Ireland’s homebuying process is marked by auctions that induce overbidding, widespread misunderstanding of rights and responsibilities and increasing delays after sales are agreed, according to new research from the ESRI’s Behavioural Research Unit.

The research, funded by the Competition and Consumer Protection Commission (CCPC), draws on a nationally representative survey of 800 adults who completed a controlled auction experiment, and a detailed survey of buyer and seller experiences and expectations.

An overhaul is required to combat a system that encourages reckless overbidding and leaves consumers in a state of “stressful limbo”, according to the study.

Participants in open auctions were more likely to exceed their original budget and to bid higher than their view of what the property was worth, according to Dr Deirdre Robertson of the ESRI, the lead academic carrying out the study.

With open auctions organised by estate agents and online, the study found bids from those taking part were pushed higher than they would be if a sealed-bid auction process was used.

The research also found significant gaps in people’s knowledge of rights and responsibilities. While more than two-thirds know it is illegal for a seller to accept multiple deposits for the same property, only one in five know that agents can legally continue to market a property after it goes “sale agreed”. Additionally, most people do not know that a buyer can pull out of a sale without penalty before contracts are signed.

“The findings show that people are navigating a system they may not fully understand and increasingly experiencing stress, especially delays to conveyancing,” said Dr Deirdre Robertson, Senior Research Officer at the ESRI.

“Our findings also suggest that the most commonly used bidding systems encourage people to overbid, inflating prices.”

It paints a picture of a market defined by ‘”auction fever”, a widespread misunderstanding of legal rights, and systemic delays that have worsened significantly in recent years.

The research found that 63% of all past property buyers experienced at least one major stressful hurdle. However, that figure spiked to over 80% among those who purchased a home within the last three years.

Irish home buying is also plagued by significant delays, with over one third of second hand buyers experiencing transactional hold ups and over a quarter of new build buyers facing moving delays.

The ERSI said that other problems experienced by buyers included finding issues after the sale, sellers pulling out and spending more on additional costs than expected.

NB – This is a guide for information purposes only and does not constitute legal advice. If you have an issue requiring legal advice, please contact any of the team at Nolan Farrell & Goff LLP, whose numbers can be found on our website www.nfg.ie, or email info@nfg.ie.