THE MAGAZINE OF THE INSTITUTE OF PROFESSIONAL AUCTIONEERS & VALUERS
IS ‘SOCIAL AND AFFORDABLE HOUSING’ WORKING?
NEW EU PROPERTY POTENTIAL IN CENTRAL EUROPE
contents W E L C O M E
T H E
P R O P E R T Y
P R O F E S S I O N A L
Welcome to the Spring issue of The Property Professional 2004.
Already it’s a busy season for auctioneers and while prices generally are softening in some areas of the market, overall the outlook for the coming season is quite good. The Institute has always stressed the need for a solid, steady market rather than sudden upswings or downturns which cause difficulty for everybody.
The Tenancies Bill, which will introduce a number of major changes in letting practices (outlined in previous issues of the magazine) is still slowly winding its way through the Dáil but is expected to be passed into legislation before the summer. It’s been a busy time for the Institute, too, on a number of fronts. On Tuesday, January 20, IPAV hosted a daylong Seminar for all our full-time students in Moran’s Silver Springs Hotel in Cork which heard a number of excellent presentations from practitioners in various fields. I would particularly like to thank our Education Director, Peter Brady, for his efforts in putting it all together.
THE PROPERTY PROFESSIONAL IS THE MAGAZINE OF THE INSTITUTE OF PROFESSIONAL AUCTIONEERS & VALUERS 129 LOWER BAGGOT STREET, DUBLIN 2. TEL: 01 6785685 FAX: 01 6762890 E-mail: firstname.lastname@example.org Website: www.ipav.ie CEI Website: www.web-cei.com
On Wednesday, February 11, the Senior College in Dún Laoghaire hosted an Open Day for its students. This was a very useful opportunity for IPAV to inform students about the operation and role of IPAV and of the career opportunities open to graduates from our courses. Thanks to the efforts of our hard-working Education Advisory Committee, our full and part-time courses are now universally agreed to be of the highest standards, providing an excellent grounding in all aspects of the auctioneering profession. Finally, a few dates for your diary. IPAV is holding a Regional Seminar in Atlone on Monday, March 29. This year’s AGM and Annual Conference will be held in the Rochestown Lodge Hotel, Cork on Friday and Saturday, May 21 and 22. As this is our first time to hold the event in the southern capital, we hope for a record turnout by members. We plan to make it a very enjoyable event this year so don’t miss out. Full details will be circulated to you in the post in the coming weeks.
Liam O’Donnell Chief Executive
Chief Executive Officer Liam O’Donnell F.I.P.A.V.
Editor Tim Ryan Tim Ryan Communications Tel: 01 6624649
Advertising & Design Designroom email@example.com
Is ‘Social and Affordable Housing’ Working ?
New EU Property Potential in Central Europe
Auctioneering Students get the picture
Obligations and Entitlements of Auctioneers and Estate Agents
Cork Auctioneer Wins Recovery of Commission and Fees
Views expressed by contributors or correspondents are not necessarily those of IPAV or the publisher and neither IPAV nor the publisher accept any responsibility for them.
DATES FOR YOUR DIARY!
Regional Seminar: Hodson Bay Hotel, Atlone, Monday, March 29th, This year’s AGM and Annual Conference will take place in the Rochestown Park Hotel, Cork on Friday and Saturday, May 21 and 22. the property professional
THE PRESIDENT Dear Member The New Year is already well underway and the traditional busy season for auctioneers and estate agents is upon us. While the upwards spiral in house prices appears to have eased, all the signs from the commentators are for a solid year with growth in residential house prices of 6 to 8 per cent expected. This is a sustainable level of growth and one that the Institute has always encouraged so that we avoid sudden swings in prices which cause difficulties all round. Later this summer, IPAV intends to undertake its regular survey of property prices and I would strongly urge all of you to participate as the greater the numbers to respond, the more accurate the survey results. In the past, this survey has provided useful information for Government departments and other research projects.
IPAV has already lined up a hectic schedule of activities for the year ahead. Already this year we have been engaged in two education seminars in Cork and Dún Laoghaire details of which are printed elsewhere in this issue. Our education courses are one of IPAV’s core activities and we are constantly upgrading them so that they are at the cutting edge of the ever-changing profession.
We are currently well over two months into the Irish Presidency of the European Union. This is probably the last time Ireland will host the presidency in its present format and it is offering the country a unique opportunity to showcase itself on the world stage. May 1st will be a very significant day when 10 new member states join the existing 15 in a new and very enlarged Europe. All the world’s attention will be focused on Áras An Uachtarain when the 10 Prime Ministers from Lithuania, Latvia, Estonia, the Czech Republic, Slovakia, Poland, Slovenia, Hungary, Malta and Cyprus will sign the membership agreements as former Taoiseach Jack Lynch and Minister for Foreign Affairs, Dr Paddy Hillery, did for Ireland back in that historic date in 1972. With enlargement will come major opportunities in the property industry. Already many enterprising Irish auctioneers and estate agents have acquired properties on behalf of clients in cities in the new Central Europe. Prague and Budapest appear to be particularly popular but attention is also focusing on places as far away as Riga and Tallinn. In time, many of these investments will prove themselves prudent and rewarding and I would encourage members to look at the potential there. However, acquiring properties in the new enlarged Europe is not without its pitfalls and anybody getting involved should proceed with caution. The securing of good, independent advice is a prerequisite to any purchase. Properties in Europe generally are much cheaper than at home and there are niche markets to be carved out for the enthusiastic and energetic agent! IPAV is, as you are aware, a member of the Confederation of European Estate Agents (CEI) which will play an increasingly important role in the future. The Institute is represented on its Board of Directors by our Chief Executive, Liam O’Donnell who is a former President of the Confederation. Through CEI, members have the opportunity of making contact with estate agents in other European states and this is something which we would like to see developed over the coming years. As borders become increasingly less significant, Europe is becoming a very small place indeed. Competitive and frequent air routes often now mean that it is as easy to go from Dublin to a European capital for a working meeting as it is from Dublin to a city or town in the south-west of Ireland! All in all, we live in very exciting times and we owe it to the generations that will come after us to make the most of it. Our AGM and Annual Conference have been set for May 21 and 22 and I would like to join with our Chief Executive in inviting you to make every effort to come to Cork this year. Our Senior Vice-President, Cork-based Richard Nagle of Global Properties and his organising team are hoping for a record attendance. I look forward to meeting as many as possible of you on that occasion, both in the discussion forums and in the very enjoyable social occasions that are so much part of the weekend. The past eight months or so have been a very exciting time for me as President of the Institute. In that time, I have been honoured to present many graduates with their parchments and to meet our current students. From participating in these functions, it is obvious to me how highly the Institute is regarded throughout the country and how it continues to grow and develop on a daily basis. However, we must never forget that the strength of the Institute depends on the support of you, the grassroots members. Without that vital support, it could not function in any real way. As Europe enters a new and exciting era of enlargement, let’s resolve together to make our Institute a vibrant and effective cog in its activities. We can all only benefit.
Paul Gartlan President
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IS ‘SOCIAL AND AFFORDABLE HOUSING’ WORKING ? BY JANE SUITER
People waiting on Dublin City Council’s housing lists may have had their hopes of living on Shrewsbury Rd dashed but there are likely to be plenty of great addresses to choose from in 2004 and beyond. The Social and Affordable Housing Scheme may have been slow to get off the ground but the Department of the Environment and local councils are confident that thousands more units will be delivered in 2004 and 2005 compared with the very meagre 140 delivered in the first nine months of 2003, the latest date for which figures are available. Schemes from the multi-award winning Clarion Quay to Shelbourne Park and Robswood in Malahide as well as Poppintree, Lucan and Ballinteer all have elements of social and affordable housing in the mix. Many more are in initial planning. Contrary to the fears of many in the industry, so far there have been remarkably few negative headlines.
