IPAV, the Institute of Professional Auctioneers & Valuers, says properties are being withdrawn from auctioneers by receivers, often without their knowledge, and are being sold for lower prices than the original offers on the same properties.
Pat Davitt, Chief Executive of IPAV, says this loss on value may have to be borne by the vendor in cases where lenders have not written down debt or are unwilling to do so.
“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,” he says.
Mr. Davitt said auctioneers are legally obliged to get the best price the market can offer for vendors.
A new survey of 133 IPAV auctioneers has shown that 57pc had properties withdrawn by receivers and placed for sale through other sales processes, despite having had a legally signed PSRA (Property Services Regulatory Authority) Sole Agency Agreement in place with the auctioneer.
Roughly half are withdrawn without any notification to the auctioneer and many of these properties are already under offer when they are withdrawn. In documented instances some properties are sold for levels considerably less than the previously offered price.
This issue raises a whole series of questions as to who benefits from this practice Mr. Davitt says: “Licenced auctioneers are regulated by the PSRA but the question that arises is, who regulates receivers.
“In a number of cases if the property doesn’t sell it may afterwards be sold to a single bidder who may offer a knock-down price and succeed,” he says.
Receivers are frequently dealing with large tranches of properties and there is an inclination to sell a range of properties in one go, he says.
“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”.
