Home truths: The 'monster' is here to stay
Published 13/11/2015 | 02:30
In March 2011 - the month Enda claimed he was preparing to send in the army to save cash machines and errant bankers from the wrath of the revolution - Allsop announced the hosting of a "monster" property auction to be held in Dublin the following month.
The public was incredulous. Established agents who were selling nothing, especially at auction, guffawed. We were at the lowest trough in one of the world's worst ever property crashes. The market had been frozen for so long no one knew the true value of property, not even the professionals.
British auctioneer Gary Murphy got up on the podium that first day and by the time he was done more than 80 properties had been sold for more than €14m. To anyone who didn't understand what Allsop had done in Britain following their property crash in 1989, this was quite simply blow-away stuff.
Few had reckoned on the potential of an 'honest' sales system with a disclosed reserve that everyone could trust (rather than one which fed deliberately skewed guide prices). They hadn't reckoned on vast cash savings still in the country or legions of wily tight-fisted farmers with pots of cash under the mattress (they proved to be the most typical buyer for the Dublin properties). They hadn't reckoned on a new realism among vendors, be they under pressure from banks to sell or the banks actually selling the property themselves.
Before long, Allsop had single-handedly 'unstuck' the frozen Irish property market.
Since then, the Allsop auction machine has been firing on all cylinders on average four times a year. At the September auction, over 260 properties sold in two days for a combined value of €45m. Another 300 going under the hammer next month (December) on the 10th and before that, this month there's another 50 going for sale in an online-only event. The success rate has consistently been 85pc to 90pc on average. So why is it still rolling apace?
It's happening elsewhere too. This week, DNG Creedon in Cork sold 35 properties out of 35 (100pc) in the Imperial Hotel, raising more than €2.648m.
Today, the Galway firm of O'Donnellan and Joyce hosts its latest 'monster' auction since its first last year. It kicks off at the Harbour Hotel at 2pm with 40 properties. Last month, the firm hosted the biggest all-day auction session to take place outside the capital and sold €5m worth. The Galway auctioneers have sold €77m worth of property in 12 auctions held over 19 months. Success like this is staggering.
The big question many are asking now is this: the economy has improved, stressed properties have dissipated to some degree, so why hasn't the monster run out of steam?
Robert Hoban of Allsop says: "It has simply become the preferred mode of doing business for investors who want to sell and investors who want to buy. It's quick, there's no messing and everything is in the open. Private treaty selling has just become too cumbersome."
So auctions of old, with nonsense reserves and contempt for potential buyers are now almost extinct, but private treaty isn't working as well as it used to either. In part this is down to complicated new demands from the banks which slow down an already tedious and costly process (which could take three months and then fall asunder in the end).
But there's more to it than that. Irish solicitors take the biscuit in dragging out conveyancing to suit their own workloads and timetables, and agents say this has got worse in recent years.
So while monster auctions have become the chosen option for investors both for selling and buying property, to some degree they are also replacing private treaty among owner occupiers buying and selling, with estimates of 30pc participation. All this business is from private treaty, which in its game of poker form of bluff and slight, is also afflicted with time wasters and bluffers who get no oxygen at a monster sale session.
When Allsop got outside Dublin to rural parts, local agents complained they were "underselling" property. But if local agent 'X' has had a home on his books for a year at €100,000, then it's not worth €100,000. If it sells in an auction for €70,000, then that's what it's worth. But monster auction properties also regularly exceed the private treaty prices they have wallowed at. Why? Shane Finn of DNG Creedon adds: "We had the auction streaming live on a website where people from around the world viewed it from as far afield as Tunisia, Dubai and Australia."
So there's increased international reach. Monster sales come with online participation.
At the Allsop sale of a Dublin apartment, bidders from Dublin, Dubai and Northern Ireland fought it out. It was bought by the northerner. It shows that auctions like these get international prices.
Sparked into life to deal with stressed properties at low cost, the monster has morphed - and now it's here to stay.