Is this Greed or am I getting Old and Cranky

Z

Zico

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Hello,

Does anyone else feel that the "Sealed Bid" method for buying houses in a "New Development" is Greed or am I getting Old and Cranky ???

This is happening at a new development in Malahide called "Galtrim Grange", where buyers have to submit their bid in a sealed envelope accompanied by their 5,000 euro deposit. The deposit will be returned if the bidder is unsuccessful. The selling agents give guide prices for the houses, but say that they expect some of the houses to sell for well above the guide price.

I know that people will argue that this happens for 2nd hand houses, but for a new development it really seems to be trying to squeeze every last cent out of buyers.

Any views welcome.
 
I dealt with a builder in Donabate who had yet to dig a foundation for a house, when we approached him he said it might be due to sealed bids, at the time I thought he was testing the market water to see what he could get. Based on the house size we estimated but didnt offer a bid but the house sold for 50K more than what we thought. He eventually sold them all without a seal bid.

A couple of months later I heard that the builders nephew wanted one of the houses but he did not receive any reduction from the market value. I'd said it was greed
 
Zico said:
This is happening at a new development in Malahide called "Galtrim Grange", where buyers have to submit their bid in a sealed envelope accompanied by their 5,000 euro deposit.
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Is this the place opposite St. Sylvesters GAA grounds?

This strategy might just backfire on the developers, i.e. they may get less than they expect (unlikely I know....).

Is their one price struck for the whole development based on the average bid, or are the top 20/30 etc. allocated a house on the basis of the price they are willing to pay? i.e. highest bidder €750k, first choice of house; next €700k second choice etc.?
 
Is this the place opposite St. Sylvesters GAA grounds?
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Yep thats the place - I actually went up for a look , thought the finish was very poor, tarmac driveways and faux roman columns :eek: Kitchens were nothing special either. Looks to me like the developers are trying to maximise their profits at the expense of a quality finish - that said I'm sure they'll sell quickly...

M
 
It's Malahide, you could sell a shoe box (the cardboard type) there for a good few quid!;)
 
CCOVICH said:
Is this the place opposite St. Sylvesters GAA grounds?

This strategy might just backfire on the developers, i.e. they may get less than they expect (unlikely I know....).

Is their one price struck for the whole development based on the average bid, or are the top 20/30 etc. allocated a house on the basis of the price they are willing to pay? i.e. highest bidder €750k, first choice of house; next €700k second choice etc.?
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can't really backfire , they don't need to sell to the highest bidder , its not like a real auction !
 
jhegarty said:
can't really backfire , they don't need to sell to the highest bidder , its not like a real auction !
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That's what I figured. Has anyone any experience of buying/bidding in this type of scenario before?
 
I can imagine this turning nasty though.

Picture the scene when two neighbours (of identical houses) discover one paid substantially less/more than the other.
 
to answer your question, yes it does sound like greed, it is greed, those developers are so greedy - the only adjectives would not be allowed on this website. unfortunately i dont think they will get their comeuppance.
 
It's a pretty pure form of 'free market economy' - If the customers are willing to play this game, I don't any reason why the builders shouldn't play too. If enough customers refuse to play the game, the developer will suffer in the end.
 
To be honest, and I'm extremely familiar with the area - the houses don't look up to any great scratch. For one, they are extremely close to the main Dublin/Belfast train line and DART line, secondly they are smack bang beside one of the largest secondary schools in Dublin which is used in the evenings as well as during the day. They are also about a 25 minute walk from Malahide train station which is brutal if you are a commuter.

IMHO you would get better value for your money out of Mountfield which is a bit down the road and closer to the shops and Malahide village, but further away from the train line and the school. That is if you are prepared to buy a second hand, but quite new house.

As regards submitting a best bid in an envelope, I would recommend you come up with a price that you would be prepared to pay for a house in such a development. Then add an odd figure on - so say for example you value the property as being €750K, then submit a bid of €751,035.60, there is then a chance that you would pip someone at the post for the sake of loose change.

I would be interested however to hear how the banks would be able to justify a mortgage for a property which sells for a price that does not reflect it's true value. For example, a 3 bed semi-d in this development would be valued at approx. €650K for the sake of arguement, but due to the best bids situation, the price that it sells for is €800K - how therefore do you justify a mortgage for this amount, as it doesn't reflect the market value of the house (or does it)?
 
mo3art said:
I would be interested however to hear how the banks would be able to justify a mortgage for a property which sells for a price that does not reflect it's true value. For example, a 3 bed semi-d in this development would be valued at approx. €650K for the sake of arguement, but due to the best bids situation, the price that it sells for is €800K - how therefore do you justify a mortgage for this amount, as it doesn't reflect the market value of the house (or does it)?
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I don't if the banks look at it the same way as I look at it - but the only definition of 'market value' that I can think of is 'the price the buyer is prepared to pay'.
 
Oh yes and I agree with you Rainyday, but if say the purchaser pays over the odds to secure the house in a closed best bids situation, and pays for arguements sake €1 million for a 3 bed semi, which at the time of the best bids was the largest bid by far. And of course the developer would accept the largest bid................

The purchaser then reaches a point where they need to dispose of the property on the open market and can only achieve a market value of €800K for the same property. That could possibly be a negative equity situation, could it not? One that was not created by a depression in the property market, but instead created by an inflated purchase price created by the sealed bids.

I'm sorry if I didn't make my comment clearer! But how do you reckon the financial institutions would handle that?
 
I agree with you RainyDay. It's a free market and the builders/developers can do what they want.


If a Ryanair passenger paying 1 cent for a seat can sit beside someone who pays 100 euro for theirs, why can't a homeowner live beside his neighbour who pays 100k less for the same property.

The question that should be really asked is why are house prices so high when the cost of building is quite low comparitively - for example a friend's contractor build 2300 sq. ft. dormer with average allowances for the usuals is only costing 135k euro in the west of Ireland.

Why isn't there more land being rezoned bla de blah?

Morality has nothing to do with it. Mind you I do believe a deposit ona house should be just that - a deposit - non refundable and binding on the seller and buyer,
 
mo3art said:
That could possibly be a negative equity situation, could it not? One that was not created by a depression in the property market, but instead created by an inflated purchase price created by the sealed bids.
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This is where you & I would I disagree - I wouldn't blame the sealed bids process itself. I'd blame the purchaser who made the inflated sealed bid. The same 'negative equity' situation could apply to a case where a developer sold his properties as an inflated price, without the sealed bids process.

I've no idea how the banks treat these cases, but they must deal with it every day in relation to auctions.
 
Surely the only way that the price will accurately reflect the 'true value of the house' is if the developer sets the price at the average bid? I would imagine that this would result in the developer maximising their profits as well?

I would suggest that people making bids should get the opinion of a valuer-how else can a 'reasonable' value be determined (i.e. one that a bank will accept)?

Of course, what the bank might accept is irrelevant if someone is funding the purchase through the sale of another property etc.
 
The value of a property is what an individual is prepared to pay at a point in time. Whether you think it is inflated or not is irrelevant. Is the sealed bid process immoral/unethical - that's up to you - the fact remains that it's legal and remember it's the purchaser that makes the offer.
 
None of the posters have questioned the legality of the scheme.


I really don't care too much about how these houses are sold, and what anyone pays for them. I don't question the morality or otherwise of the scheme either.
 
Caveat Emptor Ccovich............

The vendor can charge whatever they like providing the purchaser is prepared to pay for it! I don't think there's anything illegal about it, but I do understand peoples' reluctance to enter into a sealed bids situation.
 
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