AMV? Guide? Disclosed reserve? The price descriptions in property ads are getting curiouser and curiouser

‘WHEN I USE a word,’ Humpty Dumpty said, in rather a scornful tone, ‘it means just what I choose it to mean – neither more nor less.’ ‘The question is,’ said Alice, ‘whether you can make words mean so many different things.’”

If he was buying or selling property here in Ireland these days, Lewis Carroll would find much rich material for a sequel to Humpty Dumpty’s adventures. Seldom has “reading between the lines” been more necessary for buyers in the Irish property market.

In what is increasingly looking like a dictionary free-for-all, estate agents are choosing their own price descriptions in advertisements. The boom is well over but it has left a rich variety of price descriptions in its wake. There is no effective governing law.

In simpler times, a property for sale either had a sale price or a pre-auction “guide price”, which, of course, then became utterly discredited. But now the property advertisements are displaying a colourful range of price descriptions including “price”, “asking price”, “guide”, “price region”, “prices from” and even “minimum reserve”. And that’s just the private treaty sales. The subtle differences between them can be bewildering.

Then for auctions, there are “AMVs” and “Disclosed Reserves”. And then there is the “Reserve Price” which is the only one with a specific legal meaning. Uncertainty also reigns over whether AMV in an advertisement means Advised Minimum Value or Advised Market Value or whether there is any difference.

Sherry FitzGerald does have a glossary on its webpage which explains AMV in its advertisements as being Advised Minimum Values that “have widely replaced guide prices”.

They note that the AMVs “should be” the auctioneer’s true opinion of value of a house or apartment at the commencement of the marketing campaign. They also correctly note that AMVs are not mandatory “nor are they universally accepted in the property industry”.

The draft of the long-awaited law on property selling, designed to clean-up the reality and image of the Irish property market, makes no reference to Sherry Fitzgerald’s Advised Minimum Values, which were recommended in a 2005 report to the Minister for Justice. Rather, it refers only to a new “Advised Market Value”. It defines this as an estate agent’s reasonable estimate of how much a willing and knowledgeable buyer would pay at the time of the valuation.

Now Allsop has entered the fray and has added further to the already wide range of price descriptions. It refers to the maximum reserve price (which is made public) and the minimum reserve price (which is not) and which is also the legally-defined “reserve price”.

The minimum reserve price at its auction tomorrow is “the lowest price that the vendor is prepared to accept for the property”. If the bidding does not reach this undisclosed figure, then the seller is not required to sell the property.

It adds that the vendors’ real reserve price (which is the same as the minimum reserve price) will be set at a figure either lower than, or at least the same as, the advertised maximum reserve price. So the secret real minimum price will not be higher than the published “maximum reserve price”. And both the published “maximum reserve price” and the unpublished “minimum reserve price” can be changed at any time prior to the auction.

Allsop warns that its public maximum reserve price is not to be regarded as the asking figure. It also starkly reminds buyers that the vendor may bid up to the minimum reserve price: “You accept that it is possible that all bids up to the minimum reserve price are bids made by or on behalf of the vendor”.

There are four prices to be aware of in buying or selling any property. They apply to sales either by private treaty or by auction.

First, there is the valuation, which is what a valuer advises the property is really worth. Second, there is the price given in the advertisements, usually with some qualifying words. Third, there is the price below which the vendor really will not sell. And finally there is the sale price that is finally achieved.

Gay Byrne entertained the nation on many weekdays on his RTÉ Radio One show quoting estate agents’ “little gems” and “sun-drenched gardens” and other florid descriptions of properties that bore little resemblance to their reality. The current crop of price descriptions makes its own contribution to the confusion.

Uniformity and consistency in the property market will be among the benefits when the Property Services (Regulation) Bill is finally signed by President Mary McAleese’s successor. In the meantime, we need to learn to read property advertisements with care and to ask what the words mean – like Alice.

Pat Igoe is a solicitor in Blackrock, Co Dublin