MORE FLEXIBILITY NEEDED Under Part V of the Planning and Development Act, 2002, up to 20 per cent of a development must be given over to social and affordable housing. If not, under changes introduced in 2002, land or cash must be handed over in lieu. In reality, this is a moving target. Different councils have varying targets and policies. According to Hubert Fitzpatrick of the Irish Homebuilders Association, far more flexibility needs to be delivered. "We would like the options set out in the legislation to be real options. We need to be able to pick from a menu rather than the local authority operating a veto," says Fitzpatrick. "If this were the case the whole process would be a lot speedier." He adds that it also works very well when the local authority comes in with a land bank as recently happened with Shannon Homes 730 units at Castle Curragh. But housing managers dismiss this view. According to Philip Murphy of South Dublin Couth Council, the flexibility is already in the strategy. The council mostly wants units
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but it has taken land for adjacent halting sites in Clondalkin and Tallaght and has also taken cash from a builder in Rathfarnham who was looking at a loss on the price he had paid for his land. "Initially many builders had a ‘not over my dead body’ approach but now they have realised it is not so bad," he says. Ciaran Coughlan, a builder in Cork who is putting up a massive development akin to Mount St Annes in Milltown in the Ursuline Convent in Blackrock, agrees. "We reached an agreement in a couple of days and everyone was happy," he says. "It was a very positive experience and ourselves, the council and the client will all end up better off." But the builders say not all councils are as flexible. Many point the finger at Dublin City Council which is widely rumoured to be strict and inflexible. Certainly Dublin’s target is for a 20% allocation split 50:50 between affordable and social, compared with say 17% to 3% in Meath. However, this does not always work out, says Dublin’s Dick Whelan. Of the units he is expecting this year in central Dublin, 36 will be social and 67 affordable while in south east it is 32 social and 44 affordable. Only in north central around Cabra does the half split work with the council expecting 101 units of each type in the area. Other councils such as Fingal, South Dublin and Cork look for between 8% and 15% split between the forms depending on the location.
LOWER SPECIFICATION The IHBA’s Hubert Fitzpatrick also warns that the measures will lead to lower specification houses and apartments across the country. "A council may say that 10% of the units have to be affordable and the developer will
often have to trim the spec. to bring the units in at what the council says is an affordable price," he says. Others say that the strictures can mean that more than 20% of the units in a scheme can be handed over while yet others complain that it invariably means a lower specification building overall. But, in reality, high prices simply mean that many local authorities simply cannot afford to buy 20% of the properties even at existing land use values. But there are still substantial numbers of affordable homes likely to become available in upmarket areas such as the Merrion Rd, Ballinteer, Rathgar and other more expensive areas of Dublin as well as areas such as Inchicore and Cabra. Further out of town there will be houses and apartments in Poppintree, Lucan, Applewood in Swords and Cardy Rock and Hamlet Lane in Balbriggan but, perhaps, the biggest volume will be in the Dunshauglin area. Surprisingly, Meath has only allocated five affordable units in Kilmessin and Laytown. Housing executive Marie Byrne is expecting up to 1111 units this year with the bulk in the Dunshauglin area. Byrne says in some big developments, or those with very large homes, her preference after units is for land to build the land bank for the future. "Although we will take cash payments as well," she adds.
ADVANTAGES The advantages of qualifying for an affordable house are unambiguous. The affordable price is worked out by taking the current use value of the usually agricultural land, the cost of construction and an agreed level of profit for the builder. On average, there is likely to be a saving of some €50,000 but it can be far larger. Those
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qualifying for affordable homes, for example, will be able to pick up one bedroom units for €152,000 and 2 bed for €178,000 in Robswalls in Malahide compared with €368,500 and €414,500 for those that buy on the open market. However, the money is fully recoverable if the house is sold in 10 years. After that, there is sliding scale until year 20 when no more money is recoverable. In the upcoming development by Lyonshall in the Ursuline Convent in Blackrock, Co. Cork the 45 affordable duplexes will go for around €140,000, around €100,000 less than the likely market price. But these are all affordable units. Providing social housing which the tenant then rents from the local authority appears to be more problematic for many builders and developers. Some have compromised and agreed to developments such as the 21 social units given over to the elderly in Shelbourne Park. A similar scheme was agreed in Terenure but turned down by An Bord Planala.
WORRIES MISPLACED Padraic Kenny, law lecturer at UCG, who is writing a book on Housing Law and Policy in Ireland, says the worries are misplaced. "It is not as if these people have just come up from middle earth, they are already renting in local estates and just because they get onto a social housing list does not turn them into terrible people." He adds that all the studies show that it does not make any difference at all to house values. "Some of this is a lot of scare tactics," he says. There is also a huge reluctance on the part of the builders and the different councils to name the developments with social housing or with traveller accommodation being built or planned, particularly with the local elections coming up in June. "Providing traveller accommodation beside your private estate can still be tricky and we do not need this to blow up in our faces over the new few months," one official says. But South Dublin County Council’s Philip Murphy dismisses the fears as "propaganda nonsense and urban myth". He insists that the council is happily working with almost all the bigger house builders to build traveller and other accommodation beside their housing schemes in areas from Tallaght to Lucan to Clondalkin. Of the several hundred units he is looking forward to this year, up to 40% will be social. There is also debate over whether to cluster or ‘pepper pot’ the social and affordable housing. Most councils say they have no real preference so long as the units are delivered. Dotting social housing around the private units is also very difficult from a management point of view. Many management companies, particularly in apartments, have difficulty with it as some property occupiers would be paying the service charge and others would not. But different developers also take different approaches in their different schemes. Bovale, for example, is likely to take the ‘pepper pot’ approach in its new 1,000 unit development in Poppintree while in Lyonshall in Cork has clustered the affordable duplexes in a few areas in its massive new development in the Ursuline Convent in Blackrock. In other areas, it is more contentious and it took months of discussion before community groups in Dublin's docklands reached an agreement with Treasury Holdings, the developers of Spencer Dock, that 15% of the social housing units would be in the main part of the development. All the indications are that the developers are now ready to move ahead. "There has been some misunderstanding. But we are now seeing that the developers are in a hurry to get on and develop. They are doing deals," says Meath’s Marie Byrne. * Jane Suiter is a journalist with The Sunday Times
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NEW EU PROPERTY POTENTIAL IN CENTRAL EUROPE WITH THE IRISH PRESIDENCY OF THE EUROPEAN UNION NOW IN FULL SWING IT IS TIMELY TO BE DISCUSSING OPPORTUNITIES FOR INVESTORS IN THE TEN NEW MEMBER STATES THAT WILL BECOME PART OF THE EU IN MAY 2004.
Property investors here have already shown a huge amount of interest in Eastern Europe, with Hungary currently top of most people’s list. There is little doubt that joining the EU will benefit the property markets in each country, and the feeling is that there is more value to be found abroad than in the Irish market right now. So whilst keen investors look to the new accession states, Paul Coghlan of the Prestige Group analyses the potential pitfalls, where the value will be, and the steps you will need to take to ensure that the investment is well placed. Property has always been one of the most popular investment vehicles for Irish Investors and given the tremendous capital and rental growth experienced in the home market over the last decade, its popularity is no surprise. The various Bacon Reports, which introduced measures to discourage Irish investors from buying up many of the starter houses and apartments on the domestic market, helped to drive investors into overseas markets. While much of these reports have been reversed in recent years, there are signs that residential prices on the home market are now beginning to slow, meaning Central and Eastern European property is now a potentially better option for Irish investors. For purchasers borrowing in Euro this has been further strengthened by the current combination of low interest rates and stock market volatility, the former of which has made mortgages very affordable.
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There are obvious advantages to buying in Europe with security topping the list, and the EU membership is the rubber stamp that may eradicate some of the fear of buying abroad. Traditionally buying abroad has meant a holiday home for most people, but as investors have become more familiar with foreign markets they are seeing real potential value in areas on and off the tourist track.
THE EU The ten states that will join the EU on May 1st are the Czech Republic, Cyprus, Estonia, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia. This new cohort of countries will see the total membership close to double to 25 countries within the Union. The membership has progressed the alliance a lot further from the basic principals of peace and prosperity over the last 50 years and now looks at areas including: freedom, security, justice, regional development, job creation and environmental protection. Depending on your politics, there are obviously different views about how successful the EU has been but one thing stands out to any business person, investor or politician – the more established member states are certainly more commercially mature than other parts of Europe. And at the end of the day, trends in the economic market are closely followed by property performance, so the ten new member states are quite rightly at the top of any property investors list.
In terms of their demographic position, the new member states are a bit of a mixed bag. Malta is the smallest populated country with just 400,000 people inhabiting the beautiful Mediterranean island, compared to Poland, which is home to 38.7 million people. Lithuania, Cyprus, Czech Republic, Poland and Malta have inflation rates between two and three percent whilst Slovakia struggles with a 12 percent rate. Cyprus is a mature economy on the back of its tourist trade, which has placed it well in its acceptance by the other EU member states both socially and economically. On the back of these varying landscapes come many potential minefields for people hoping to invest. Like any other property purchase there are rules to stick to and risks that can be avoided. The first rule would be to know the area. Each varies in its potential and so it can be a case of ‘horses for courses’.
