Legislation on the sale of houses could be amended to prevent the practice of "gazumping", according to the Irish Auctioneers' and Valuers' Institute.
In a submission sent last week to the Minister for the Environment, Mr Dempsey, the IAVI has suggested that the law concerning contracts by private treaty could be altered easily to reduce gazumping, whereby builders refuse to sign contracts while they wait for higher offers from house-buyers.
"Basically we're saying to vendors `Do not issue a contract unless you intend doing business'," said the IAVI chief executive, Mr Alan Cooke. He rejected the suggestion that auctioneers and estate agents used the practice to increase commission. Auctioneers did not introduce gazumping, Mr Cooke said yesterday. "In fact, it is an auctioneer's nightmare."
Gazumping comes about because "all contracts now contain a clause to the effect that the contract shall not be binding on the vendor unless and until signed by him", according to the IAVI.
The organisation suggests that the loophole in the law could be closed by making that particular clause ineffectual for two weeks once the contract is issued.
"This proposal would have the effect of giving the purchaser a two-week option once a private treaty contract is issued."
Once the buyer returns the contract within a fortnight and without unilateral changes, "a contract would be binding on both parties".
Mr Cooke said the IAVI proposal followed last month's introduction of a Fine Gael Bill to eliminate gazumping.
That Bill would make it an offence for a vendor to fail to sign a contract within 14 days of a booking deposit being paid.
Mr Cooke said that Bill would apply in an ideal world, but in reality "anything that happens before a formal contract is issued can be got around".
The IAVI proposal submitted last Friday is being considered, according to a spokeswoman for the Department of the Environment.
Gazumping is not widespread but it does go on and "it generates a huge amount of ill-will", said Mr Cooke.
"We can't stop it. It's the vendors who make the decisions" and for auctioneers "our hands are tied".
He said it was "not worth the difficulty and the hassle" to be involved in gazumping. If an estate agent was selling a house for £150,000 and somebody else offered an extra £2,000 an agent was not going to get involved for the extra commission.
"You're the middleman, the messenger passing on bad news" to the original purchaser, he said. It was bad for auctioneers' reputations.
A property could not be sold by private treaty without a contract being issued, "so this is the stage at which Government should step in", Mr Cooke said. The Government has favoured a voluntary code of practice, but the IAVI believes not all vendors would adhere to a voluntary code.
But the IAVI submission to Government stresses that "clearly, only private treaty sales can be affected, as by their nature auctions and tenders normally require the issuing of blank contract documents to a number of parties. All new housing, and the vast majority of second-hand houses and apartments are sold by private treaty."
The IAVI is the largest property organisation in Ireland, with about 1,300 members.
