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ONLINE BIDDING PLATFORMS may feel more transparent to homebuyers, but new research suggests people using the platforms are far more likely to bid higher and take greater financial risks in buying homes.
That’s according to the researchers at the ESRI, who claim in a new report that buyers using online auctions and even those using the more traditional method of making bids through estate agents are more likely to exceed both their ideal budget and what they believe a property is worth.
For those of you not currently battling through the headache-inducing process of buying a house in Ireland in 2026: the two primary routes for prospective buyers to secure a home are online auctions or bids through an estate agent.
Online auctions refer to the sale of residential or commercial properties through a digital, internet-based platform rather than a traditional in-person auction room.
Bidders register, verify their identity, and place offers in real-time, often with an eBay-style countdown timer.
It provides a transparent, secure, and fast method for buying properties, with legal contracts often exchanged immediately upon the fall of the virtual gavel.
The other method – going through an estate agent – involves the sellers hiring a professional to manage the entire property disposal process, from valuation and marketing to negotiating offers with a number of hopeful buyers, and closing the sale.
Another system used in Scotland is referred to as ‘sealed-bid auctions’, which the ESRI examined in detail.
In this system, a solicitor receives all the bids on behalf of the seller, rather than an estate agent. There are two key differences:
The seller may choose the best of these, although they are not legally obliged to do so, and can interact directly with a specific bidder if they wish. One bidder does not know what the other is offering.
Despite this, most buyers still say they would prefer online bidding, according to the think-tank’s report.
The report found that buyers felt inclined to offer more than they believed a property was worth across all bidding systems, but the effect was strongest in open and online auctions.
Compared with a baseline measure of what participants thought a friend or family member should pay for a home, final offers on sealed-bid auctions tended to be up by about €7,000.
By contrast, bidding through an estate agent increased final bids by roughly €13,500, while online bidding platforms saw prices jump by as much as €16,000.
Dr Deirdre Robertson, senior research officer at the ESRI and lead author of the report, said this gap between the perception of fairness in online auctions and the reality was one of the study’s key findings.
“When we ask people which system they would choose if they could, most say the online bidding system,” Robertson said.
“But that’s exactly why we ran the experiment, to see what actually happens when people are bidding under these different systems.”
“What we find is that people are more likely to bid above their ideal budget, and above what they think the house is worth, when they’re using online platforms or bidding through estate agents, compared to sealed bids.”
The report found that just over half of participants (54%) in sealed-bid auctions ended up bidding beyond their ideal budget.
That rose to 61% when bidding through an estate agent and nearly two-thirds (65%) when using an online auction platform.
The report draws on behavioural science to explain why this happens, particularly the concept of ‘auction fever’.
“When people are in constant competition with each other and can see bids going up, they’re more likely to keep pushing their bids,” Robertson said.
Every time you’re the highest bidder and then someone outbids you, you’ve essentially lost your place – and that makes you more likely to increase your bid again, even if it means going beyond what you originally planned.
Robertson added this competitive dynamic now appears to be a structural feature of Ireland’s housing market.
“This paper isn’t looking at supply and demand, it’s purely looking at behavioural effects,” Robertson said.
“But those behavioural elements are clearly part of what’s feeding into rising prices and volatility.”
While online auctions are contributing to this, most homes in Ireland are sold through the ‘open offer’ system, where buyers submit bids via an estate agent and are told when they have been outbid.
This system encourages higher offers in a process that closely resembles an auction.
Buyers and sellers are not legally committed until contracts are signed, meaning either side can pull out late in the process.
The ESRI has previously noted that the open offer system feels natural largely because it is the only one most Irish buyers have ever known.
Robertson also pointed to the ‘sunk cost fallacy’, where people continue investing in a property because they don’t want to lose what they have already put in, financially or emotionally.
“People can become heavily invested in a property and then keep putting more cost into it, even when it may not be the best financial decision in the end,” she said.
The report also found widespread misunderstandings about how the homebuying process works.
Only one in five respondents knew that a property can legally continue to be marketed after it goes sale agreed, while many were unaware that buyers can withdraw from a sale without penalty before contracts are signed.
Robertson said these knowledge gaps could leave buyers financially exposed.
“People are acting in a system they don’t fully understand,” Robertson said.
“There’s no objective right or wrong decision when buying a house, but misperceptions about such important aspects of the process suggest some people may be taking risks without fully realising it.”
Robertson added that the findings point to a need for more accessible information about buyers’ rights and responsibilities.
“It’s never a bad thing to have good knowledge about a system you’re acting in, particularly when the financial repercussions are so large,” she explained.
More than 80% of people who bought a home in the past three years experienced at least one major ‘transactional stressor’, such as conveyancing delays (conveyancing is the legal transfer of property from an owner to the buyer), spending more than expected, or delays moving in.
The data shows these stressors have become more common over time, Robertson explained.
The report also highlights low levels of trust in the homebuying process.
More than one in seven buyers (14%) said they suspected ‘ghost bidding’ (an illegal practice in auctions to artificially drive up prices using fake bids) had occurred during their purchase.
While the researchers cannot verify these claims, Robertson said the perception alone is significant.
She said this may help explain why buyers are drawn to online platforms, which appear more transparent, even though they can intensify competitive pressure.
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