case in a good healthy market.''
A recent UK report, carried out by online estate agency eMoov.co.uk, said 100,000 potential buyers are gazumped every year, with an average loss of £1,752 (€2,123) per purchaser not to mention the "huge emotional toll".
Mr Reilly said gazumping tended to occur in the period between accepting a bid and the receipt of a booking deposit.
"It's something I would never advise a client to consider,'' he added.
"If a party comes back and makes an offer -- and insists this is passed on to the vendor -- we are obliged to pass on that offer. Our policy is that as soon as we get a deposit we won't entertain any viewings or inquiries.
"We will take a name and number for a cancellation list and that is it."
Karen Mulvaney, managing director of buyersagent.ie, said bidding wars were common practice for desirable properties in Dublin.
"The better suburbs have just gone completely mad. On the southside, the Dublin 6 area in particular and the suburb of Ranelagh are extremely popular with buyers.
"All the really good areas -- Blackrock, Ballsbridge and Donnybrook -- are doing really well.
"There's big demand in Monkstown as well. Everything for sale in those areas has become a bidding war," she said.
"On the northside, Clontarf seems to be the most in demand while Sutton and Howth are slower to pick up. There's such a shortage of property and there are a huge number of buyers.
"It would be common now to go to a Saturday viewing and have more than 30 people there."
She added: "Investors are flooding the market again, and they're not necessarily Irish. I've more international clients on my books now than I've had for the last five years combined. It's absolutely bananas."
Meanwhile, the two-tier dimension to the current state of Ireland's property market -- with Dublin prices on the rise and many provincial locations still sluggish -- looks set to continue well into 2014.
However, the most recent figures also show there are various pockets where the rate of decline has slowed down -- most notably in the commuter counties adjoining the capital.
A review of the overall market for last year shows that since late 2011, the rate of change in Dublin asking prices has gone from -22pc to +11pc, with all six regions in the capital showing gains.
Outside Dublin, the rate of change in asking prices has fallen from a figure of -16pc in late 2011 to an average fall of -6pc during 2013.
Experts vary in their predictions of how much prices will rise this year -- but all agree there will be significant increases in 2014.
Eight different analysts recently surveyed by Bloomberg News forecast a seven per cent increase nationally this year.
However, Philip O'Sullivan -- an analyst at Investec Plc -- predicts values may jump by as much as 14pc.