Home Truths: Body’s move to take the puff from bids is a smokeless duel
The big view on Ireland’s property market
Forty years ago my parents were offloading their cute Edwardian millworker’s cottage in order to trade up. The cottage was to be sold by auction through a local estate agent.
Long before Blackadder, my dad and his mates got together over pints to work out a “cunning plan”. On the day, the auction room floor was well seeded with his cronies; at least one bearing instructions to be ‘puff adder’ to the bidding. The unknowing auctioneer took up the gavel and my dad retired from the room, too nervous to watch.
After a busy bidding session closed, the auctioneer came back to my dad, jubilant to tell him that a good price had been reached. When asked to point out the buyer, the agent jabbed a finger at my dad’s sheepish looking ‘puffer’ who, like so many often do; had completely lost the run of himself in an auction room.
But the puffer wasn’t as embarrassed as my dad, who had to explain to the auctioneer why this house was still a long way from being sold and the agent’s fee a long way from being paid. That’s the last time I became aware of a ‘puff’ bid being placed at an Irish house auction and I have written about the property market for almost 30 years.
But last week it was announced that the Property Services Regulatory Authority (PSRA) is preparing new rules for estate agents to determine that “false or misleading” bidding for properties is to be “deemed improper”.
Of course that should be the case. More properly than just being “deemed improper,” fake bidding should be illegal and fully punishable by real penalties under law. The announcement from the PSRA has caused consternation among the established estate agency sector. But not for reasons we might expect.
You see, most Irish estate agents believed all along that puff bidding, whether at auction or private treaty, was fully illegal already; never mind soon to be deemed “improper”. To estate agents, last week’s announcement was a bit like declaring that it will soon be deemed improper for chimney sweeps to shove six-year-olds up sooty flues. Generally speaking, it just doesn’t happen.
One estate agent with decades of experience in the Dublin market adds: “We just thought it was illegal all along, and that if anyone was caught doing it they’d be struck off. And I can speak for many I know who work in other agencies in thinking the same. It doesn’t happen. You’d be fired.” And they’d spill the beans if they thought the competition was at it.
A half-a-day’s phone calls through various professional estate agency sources elicited much the same response. The last time they thought puffing took place was pre-2007 when agencies suspected that dodgy vendors (like my dad) were salting auction rooms to get their homes up to the reserve. But it had nothing to do with the estate agents back then and they couldn’t do anything about it in any case.
Now thanks to the recent PSRA announcement, there are concerns in the sector that vendors might actually ask for puffing, given that it is now known not to be illegal (they will be turned down). Or that the few dodgy operators who plague every sector will now actively consider taking a puff or two until it is de facto declared illegal.
As someone who has received every complaint imaginable from the public concerning estate agents, I can categorically declare I haven’t heard a piffle about puffing.
It also seems strange for the PSRA to raise this at a time when, thanks to technology, buyers involved in bidding can increasingly and easily access the process at any time online, to see exactly what else is on the table, from whom and when it was put there.
But what is fully ironic is that members of the public have always believed (particularly regarding the private treaty process), that they are bidding against ghosts and the estate agents are ‘puffing’ them up. Unfortunately they usually discover they are wrong at the point when the house is sold to the other bidder. And perhaps this core belief is the origin of proposed measures against fake bids that are, well, fake.
They’re no saints. As a property market analyst I’ve had reasons to tear strips off estate agents over the years. Recently I hit out at the practice of over estimation of achievable prices to vendors at tender stage – a practice a handful of firms have been guilty of in order to obtain instructions ahead of their competitors. But this relies on greedy vendors, its victims are other estate agents, and the vendor ends up getting full market value for his or her home in either case.
I criticised when I believed fees were too high (they haven’t been lately) and when misleading and deliberately underestimated guideline prices were being widely deployed to get bums on seats for auctions pre-2007.
Some agencies can be blamed for misleading the public about what was going on when the market was starting to crumble back in 2006/07. But at the same time, the largest networks were providing open, accurate and publicly available quarterly data. And they still do. In fact, their data has been consistently more reliable than the State’s.
In fairness to the Irish estate agency sector, over 30 years it has moved (thanks in no small part to its professional organisations) towards steadily higher standards of education, ethics and practice.
Irish estate agents tend to stay in the business for life and often through successive generations. Generally they take a great pride in their work and most care about people (despite needing to appear impartial) and they deal graciously with a disparaging public. They are far better professionally and ethically than their counterparts in the UK, in Europe and in the USA. They are certainly no worse, and perhaps much better than others in supposedly more ‘reputable’ professions.
So is it just systematic of an ultra diplomatic profession, which seldom stands up for itself against disparaging perceptions held, that Government is looking to call out wrongs which likely don’t exist? And just because popular wisdom holds it to be so? Because these days puff from the State on false bidding is very much a smokeless duel.