INVESTMENT There are many areas with growth potential. But how is that potential defined? Well for the true investor there are three areas that will earn money in property: capital appreciation of the asset, rental yields and the lesser advertised of the three – the capital appreciation of the investment during the construction stage. To explain this further, an example would be a property that is brought off the plans with a considerable build time. If only a proportion
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of the money is to be put down in this stage the return on that investment can be a great yield – i.e. I pay 10% (€10,000) of the house price in January, by October the projected sale price of the finished property has risen by 15% and the return on my investment is 150% on the money put down. With this in mind, to maximise the potential yields and reduce the investment risk, property investors need to look for certain economic and social trends within an economy. These would typically include a well-educated work force, a young ambitious professional population and evidence of inward investment by public and private business. Other vital areas to consider when buying property abroad are the legal system of the country and the financial and banking situation. Many people go into foreign property without giving these factors a second thought, but they are actually two of the most important things to ensure that your investment is safe. It is always advisable to look for international law firms in country’ to ensure that you are getting the right advice. In many of the new member states the law systems are still evolving and only coming round to foreign investment, so tread carefully.
POTENTIAL By far the most exciting markets out of the accession group are the Baltic States. Estonia, Latvia and Lithuania are well positioned to gain mass foreign investment upon their entry to the Union. They have a young and incredibly enthusiastic population that are well educated. Tallinn, Estonia’s capital is an extremely vibrant city that is becoming increasingly popular with tourists. It has a sophisticated legal system, its banking is sound and in good supply, and being bordered by Sweden and Finland, it is seen as the gateway between the Nordic States and Russia. It also holds good potential rental yields making it an attractive market to buy property. Its sister Baltic States would be a little behind in maturity but are certainly showing potential. On the other end of the scale you have Poland and the Czech Republic. Both have seen heavy investment in the last ten years and as such don’t seem to offer as much value as the Baltic’s could offer. In fact it has been said that Tallinn is expected to follow Prague in its climb to becoming the ‘place to be’ in the new Europe. Investors in Prague will have seen good return in the last few years, but those thinking about buying property in the city now are unlikely to see impressive returns.
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REGIONAL SEMINAR IPAV is holding a Regional Seminar for members on Monday, March 29, in the Hodson Bay Hotel, Athlone. While it is "regional", all members are welcome to attend.
Agenda 6.45pm Registration. Tea and Coffee 7.00pm Introduction by Paul Gartlan, IPAV President 7.15pm The Implications of Decoupling – Con Lucey, Chief Economist, IFA 8.00pm Questions from the Floor 8.15pm The Methods of Valuation – Margaret Brady * * * * *
Comparative Contractors Investment Profits Residual
Questions from the Floor
Summary and Concluding Remarks – Liam O’Donnell, Chief Executive, IPAV
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In terms of value in the new member states Poland seems to be the least attractive, much like the Czech Republic the chance has gone and at this point in time the market seems to be a little depressed. Two other mature areas within the new member states in terms of property investment would be the places that many Irish people may well have already visited: Cyprus and Malta. Both have benefited from the tourism trade, and in fact rely on them economically. For an investor there tends to be little value here, but for the holiday homebuyer, you are certainly investing in a guarantee of the sun.
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Slovakia and Slovenia are likened to the Baltic’s in their demographics but have their share of pitfalls. Slovenia has traditionally been a hard property market to get into due to difficulties in acquiring land as a foreign national. It has only been possible to invest in land since February 1st 2003 and as such presents itself as an untapped market in some ways. However, it is a wealthy country in relative terms and would be marginally more advanced than Slovakia. Slovakia is a progressive nation and the legal system has changed in the last few years making the market much more attractive. But by far the most popular of the new member states with Irish property investors at this moment is Hungary. You only have to open the property ads to see that the market has mushroomed and interest from Irish investors is massive. The Hungary model is most likely a forerunner from what we can expect from the Baltic’s, Slovenia and Slovakia. With a population of 10.2 million Hungary is one of the bigger accession states. The country’s business climate is excellent thanks to a young educated workforce whose language skills are exceptional. The labour force is very strong in the IT, engineering, medical and scientific sectors. Economically, the country has been out performing other new member states and is highly successful in attracting foreign investment. Budapest, Hungary’s capital city is the dominant property market where the construction industry’s long term future is bright, with private sector demand for residential and commercial buildings set to
remain strong as mortgage lending expands and the public sector continues to command a generous civil engineering budget, extensively financed through EU accession funds. The residential segment of the Hungarian property market has gone through the most changes in the past two years and is now one of the most dynamic. Large international developers and professional local developers have entered the market where large-scale schemes varying from 60 to 300 units are under development. Residential prices have seen increases of between 40 and 60% since 1998 in local currency. Discounting for inflation, this means increases in real terms of between 20 and 40% over the market as a whole. Currently, the best areas to invest in are the rapidly developing 6th, 7th, 8th, 9th and 13th districts of Pest around the central 5th district. Foreign ownership of and investment into Hungarian firms is widespread and the rental market is strong among Westerners. Yields of anything between 7-8% are normal for well furnished apartments in central areas. The one downfall of the mass interest in the Hungary market is that there are a lot of companies offering substandard services to potential buyers. People looking to buy in Hungary or any other foreign country should beware the ‘quick sell’. Investors should look for a company that has experience in the market, preferably has a presence in the country, has good links to legal and financial institutions in the area and most of all, won’t disappear when the contract is signed. Hungarian Tax issues and laws can be complicated and as such it is vital that you have the support you need from the word go. This is also commonplace in most of the accession states, and so the same rule applies. There is great potential in some of the new member states and the second half of 2004 will prove to be an interesting time as these countries adjust to the membership. Due to the complexity of the issues involved in buying foreign property it is vital that Irish investors go in with their eyes open. * Paul Coghlan is Chief Executive of the Prestige Group. The company placed over €170 million of Irish investors money in UK and Eastern European property in 2003 and is one of Ireland’s leading property investment companies.
WILLIAM FENNELLY RIP Dominick Street Mullingar Co Westmeath Ireland Tel (044) 40000 Fax (044) 43726 Email firstname.lastname@example.org Web www.davittanddavitt.ie
IPAV has learned with great sadness of the untimely death of William Fennelly who lectured the Institute’s part-time students in Dublin on Valuation. William (36) was a Director of Lisney and was very well known in his profession. He joined Lisney in June 1996 upon his return from London where he worked with St. Quintain. He lectured on the IPAV course in UCD for a number of years before transferring to the Institute of Technology, Tallaght last Autumn.
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The President, National Council and staff wish to extend their deepest sympathy to his wife and family.
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AUCTIONEERING STUDENTS GET THE PICTURE BY PETER BRADY, CHAIRMAN EDUCATION ADVISORY COMMITTEE
"It is important that you develop an understanding of the market and realise that potential purchasers cannot be persuaded to buy what they do not want." That was the advice given to over two hundred Real Estate students from Cork College of Commerce and Senior College Dún Laoghaire who were attending a Seminar on the future of professional practice in Moran’s Silversprings Hotel, Cork. The speaker, Frank Ryan FRICS (Colliers Jackson Stops) also told the students that increased wealth now meant that home purchasers’ basic needs were largely fulfilled. New demands centred on issues of quality and status - build quality and high specification were the deciding factors in influencing purchasers. The Seminar was organised by Cork College of Commerce in association with the Institute of Professional Auctioneers and Valuers (IPAV). Both the Chairperson of the Board of Management and the Principal of the College welcomed students and lecturers from Senior College Dun Laoghaire, the only other College in Ireland to offer the IPAV course. The Principal of the College, Gerard O Dwyer, spoke of the long association with IPAV and said he was very proud that Cork College of Commerce was a recognised centre of excellence for the delivery of the course.
Peter Brady addressing the Seminar
Mr Richard Nagle Senior Vice President IPAV told the students that while many spoke of the "market", they should realise they had a part to play in it. To an extent he said, they were actively involved in shaping the future of the market. They were facing into a challenging and exciting future and it was up to them to be pro-active and to aspire to the highest standards to meet clients’ needs, a theme that was echoed in Mr Frank Ryans final lecture. The morning began with a presentation by David Duffy of the Economic and Social Research Institute (ESRI) who told students that Ireland experienced the highest proportion of home ownership in the EU. While labour and material cost had increased over the last 10 years, land prices had risen more spectacularly and contributed in a significant way to the real cost of housing. This was a factor that had to be addressed if the cost of housing was to be controlled – he referred the students to research conducted by Roche and Stephenson in this context. Deirdre Cullen of the Central Statistics Office described the major changes in Irish society from 1926 to 2002. The greatest change was to be seen in the transformation of the country from a rural to an urban society. In 1926 c. 68% of the population were confined to rural areas with c. 33% living in urban areas. By 2002, this situation was dramatically reversed with 60% of people now living in urban areas while the other 40% live in the country.
Guest Speaker Deirdre Cullen (left), Central Statistics Office, with Aimee McClenahan, Swords, Laura Finnegan, Howth and Louisa Kennedy, Kiliney.
