Auctioneers Dubious About Receiver Sales

07 Jun 2018 | 02.21 pm

Auctioneers Dubious About Receiver Sales

Best offer no guarantee of buying property

07 Jun 2018 | 02.21 pm

The Institute of Professional Auctioneers & Valuers (IPAV) claims that properties are being withdrawn from auctioneers by receivers, often without their knowledge, and are being sold for lower prices than the original offers on the same properties.

Speaking ahead of IPAV’s annual conference in Kilkenny, chief executive Pat Davitt said: “The question that arises is how much deeper is the debt level growing on those already exposed to heavy debt, and are they being forced by this practice into further unnecessary debt, even though their properties have gone into receivership.”

Davitt (pictured) added that auctioneers are legally obliged to get the best price the market can offer for vendors.

A recent survey of 133 IPAV auctioneers has shown that 57% had properties withdrawn by receivers and placed for sale through other sales processes, despite having had a legally signed Property Services Regulatory Authority sole agency agreement in place with the auctioneer.

Roughly half the properties were withdrawn without any notification to the auctioneer, and many of these properties were already under offer when they are withdrawn. According to IPAV, some properties are sold for levels considerably less than the previously offered price.

Davitt added that that receivers are frequently dealing with large tranches of properties and there is an inclination to sell a range of properties in one go. “However, it means that someone who has genuinely made the best offer for the property may not secure it. They may find that unbeknownst to them and the acting auctioneer the property has been sold for a lower price.”

In Davitt’s view, while this practice may be beneficial to the eventual purchaser, it is disruptive to the industry and costly to those who have to handle the additional debt burden associated with the lower price, whether that be the original borrower, the financial institution or taxpayer paying the write-off.

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