Auction madness

[coolie21]

I've been to two auctions recently where the auctioneer 'persuaded' the holder of the highest bid to raise their bid (against themselves) to put the house on the market. At auction yesterday a 3bed 1 bath renovator reached 340K. The auctioneer then paused the auction for 'vendor instructions'. After some street theatre and discussions with the highest bidder the auctioneer returned and announced that the bidder had raised their bid to 415K and that the house was now on the market. You could have knocked me over with a feather.

Fortunately for the bidder no-one else chipped in at that point but they clearly were unaware that they had a free run at post auction negotiation (with a worried seller) if they just held fast and the property was passed in. Perhaps Michael Caton on Hot Property should explain the rules for these punters. Sheesh.

 

[jazzlobber]

A couple of things strike me about this,

its most likely a first home buyer or somebody that has not been to an auction or know the way things work, yes the best option is to get it passed in on a vendor bid or whatever, no other bids you can then speak to agent regarding market etc and try and get vendor to sell.

going from 340 to 415 is stupid, the vendor may not sell at 340 but that's up to them.

The other thing that could possibly be happening is the person bidding 415 is a dud or plant by the RE agent and they're trying to get genuine bidders anxious to purchase,

 

[coolie21]

A couple of things strike me about this,

its most likely a first home buyer or somebody that has not been to an auction or know the way things work, yes the best option is to get it passed in on a vendor bid or whatever, no other bids you can then speak to agent regarding market etc and try and get vendor to sell.

going from 340 to 415 is stupid, the vendor may not sell at 340 but that's up to them.

The other thing that could possibly be happening is the person bidding 415 is a dud or plant by the RE agent and they're trying to get genuine bidders anxious to purchase,

I really think in both cases the auctioneer browbeat unsophisticated bidders. In the case of the latter auction, that house had been marketed at a higher price for a couple of months, attracting no interest (overpriced). The auction was the fallback position, so the vendors clearly needed to sell. The bidder may have still thought they were buying under market and were getting a good deal, but they didn't need to raise their bid in order to negotiate, it would have been passed in at 340K.

Another comment of interest here re REA tactics. The house was cleared of furniture except for one photograph showing a lady in a hospital bed surrounded by relatives, and a sad looking electric wheelchair out the back....

A bit obvious I thought, even if true

 

[wylie]

What price did you think the house was worth?

I am just thinking that if the vendor and/or her family would not take under $415K and the bidding had stopped far short of that, raising his bid to the reserve may have been quite acceptable to the buyer.

This happened to us with our PPOR through the Public Trustee, so it does not mean the buyer was naive (though I take your point that this could have been the case).

What I am saying is that if you thought low $400s was a reasonable price, then unless they were absolutely desparate to sell, $340K would never have bought it.

If you thought the value was about $340K then the buyer has probably been dudded, but I find it hard to believe someone would pay that much over the value (but not saying it hasn't happened before).

If it was worth in the $400s then the highest bidder at $340K would possibly not have been in the race even negotiating afterwards, and it would probably have sold the same day for closer to the market value.

Of course, you were there and I am speculating, but curious to know what you thought it was worth.

Wylie

 

[coolie21]

Based on recent sales and comparisons I would have paid 380-390 max. But then I wasn't bidding and it wouldn't have been for me to live in anyway, so that is an 'unemotional' price.

I was there because I bought the house 2 doors down a couple of weeks ago at auction and wanted to see what this one went for. As the house I bought is in much better condition and is 4/5 bed 2 bath and I paid 10K less, personally I am stoked by the result. But the point of this thread is to highlight that I have seen this situation twice now in a couple of weeks where a bidder has been persuaded by an auctioneer to raise his own bid when they had first dibs at negotiation anyway as they were the highest bidder.

To be fair to Michael Caton, in a recent episode of Hot Property, he also expressed incredulity when a bidder for a Gold Coast property bid against himself in the same situation, raising his own bid by 10K before anyone else countered. And maybe suggesting that Michael should do a segment on how to bid at auction might take something away from the 'televisual excitement' of his TV auctions

 

[HandyAndy888]

Funny things happen at auctions..like vendor bids, auctioneer bids, phantom bidding, bidding as outlined above, auctioneer bidding against possible buyers....its utterly stupid and I guess only the silly fall in the trap...

 

[Peter 14.7]

Sounds to me the auctioneers have found a way to get around the vendor bid/dummy bid rules. It fact is give real meaning to the term "dummy bid".

Peter 14.7

 

[Darren1968]

dummy bids

Recently I was watching a UK property show on Foxtel and the auctioneer was basically making up bids.

He would point to the back wall of the auction room and take a bid as if someone back there was bidding.

There was only one true bidder left and they were in effect bidding against the auctioneer.

They had no idea that there was in fact no one back there bidding and that the auctioneer was simply making up the bids.

He managed to get them to raise their bid (in increments) by $20,000 (pounds)

This was known as "bidding off the wall" and is apparently legal over there.

Is that sort of thing legal over here?

It sounds like the bidder in this post. If he had known the rules/protocols he should have stuck to his bid and negotiated. Might have saved himself a few thousand dollars.

 

[wylie]

Bidding off the wall, as you call it, used to be rife here. Supposedly tightened up now, and I haven't been to an auction lately to see whether it is still around.

I would like to think things are different because of the hefty fines if RE agents are caught doing dodgy things.

Several years ago, I used to be asked to start the bidding and take it up to a certain amount, which I did on numerous occasions.

Wylie

 

[willair]

After some street theatre and discussions with the highest bidder the auctioneer returned and announced that the bidder had raised their bid to 415K and that the house was now on the market. You could have knocked me over with a feather.

.

Collie ,no one wanted to take a chance and bid above 415K,from 340k then 415K,I would have run to the gate,can i just ask what area this property is in I wonder how many bids the gum tree in the back yard made..willair..