Nicholas Mansergh a senior planner with Cork County Council set the context for the development levy and said that in relation to the major investment by the Council in infrastructure, the levy imposed on developers was quite modest. Echoing an earlier theme, he said that until landowners perceived their asset in a different light, costs would continue to rise. In closing the seminar Liam O Donnell, IPAV Chief Executive, told the students that the future for professional practitioners was very bright. The opportunities at home and abroad were there. The Education provided by IPAV was designed to prepare the student to meet the needs of an expanding, demanding market. Photographs by Donagh Glavin/Sheehy Photography
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(l – r) Jack Penruddouc, Lismore, Deirdre Carty, Galway, Joanne Boswell, Dublin, and Michelle Fahy, Galway at the Cork Conference
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AUCTIONEERING STUDENTS GET THE PICTURE
Michelle O'Regan Ballineen, Rachel Fay, Glandore, Deirdre Cullen CSO (Guest Speaker), Joseph Kelly, Carrigtwohill, and Russell Flemming, Ardmore.
John Twomey Innishannon, Micheal Power, Douglas, and Ian McGregor, Sundays Well.
Keith Ryan, Mullingar and Jayeola Agunsiade, Newbridge
Senior College Student of the Year 2002/2003 Darragh Clancy is presented with an auctioneer’s gavel by Kevin Browne, HRM Manager in IADT, Dún Laoghaire
Students at the IPAV Seminar
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OBLIGATIONS AND ENTITLEMENTS OF AUCTIONEERS AND ESTATE AGENTS (SECOND OF A TWO PART SERIES - CONTINUED FROM WINTER ‘03 EDITION) BY BRIAN HUTCHINSON, ASSOCIATE DEAN, FACULTY OF LAW, UCD HOW MUCH ARE YOU ENTITLED TO? If you don’t agree a rate then you will be entitled at law to a "reasonable fee" * How much is a matter for the courts to determine on the basis of expert evidence * not a cheap prospect!
ENTITLEMENT TO EXPENSES: Auctioneers and estate agents will also be entitled to recover all normal expenses and outlays incurred in the performance of their authorised duties, whether the property is sold or otherwise. Again it makes sense to obtain written confirmation of the terms of such outlay and expenses.
ENTITLEMENT TO WITHHOLD ITEMS OF A CLIENT’S PROPERTY UNTIL PAID: An auctioneer or estate agent who has not been paid his or her commission or remuneration (when entitled to it) can exercise a Lien. Caution should be employed in relying on this remedy, and where there is any doubt professional legal advice should be sought. Wrongfully withholding a client’s property can have serious consequences. A lien is a right to retain possession of items of the client’s property until paid; e.g. documents etc. The auctioneer or estate agent must, however, have obtained the principal’s property in the first place with the principal’s permission and for a purpose connected with the transaction in respect of which the commission or remuneration arose. Thus, an auctioneer could not claim a lien over specific items of his or her principal's furniture when payment is due to him or her in respect of a different sale of, say, items of industrial machinery on behalf of the principal. A lien does not give the auctioneer or estate agent a right to sell the goods; and he or she is bound to take reasonable care of them.
CONTRACTUAL OBLIGATIONS TO CLIENTS A contract is an agreement enforceable in a court of law. Contracts do not generally have to be in writing; although there are notable exceptions such as contracts for the sale of land, and contracts of guarantee, which if not made in writing must be evidenced in writing. Auctioneers and estate agents will owe contractual duties to their clients. The extent of these depends on the agreement between the parties. The principal contractual duty of an auctioneer is to auction the client’s property. This may involve advertising the auction and describing the lots. The principal contractual duty of an estate agent is to make attempts to find a
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purchaser or a person ready willing and able to purchase. This may also involve advertising the property, producing brochures, erecting signs, and displaying the property. An auctioneer or estate agent must not delay or obstruct the sale of the principal’s property.
PROFESSIONAL OBLIGATIONS TOWARDS CLIENTS Auctioneers and estate agents (and valuers) must exercise the skill and care reasonably expected of professionals in their position. If he or she negligently gives unsound advice or misleading information or expresses an erroneous opinion to the client, he or she may be liable for any damage suffered by the client if it was obvious that they were depending on his or her expertise. Auctioneers and estate agents must take particular care not to misrepresent or falsify details of a property, or to unfairly enhance its characteristics or value to induce a purchaser to purchase the property under false pretences. In such cases, an aggrieved purchaser might sue the vendor who in turn might seek an indemnity against the estate agent or auctioneer. In this way an auctioneer or estate agent could find himself or herself liable to the client.
AGENT’S OBLIGATIONS Auctioneers and estate agents owe additional duties to their client’s stemming from the agency relationship between the parties. These are discussed below.
TRUSTEE’S OBLIGATIONS An auctioneer or estate agent effectively holds a clients’ money as a kind of trustee for the client. Failure to safeguard that money (e.g. mixing it up with one’s own funds) or to account for it could lead to liability for breach of trust.
3. OBLIGATIONS AND ENTITLEMENTS ARISING THROUGH AGENCY USUAL AUTHORITY OF AUCTIONEERS AND ESTATE AGENTS. An auctioneer or estate agent has authority to do whatever is usual for an agent in his or her position, even though the principal or client has not expressly permitted - unless, of course the principal or client has forbidden the activity in question. Auctioneers have usual authority to: * Sell at auction the goods, which have been given to him or her; * Sign the contract of sale on behalf of the vendor or purchaser at auction; * Accept payment in cash. Thus, where an auctioneer does any of the above it
will be treated as having been done by the principal or client, unless he or she has forbidden it.
AUCTIONEERS DO NOT HAVE USUAL AUTHORITY TO: * Sell below the advertised reserve price at auction; or; * Accept non-cash payments without the principal's permission. Estate Agents have usual authority to: * Introduce potential purchasers or tenants; and * Communicate offers to the principal.
ESTATE AGENTS DO NOT HAVE USUAL AUTHORITY TO: * Sell the property without the principal's permission; * Vary, sign or conclude the contract without the principal's permission * To accept deposits without the principal's permission.
DUTIES OF AGENTS The principal duty of any agent is to perform the tasks for which he or she was engaged. In performing that duty, the agent must exercise the skill and care reasonably expected of a person in his or her position. In addition, the following duties must be observed: * Not to exceed his or her authority * Not to enter into a conflict of interests between his or her own interests and those of the principal or client * Not to accept bribes, secret commissions, or under-the-counter payments or benefits from customers without the principal’s consent * Not to delegate important tasks outside the practice without the consent of the principal. Simple clerical tasks may be delegated. * Not to treat the principal’s property as though it was his or her own in disregard of the principal
ACCEPTING DEPOSITS - AND "STAKEHOLDERS". When a deposit is paid to an agent, the question arises as to whether they accept the deposit as: * Agent for the Vendor? * Agent for the Purchaser? * Agent for both - i.e. as "Stakeholder"? If the deposit is accepted as agent for the vendor and it is subsequently lost - e.g. through unsuccessful Investment, it is the vendor, as opposed to the agent, who must assume any responsibility to the purchaser for it (the vendor may then, of course claim against the agent). If the agent accepts as agent for the purchaser, the
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principal’s property until paid. These entitlements are discussed further above.
ENTITLEMENTS DEPENDING ON TYPE OF AGENCY: Sole Agency: The principal gives the agent the sole right to act as agent for the property for a given period, and foregoes the right to instruct other agents. If the principal does instruct another agent the sole agent may be entitled to commission on any transactions concluded by the new agent.
situation is reversed and it is the purchaser who assumes responsibility to the vendor. A stakeholder has been defined as someone who: "does not receive the money for either party, he receives it for both; and until the event is known it is his duty to keep it in his own hands" (per Lord Chief Justice Tenterden in Harrington v Hoggart (1830) 1 B&Ad 577). A stakeholder takes on a personal liability to the vendor and purchaser to account to them for the amount of the deposit; if the stakeholder pays the deposit to the wrong person, or fails to return it in circumstances where the purchaser is entitled to the return of the deposit, the estate agent will be directly liable to the purchaser. The vendor, as the agent's principal, will also be liable to the purchaser when the stakeholder is unable to return the deposit directly: Leemac Overseas Investments v Harvey  IR 160. It is accepted that stakeholders can keep any interest earned on the "stake" whilst they hold it.
AUCTIONEERS: As we have seen, auctioneers have usual authority to accept cash deposits without the principal's express permission. Where a deposit is accepted by an auctioneer the presumption is that the agent Is a "stakeholder" (Furtado v Lumley (1890) 6 T.L.R. 168). The presumption can be rebutted by agreement.
ESTATE AGENTS: Estate agents have no usual authority to accept deposits without the principal's permission (Sorrell v Finch  2 All ER 371; Law v Roberts & Co  IR 292) - so in those circumstances the agent holds as monies as agent for the purchaser until contracts have been exchanged. Where a deposit is accepted by an estate agent or other agent, e.g. solicitor, with the permission of the principal, the presumption is that they accept not as stakeholder but as agent for the vendor. Contractual provisions commonly override this presumption. Stakeholders are common in Irish contracts for the sale of land and interests therein, since the Law Society’s Standard Conditions of Sale contain provisions relating to stakeholders.
AGENT’S ENTITLEMENTS: An agent’s main entitlements are to payment of remuneration or commission having completed the tasks for which he or she was engaged; and to re-payment of out-of-pocket expenses incurred while acting within the scope of his or her authority. An agent may also withhold the
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The principal must clearly and expressly confer sole agency rights. They will not be implied: Galvin (Estates) Ltd v Hedigan  ILRM 295 and Murphy, Buckley, Keogh v PYE (Ireland) Ltd  IR 57. The principal may still deal with the property privately (i.e. without instructing another agent) unless he or she expressly foregoes that right. Joint Sole Agency: The principal instructs two or more agents. Any commission is usually shared between the agents. Exclusive Agency: Sometimes also referred to as "sole selling rights". The principal gives the agent the sole right to deal with the property for a given period, and foregoes the right to instruct another agent or to sell the property privately. The principal must clearly and expressly confer exclusive agency rights. They will not be implied. Multiple Agency: The principal instructs a number of agents. Normally, only the agent who concludes the transaction will be entitled to commission. Sub-Agency: The principal instructs an agent, whom he or she authorises to delegate the business to other agents. The commission is normally paid to the principal agent, who in turn pays a fee to the sub-agent who has successfully concluded the transaction.
OBLIGATIONS AND ENTITLEMENTS IF ACTING FOR UNDISCLOSED PRINCIPALS: Where an agent acts on behalf of somebody else, but does not disclose that he is acting as agent for somebody else, the transaction is still binding as between the principal and third party, provided the agent is actually authorised by the principal to act on his or her behalf and the personality of the agent is not so fundamental to the contract with the third party that the principal is later unable to intervene. The agent assumes a direct responsibility to the third party until the principal becomes disclosed. Thus the third party can sue the agent personally on the transaction. Once the principal becomes disclosed, the third party must elect to sue either the Principal or the Agent - but he or she can’t obtain judgment against both.
4. OBLIGATIONS AND ENTITLEMENTS ASSOCIATED WITH AUCTIONS THE AUTHORITY OF AN AUCTIONEER: Apparent Authority to Sell by Auction: An Auctioneer has apparent authority to sell by auction property which has been given to him "if one sends goods to an auction room can it be supposed that he sent them there merely for safe custody?" (Lord Ellenborough in Pickering v Busk (1812) 15 East 38.) This means, then, that even
if the sale, or sale by auction, was not authorised or was prohibited by the Vendor, the sale is still valid and binding on the Vendor, unless the purchaser knew or ought to have known that the sale was unauthorised or prohibited. The Vendor may sue the auctioneer, however, where the auctioneer has acted in breach of agreement by selling. No Apparent Authority to sell Otherwise than by Auction: An auctioneer will need express authority or permission to sell goods by private sale as opposed to auction. An unauthorised private sale will not be binding on the Vendor. In Daniel v Adams (1764) Amb 495, Adams put property up for auction with a reserve of £120. It failed to make £120, but the Auctioneer was later able to get £150 for it in a private sale. Adams, however, had given first refusal to someone else if the property went to private sale, and he did not now want to be bound by the Auctioneer’s private sale. The court held that he was not bound; the auctioneer had no implied or apparent authority to sell otherwise than by way of auction. Furthermore, in Marsh v Jelf (1862) 3 F&F 234 it was held that no commission was payable on the unauthorised private sale.
LICENSING AND PERMITS: Auctioneers must comply with the requirements of the Auctioneers and House Agents Acts, discussed above, in respect of licenses and permits. These include an obligation to display in a conspicuous place where the auction is held a placard bearing the licensed name and address of the Auctioneer; or publish a notice in a newspaper circulating in the area of the auction stating the licensed name and address of the Auctioneer. There is a fine for failure to comply with these requirements.
THE BID & THE FALL OF THE HAMMER: Contractual nature of the bid - A bid, contractually speaking, is an offer to buy the lot at the price bid and in accordance with the conditions upon which the lot is put up for sale. If the property is knocked down to that bidder, that constitutes acceptance of the bid and a contract of sale is created. Prior to such acceptance, the bidder may retract his or her bid. For auctions of goods, the Sale of Goods Act, 1893 restates these principles: "A sale by auction is complete when the auctioneer announces its completion by the fall of the hammer, or other customary manner. Until such announcement is made any bidder may retract his bid." Note, however, that the Law Society standard terms of auctions for the sale of land and buildings forbid the withdrawal of a bid once it is accepted by the auctioneer. Mistaken bids -A mistaken bid will not normally excuse the bidder unless the auctioneer knows the bid to be mistaken. Bids from the vendor or the vendor’s agents - A vendor may bid on his or her own property effectively withdrawing it from the auction (see Appendix 7.1. below). For auctions of goods, however, the position is different: "Where a sale by auction is not notified to be subject to a right to bid on behalf of the seller, it shall not be lawful for the seller to bid himself or to employ any person to bid at such sale, or for the auctioneer knowingly to take any bid from the
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seller or any such person; any sale contravening this rule may be treated as fraudulent by the buyer."- Section 58(3) of the Sale of Goods Act, 1893. Where the auction is to the "highest bidder," the auctioneer may be liable to the highest bona fide bidder if the vendor is the actual highest bidder. "Puffing Up Bids": Where an auctioneer knowingly accepts fictitious bids made in an effort to puff up the real bids, the highest bidder may revoke the contract and recover any deposit paid with interest. Knockout Agreements: Two or more persons may lawfully agree not to bid against each other and to divide the property amongst them afterwards.
ENTITLEMENT TO SIGN CONTRACTS: An auctioneer is legally empowered to sign contracts on behalf of both vendor and purchaser after a sale at auction. This is an ancient rule designed to prevent purchasers from escaping from their bids by refusing to sign. The auctioneer may not sign on the purchaser’s behalf if the purchaser mistakenly bid for the wrong lot, or if the auctioneer himself or herself is also the vendor.
5. GENERAL LIABILITY TOWARDS THIRD PARTIES In addition to the duties which auctioneers and estate agents owe their clients, they are also under a general obligation to third party members of the public who may be affected by their actions. These include: A duty not to warrant that they have authority to sell or otherwise deal with a property when in fact they have no such authority. * A duty not to misrepresent or falsify details of a property or to unfairly enhance its characteristics or value to induce a purchaser to purchase the property under false pretences.
In such circumstances the purchaser might sue the vendor who in turn might sue the auctioneer or estate agent - making them indirectly liable to the purchaser. * A duty to sell to the highest bidder at auction where the particulars stipulate that the auction is to be "to the highest bidder" or "without reserve." This duty operates even if the vendor refuses to sell to the highest bidder - but in such circumstances the auctioneer can sue the vendor in turn. * A duty not to knowingly accept fictitious bids which have been made solely in an effort to "puff up" the real bids. * A duty to take reasonable care against personal injury to persons and property when showing properties to the public. Though in many cases it will principally be the vendor who is liable, the auctioneer or estate agent may become liable for to the vendor or the third party for their part in the injury. A carefully worded notice or exclusion clause can relieve an auctioneer or estate agent from liability to third parties for errors or misdescriptions appearing in advertising literature.
CONCLUSIONS Maintaining professional practices and employing ordinary common sense will bring one a long way towards meeting the obligations associated with being an auctioneer or estate agent, while allowing one full opportunity to enjoy the associated entitlements too. Take care to keep abreast of the best professional practices in your field, and don’t be afraid to consult your colleagues or your Institute for guidance any time you feel you are out of your depth or unsure about how to proceed. Don’t be afraid to seek professional legal advice where appropriate.
NEW SUNDAY TRIBUNE PROPERTY SUPPLEMENT The Sunday Tribune has launched a new Property Supplement that deals exclusively with the commercial property market in Ireland. It is an eightpage pull out that covers the retail market, the office market, pubs and restaurants. Its main appeal according to Property Editor Helen Rogers is that it is not merely Dublin-focused. "Many newspapers tend to be biased in their property coverage, giving a large amount of coverage to the Dublin Area. This new supplement will give great focus to national news in the property market," she said. Each week there is a special topic of interest in the new supplement, for example Decentralisation or the National Spatial Strategy Plan with in-depth analysis of the effects, advantages and disadvantages that these plans bring to the market. Among the contributors is David Brophy, a wellknown and experienced property journalist. Another feature is the one-to-one interviews with top developers and leading retailers. They will give an insight into the key players and their feelings about the industry at the moment; while also discussing ‘done deals’ and planning permission in certain areas around the country. This element of the supplement adds to the lively mix of news stories and analysis in what hopes to be a very useful and worthwhile extra resource for the Sunday Tribune and Irish property market at large.
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CORK AUCTIONEER WINS RECOVERY OF COMMISSION AND FEES
A Cork-based firm of auctioneers won an action for damages in Waterford Circuit Court recently for the recovery of auctioneer’s fees in respect of the sale of a prime plot of 2.4 acres of residential development land in Co. Waterford. White Lake Properties, trading as Burton Lavan McCarthy of Princess St., Cork, were given a decree for €11,764 and costs in their claim against father and son, Michael and Kieran Tobin of West St., Tallow, the owners and vendors of the property.
SOLE AGENTS The plaintiffs claimed they were appointed sole agents for the sale of the land by agreement and they introduced the Tobins to a developer, John Kelly who eventually purchased the land. Offers of £520,000 (punts) and £530,000 (punts) were received for the land, which was ultimately sold without the knowledge of the plaintiff for a reduced price of £345,000 (punts) due to planning difficulties. The plaintiffs only became aware of the sale when Mr. Kelly approached them some years later and requested them to sell their land. The defendants alleged the sold agency agreement did not hold up and became barred by passage of time and the failure of the plaintiffs to vigorously sell their land. Auctioneer Ken Lavan said he became aware that the Tobins had land for sale in West St., Tallow, and approached them around July 2000 and told them he had a number of people on his books who would be interested in purchasing it subject to planning permission. The conversation took place in Michael Tobin’s house in West St., Tallow and he said if they could get £560,000 if they sold the land. It was agreed that he should act as auctioneer and a sole agency agreement was signed. He (Lavan) was to be sole agent unless informed in writing that it was being terminated. His commission was to be 2% plus VAT @ 21%. At no stage was the sole agency terminated orally or in writing.
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Mr. Lavan said he walked the land with the vendors and immediately put it up for sale. He erected a ‘For Sale’ sign on the property within a few days and placed four advertisements in the Evening Echo and the Irish Examiner at a cost of £960. There were a number of phone calls from developers in Cork and West Waterford and he brought them to view the land. An offer of £520,000 was made by a Richard Tobin and another later of £530,000. Neither offer was accepted. Another developer John Kelly was looking for land and he sent him maps of the property and met him late in August in the car park in West St., Tallow, and introduced him to the Tobins. They walked the land and Mr Kelly indicated is interest. After that, there was no further contact with Mr. Kelly and he was unaware the property had been sold until he got a call from him some years later to say he wanted to sell the property. In cross examination by Mr. Ml. Delaney, B.L. instructed by J.V. Walsh & Co., for the defendants, the witness said the sole agency agreement was signed by Ml. Tobin, who owned the land and his son Kieran was also present. At the outset they wanted £560,000 but his view was that the price could be calculated on the number of houses which might get planning permission. He said he would do his best and he felt £500,000 would be a good price. On the following day he rang a number of developers who were looking for land in the area and the first contact with Mr. Kelly was in late July 2000 when he arranged a meeting and introduced him to the Tobins. . After the offers were rejected he was unaware that a sale was agreed on September 4 with Mr. Kelly for a price of £500,000. He was certain that £560,000 was the price the Tobins wanted and not £500,000. Mr Delaney, B.L. asked if it was not basic logic that if there was an offer of £530,000 from a potential buyer that it would be accepted instead of £500,000.
NO COMPLAINT Mr. Lavan said he could not answer that question. He said he did a lot of hard work on the sale and he was never told by Kieran Tobin that it had been sold. No complaint was ever made hat he did not "lift a finger" to make a sale. He denied trying to shore up his position after being dismissed by putting an advertisement into the Examiner. At no stage was he informed that his contract had ended or that Cyril Wall, a Midleton-based auctioneer, had been engaged on Sept 1, 2000, and that a sale had been agreed with Mr. Kelly within three days. He was entirely unaware he had been "sacked".
Mr Delaney, B.L. said after the contract was signed there was difficulty with Mr. Kelly getting planning permission for the number of houses he envisaged building and it became necessary for the purchase price to be renegotiated. Ultimately, the land was sold on January 28, 2002, for £345,000 a significantly lower price. In evidence Kevin Tobin said the property belonged to his father and he played an active role in the sale and he actually rang Mr. Lavan. When his father signed the sole agency agreement, it was on the understanding that the property was to be "sold vigorously" and the price was half a million pounds. The plaintiff did nothing to sell the property and they did not set eyes on him after July 21 and he did not erect a sale sign until the middle of September. Eventually, he rang Mr. Lavan and told him the sale agency had ceased and it was made quite clear that a new auctioneer, Mr. Wall, had been engaged.
PLANNING PROBLEM The asking price for the land was £500,000 but a problem arose in relation to planning for the residential development. When permission was granted, a resident objected and appealed to An Board Pleanála. It was a long running saga and the contract was eventually signed on January 28, 2002. Mr. Wall was paid his commission based on the reduced price. Cross-examined by Mr. Jeremy Maher, B.L. the witness said he appointed Mr. Wall within two and a half weeks of Mr. Lavan’s signing the sole agency agreement because the land was not being promoted vigorously. The ‘For Sale’ sign was erected when the land was actually sold and he took it down. If the plaintiff wanted to waste his money by putting up a sign it made no difference to him. Mr. Tobin denied a suggestion that an attempt was made to "trick" Mr. Lavan and he was never contacted because he would have known the land was sold and he had been "tricked." He was present when the sole agency agreement was signed but he did not read it. The phone call dismissing Mr. Lavan was made on August 11 but he did not have a record of his phone calls for that day. Mr. Maher, B.L. said to the witness: "You are familiar with the case made by the plaintiff and you saw the legal documents and spoke to your solicitor about it. The phone call is crucial to your case and it is essential that it would be put into your defence. But there is not a mention of the phone call because you made it up in the recent past. You made it up and you are trying to trick Mr. Lavan out of his money," he alleged. Mr. Tobin denied the allegations.
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PURCHASE AGREED A director of the company that brought the land, John Kelly said he was first contacted by Mr. Lavan and he expressed interest and was sent the maps of the property. He could not recall meeting Mr. Lavan in West St., Tallow. The next contact was a phone call from Cyril Wall stating that he had the sale of the same land. When he met the Tobins, they agreed a purchase price the same day. Planning difficulties arose and ultimately a contract was signed on Jan 28, 2002, for a reduced price of £345,000 and the sale was completed. In reply to questions he said he could have met Mr. Lavan on the land. He pointed out to Cyril Wall that the land was the same property that Mr. Lavan had for sale and pointed out his sale sign on the site. He saw fit to enquire what the position was as to who had the sale of the land. In evidence Cyril Wall said he was engaged by Kieran Tobin and the price put on the property was £500,000. He had a buyer in mind and felt there was no need to advertise. On the following morning, September 4, he showed it to Mr. Kelly and a deal was done that afternoon and he was paid 2% commission on the reduced purchase price. He was told by Kieran Tobin that Mr. Lavan had been dismissed and he took him at his word and he was never told about a sole agency agreement. Judge Ml. O’Shea said it was an involved case and all parties came across as decent people doing their best to remember what happened in respect of the land sale. It was not disputed that there was an agreement between the owners of the land and the plaintiff company. Kieran Tobin had said the land was to be sold vigorously and there was a breach of agreement for not doing so. Everybody wanted to sell their property but there must be a reasonable time and something could not be done overnight in any walk of life.
BALANCE OF PROBABILITY Mr. Lavan’s approach to selling the property was no different from Mr. Wall’s and he got in touch with developers and met and negotiated with them. Mr. Lavan acted with "tremendous efficiency" and he was satisfied there was no basis for dismissing him. The land was valued at £500,000 by Mr. Tobin and he found it incomprehensible why Mr. Lavan would write two letters with two offers if he was dismissed. Mr. Tobin was adamant about the date when the sale sign was erected but this was contradicted by three people, two of whom were his own witnesses. If he was incorrect, in that the court found that he did not formally terminate the sole agency contract, Mr. Lavan was adamant that he introduced Mr. John Kelly and he walked the land with him and the vendors. The Judge said he was satisfied on the balance of probabilities that Mr. Kelly was introduced to the property by Mr. Lavan. He was also satisfied that, as a matter of fact and as a matter of law, Mr. Lavan did introduce Mr. Kelly to the defendants and he was entitled to succeed in his claim for 2% of the purchase price and his costs. A stay was granted on the order in the event of an appeal.
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DARA DEERING - EBS We have all read the speculation about the future of the mortgage market, with some commentators forecasting that the bubble is about to burst and others predicting continued growth. In order to forecast the future, we need to understand what factors have affected the performance of the mortgage market leading up to the present day.
FACTORS INFLUENCING MORTGAGE MARKET Over the last five years, the Irish Mortgage Market has experienced significant growth levels of over 100%. This significant growth rate has been underpinned by a number of factors which includes house prices, demand, supply and The Celtic Tiger. If we look at each of these factors individually we can understand how they each have impacted the mortgage market.
been so low since post World War II years Increases in wage levels, following the growth of the Celtic Tiger, coupled with the low interest rate environment have resulted in improved affordability for young people entering the housing market. Two other factors have also impacted on the market;* Movers also began to avail of the increased value of their homes and began to sell and use the released equity on their homes to "trade up". * A factor which has contributed to strong growth in the mortgage market is the reemergence of the investor to the market post bacon.
House Prices We have seen house prices increase by over two hundred percent in the ten years from 1993 to 2003, with the most significant increases recorded since 1998/1999.
Demand A baby boom in the 1970’s and early eighties (from 1961 – 1979 the Irish population increased by 20%) meant that a large portion of the population were in a position to purchase their first home during the early nineties. This created a great demand for housing in the market which could not be met by housing stock or supply of new homes. This increased demand in turn caused house prices to increase. High levels of positive net migration have also placed large demands on housing supply. These high levels of positive net migration resulted from tax incentives, EMU membership and Ireland’s position on the edge of Europe.
Supply Since 1999, we have seen 275,440 housing units (both private and social) completed in Ireland (Source: Department of the Environment Quarterly Housing Bulletin), in fact the number of houses completed every year has increased steadily since 1993. In 2003 alone 68,819 units were completed, 19.2% higher than the 57,695 homes completed in 2002.
The Celtic Tiger Ireland’s entry into the European Monetary Union saw interest rates drop from double figures to single digit rates. Rates have continually dropped over the last decade to the all time lows of today. In fact rates have not
Source: The department of Environment Quarterly Housing Bulletin
PRESENT AND OUTLOOK FOR 2004 So what is happening at the moment? All of the above factors, house prices, supply, demand and The Celtic Tiger have translated into double digit growth in the mortgage market in 2002 and 2003. In fact the mortgage market is expected to have grown by 21% in 2003. Looking at 2004 – record levels of supply in recent years means supply is now beginning to meet demand. We expect the number of completions in 2004 to be in the region of 65,000 and 68,000, in line with 2003 numbers. Since July we have seen year on year growth in house prices decrease from 15.6% to 13.4% in January (source: permanent tsb/ESRI house price index). This trend will continue throughout the year with houses prices expected to see an overall increase of just seven per cent by year end. Looking at the demographics, with a growing young population caused by natural increases and high inward migration (especially in the 25 – 44 year age group – the main house buying age group) we expect demand to remain strong over the next couple of years. With the underlying fundamentals of the mortgage market remaining strong in 2004 we expect solid growth in the year of circa 12%
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INTERVIEW WITH OLIVER DEMPSEY RECENT STUDIES HAVE SHOWN THAT THE INTERNET IS BECOMING A MORE IMPORTANT COMMUNICATIONS AND MARKETING TOOL FOR BUSINESS AND THIS INCLUDES AUCTIONEERS AND ESTATE AGENTS. WE ASKED OLIVER DEMPSEY FROM BARROWVALE TECHNOLOGY LTD. TO GIVE HIS VIEWS ON SOME OF THE IMPORTANT ISSUES FOR MARKETING PROPERTIES ON THE INTERNET. contains any advice for first time buyers, they should be able to search for ‘first time buyers’ and get a list of articles relating to that phrase if any exist. How often should you update the site?
Oliver, what are the important issues when marketing properties on the Internet? The main things to get right are design and navigation, to update the site regularly, provide as much helpful relevant information as possible and to market the site properly. There are also other new technologies available now that will make your business more competitive. What advice would you give about design and navigation? You need to have a professional design. A professional design is very important and a poorly designed site won’t do your image any good. Get a reputable web design company to design your site, look at work they have done for other customers before you make a decision. The design of a site is like the foundation of a house, if you cut costs on the design you are going to weaken the effect of the whole site and ultimately you may have to replace the whole site in the future if you don’t do it right in the first place. Navigation is how we find our way around the website using links to bring us to different pages. It is important that those links are always available and that they are in the same location. On larger sites you might need to have a search facility. How would you use a search facility? A search facility is very important on a site with a lot of properties and/or information. It is very important that a person can search using the criteria that they want instead of having to search a long list of 30 or 40 properties. For example if the person is looking for a 3 bedroom terraced house in Dublin 8 for less than €450,000, well then they should be able to key in those criteria and get a list of matching houses. Similarly if they want to know if your site
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You need to keep your site up to date, but this is not exclusive to the content of the site, it also relates to the design and feel of a site. Similar to the way people get tired of looking at the same car after a couple of years, people also get tired looking at the same website if it is not renewed regularly. Our bigger customers change the layout and design of their sites at least once a year to keep them looking fresh and new in much the same way as a department store would renew the interior of their stores with fashionable contemporary design and keep ahead of the competition. And what about the content It is very important to change the content as often as possible. In relation to properties that come on the market, they should be uploaded to the website straight away. It is also a good idea to have a featured property that will change automatically or can be changed manually on a regular basis. From the buyers point of view you are much more likely to catch their attention if you are changing around feature property like that. From a sellers point of view it shows that you are making a real effort to sell property and get the best price. How much information is needed on a website? The more comprehensive a site is the better, for example if you have information giving advise on rates of stamp duty, mortgage relief, grants, solicitors and as much information as possible giving advice for your customers then it will be much more likely to be used as a useful resource, will be a talking point between friends and bring back people as well… it’s bound to bring in more business. However, as well as providing comprehensive information you also need to know how to organise content. Why is it important to know how to organise content? We have done some very interesting experiments with some of our clients to see how their customers view property or product lists on the Internet. We have seen sales increases in these businesses by arranging properties in the right order e.g. cheaper houses at the beginning, dearer houses at the end or visa versa. You mentioned marketing earlier, what advice would you give about marketing?
Well, after you have made such a good effort to produce a professional web presence, you now need to tell people where it is. Websites are like brochures, they might as well be in a box on the floor under your desk unless you make an effort to show them to people or to distribute them. Nobody will ever see your website unless you advertise and market it, even if the Internet wasn’t such a vast place, it would already be difficult enough for people to guess where your website is unless you indicate where it can be found. What’s the best way to market your website? Marketing your website is carried out offline and online. You can easily market the site offline yourself by advertising it on signage, business cards, brochures, ads in newspapers and magazines, phone answering machine and word of mouth. Online marketing is more complicated because it involves optimising the site as well as advertising it. It is a pity to spend time and money advertising the site online if it hasn’t been optimised at least once. Are all sites not optimised already? No, I have seen sites that have cost over €15,000 but have not been optimised properly, so throwing more money at it is not going to make it a success if the developer doesn’t understand how to optimise it. I’ve also found that much of the advice that you can read online about search engine registration and optimisation is untrue and inaccurate. And it stands to reason, because first of all the person might not be the marketing expert that they claim to be and secondly, even if they were, they are surely not going to give their secrets away to everyone else. Ideally you need to at least get the advice of an Internet marketing expert if you are serious about marketing your website properly and to be seen to be doing the best job in marketing your clients’ property as well. How can we find a good marketing expert? It is difficult to get a good marketing expert, but if you are approached by someone who claims they can optimise your website and increase visitor numbers, ask them to produce statistics and references of sites that they have already increased visitor numbers to. Then, if you do decide to take them on, make sure that you get some good statistical tools set up on your own site so that you can monitor it to see if they have made any difference. Take them to task after a couple of months if there is no meaningful difference in visitor numbers or enquiries because there should be. Don’t forget that this is an ongoing task of maintaining visitor numbers from
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online marketing. In much the same way that it is important offline to use your shop window, signage and newspaper ads, you also need to invest in marketing online to maintain the numbers of enquiries that you get online. Someone with good experience in online marketing can also help you to keep existing customers up to date with market trends and opportunities using for example newsletters. Why would you use a newsletter if you already have a website, is a newsletter expensive to produce? A newsletter is a good additional tool to use along with a website. An online newsletter is a very cost effective way to send information to your customers because it is sent over the Internet and there are no printing costs. It helps you to keep in contact with buyers and sellers to provide them with up to date information on property news and also on buying opportunities. If you’re seen to be doing a good job in providing information and keeping in contact with your customers, you are much more likely to gain more business as a result. You mentioned new technology helping to improve competitiveness, what do you mean by that?
For those of who are comfortable with using new technology, there are now lots of new and exciting possibilities available to help speed up workflow, reduce administration and make your business more competitive. Broadband is now making it possible for you to update properties in the database remotely using a handheld computer. So you could actually register the property on your system while you are on site. This leaves less paperwork and the property is available immediately for your colleagues and customers to view. It also looks pretty impressive, imagine the look on their face when you take that gadget our of your pocket! Finally, is there any other advice that you would give to our readers? Well just to say that our most successful customers pro-actively work on improving their online presence all of the time. They are constantly monitoring traffic on their site and how it is being effected by layout, navigation, content, prices, featured properties and online marketing. Don’t let your web marketing people off with just doing the job and then disappearing, ask them to monitor your site and provide you with updates on traffic and enquiries
and where they are coming from and whether they are going up or down. The web is now a serious tool for researching products and property. We had a case recently where a customer thought there were very few people looking at his website and he asked us to take down the old one while the new one was in the final stages of testing. This was against our advice by the way because we would never advise anybody to take down their website at any time. Anyhow, he couldn’t believe the number of complaints that he got, lots of people were using it for looking at properties but he never knew about it. He was unaware how much of a benefit it was to his business as people were doing their own research online. Hire a good web marketing consultant to at least advise on how best to achieve these results. They will look at your present site and help you to ensure it is professional looking and up to date, that it contains relevant and useful information and that properties are organised optimally. He/she will also help you to ensure that it is promoted effectively online and that it is optimised to generate new business.
HOUSE REBUIDING COSTS THE FOLLOWING TABLE IS PRINTED COURTESY OF THE SOCIETY OF CHARTERED SURVEYORS TABLE OF COSTS 2003 HOUSE TYPE No. of
70 sq. m.
(750 sq. ft.) (€172 sq.ft.) (€129 sq.ft.) 3
95 sq. m.
(1023 sq.ft) (€164 sq.ft.) (€122 sq.ft.) SEMI -DETACHED
95 sq. m.
(1023 sq.ft) (€167 sq.ft.) (€127 sq.ft) 4
(1270 sq.ft.) (€155 sq.ft) (€117 sq.ft.) DETACHED
(1270 sq.ft) (€161 sq,ft.) (€119 sq.ft.) DETACHED BUNGALOW 4
(1572 sq.ft.) (€152 sq.ft.) (€117 sq.ft.)
Garage: Total rebuilding costs range from €13,724 for a single attached garage to €24,675 for a double attached garage. This table is a guideline based on a typical speculative built, estate type house in the Dublin, Cork, and Galway areas. These figures are July 2003 figures. See important notes below.
1. The figures shown in the table are a MINIMUM base cost guide for your house insurance. 2. The figures are based on estate type houses built in the Dublin, Cork and Galway areas since the 1960’s. They exclude: (a) properties with more than 2 storeys or with basements or habitable attics. (b) ‘one-off’ houses with special design features or period houses. (c) Apartments/residential flats because of split responsibilities for shared areas. The insurance of apartments is covered in the block service charge. Owners should confirm with their management companies / agents that their
apartment block has been valued for insurance purposes, and that the insured value is current. €1397 sq.m. 3. The figures assume a basic (€130 sq. ft) quality specification with normal €1311 sq.m. foundations, brick/block walls, (€122 sq.ft) concrete ground floor and timber €1331 sq.m. first floor, softwood flush doors (€124 sq.ft.) and hardwood double glazed €1226 sq.m. windows, painted plaster to walls, (€114 sq.ft.) plastered ceilings, standard €1207 electrics and central heating. (€118 sq.ft.) The sum insured should be €1213 sq.m. increased to allow for better than average kitchen fittings, built-in (€113 sq.ft.) wardrobes, finishes and any other items not normally included in an estate type house (e.g. fire alarm). 4. House contents such as carpets, curtains, furniture, etc. are not covered by the figures. 5. No allowance has been made for the cost of outbuildings, patios or boundary walls. The figures do however allow for a concrete path around the house, for driveway repairs and regressing. 6. The figures allow for demolition costs, professional fees incurred in reinstatement and VAT at 13.55 on building costs and 21% on professional fees. 7. The amounts include for professional fees have been calculated to cover the following services: Building Surveyor / Architect: Prepare working drawings and specification and administering the building contract. Rebuilding cost
Quantity Surveyor: Invite and examine tenders, process payments and agree final account. Provision has not been included to cover the cost of a Structural Engineer who may be required in some cases. Fees associated with the preparation of insurance claims are not included. 8. The costs are based on building rates ruling in July 2003 and do not include for inflation during the duration of the policy and the period between any loss occurring and reinstatement.
BUSINESS FOR SALE Auctioneers & Estate Agency Dublin * Successful & Dynamic Agency * Extensive Client Database * Thriving Encasement Area * Substantial Growth Potential Please Reply To: Fergus Fitzpatrick & Co, Certified Accountants 14 Fitzwilliam Place, D2 Tel (01) 240 2288 email email@example.com the property professional
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CAREERS FORUM AT DÚN LAOGHAIRE SENIOR COLLEGE money-laundering legislation and it is also represented on the new Private Tenancies Board, which is the subject of legislation currently going through the Dáil. "There is strength in numbers and by acting as a strong institute, IPAV ensures that the views of members are heard at all levels," Liam O’Donnell added. The IPAV chief executive encouraged all students to Students in attendance at the IPAV Forum maintain their membership of the Institute and to Over 600 students attended a Careers Forum in become participating members in its activities. the Royal Marine Hotel, Dún Laoghaire on He also appealed to them to run for office in Wednesday, 11th February organised by the the coming years and to help to develop the Senior College. The purpose of the event was Institute in the best interest of members. to allow students pursuing a career in "The career of the auctioneer and estate agent auctioneering a chance to hear experts in the has been transformed over the last decade field and also to learn from the experiences of largely due to the Celtic Tiger and the huge past students. increase in property prices," he told the Cecelia O’Flaherty, Course Co-ordinator at SCD, students. "Apart from choosing the traditional acted as MC for the day and introduced the route of becoming an auctioneer, there are speakers – namely, Liam O’ Donnell, IPAV Chief options in property management both in the Executive, Peter Brady, Chairman IPAV private and public sector. Most of the major Education Officer and IPAV graduates John State and private organisations e.g. the ESB, Coyne and Seamus Forde. Bord Gais, CIE and so on all employ their own After a DVD presentation about the Institute, property manager to manage their portfolios. Liam O’ Donnell began with a brief history of These can be very worthwhile and fulfilling the Institute of Professional Auctioneers and careers. Valuers. He said it was founded by a small but "Secondly, the huge growth in apartment farsighted group of people in 1971 as a blocks in our cities and towns has seen a huge representative body for qualified, licensed rise in the demand for Property Management auctioneers, valuers and estate agents Companies who manage all aspects of the throughout the country. Its basic aims then property. Again, this is another route that can were to ensure the highest standards among be very interesting and those working in the profession of worthwhile for the young, auctioneering and estate agency and to ensure enthusiastic graduate." those standards were met at all times.
750 MEMBERS The institute is 31 years old this year and while it has developed beyond all recognition since then, the basic aims have not changed. Today, IPAV boasts over 750 members with 600 full and part-time students at seven centres around the country, said Liam O’Donnell. Over the years, IPAV has developed and extended the range of services it provides for members. For example, IPAV is in regular communication with Government, the local authorities, and other relevant institutions on all issues of relevance to members. IPAV is currently negotiating with the Government on the new
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information we give you that counts," he advised. A professional, according to Peter Brady is an educated, qualified person with a Code of Ethics as outlined by the Institute. The many courses run by IPAV are fully recognised by the industry as offering the most professional and "hands on" training and qualifications to be had. It was however, up to each student to make of it what they wanted. "It’s all out there in front of you so make the most of it!" he added. John Coyne, was a student at SCD from 19992001. He is currently a Property Manager with Keenan Property Management in Dublin city centre. He completed his third year in Cork before studying for his degree in Bristol. His job entails managing property, common areas, service charges, maintenance, landscape, lights, cleaning and insurance issues. John explained to the group of students that it was with his qualifications that got him his current job. He said that often on the course, it is easy to doubt the relevance of some of the course work, but yet in the day-to-day demands of his job, he is amazed at how relevant his knowledge base is. John advised the students to remain focused, keep up to date with project work and to take responsibility for their own achievements. "If you are having difficulties with certain subjects, go to your lecturer and discuss the problem early on. "This way it does not get out of hand," advised John. Seamus Forde gave an interesting talk at the forum. Seamus also attended SCD from 19992001 and completed his third year and degree in Bristol. He is currently studying a Masters degree in Town and Country Planning in Queen’s University in Belfast.
PROFITS BEFORE WORK "The only place where profit comes before work is in the dictionary," said Peter Brady. He spoke to the students about educational opportunities and progression. He said that with hard work and dedication now is the time to succeed in this business. "There are so many windows of opportunities out there now as the industry is constantly specialising and moving into other sectors. It is however, what you do with the
Cecilia O’Flaherty, Peter Brady and Liam O’Donnell