Hi Folks,
Well, the time has come to wind this great thread up. Thanks to everyone who participated, especially GeoffW for putting in the first offer. It got the discussion moving and led to many interesting points. I've learned a lot from both Part 1 & 2 and will share some of those thoughts, later.
I wish I could credit myself for creating those exercises but I'm not that clever. The exercises were lifted from a book I recently acquired from attending a property investment show. I saw it displayed with the title Buying Bargains at Property Auctions by Howard R Goodie. Well, with a title like that how could you not pick it up. I read the back cover first and learned that the author was an experienced property auctioneer. Well, since most books in my collection seem to be written by investment gurus, solicitors or accountants I thought a book by an auctioneer would be different to anything I had. I quickly scanned the contents and some of the chapters and in only a few seconds I realized there was a bunch of information in the book which I had never come across before. An insider's view of the auctioneer's trade. Very useful, I thought, to know how the auction is being manipulated.
Example: Advice to a Vendor
Do not bid yourself unless agreed beforehand with the auctioneer. The auctioneer will wish to judge if it is necessary to make bids on your behalf to maintain the momentum and rhythm of the bidding.
Do not wait to fix the reserve until the last minute. Auctioneers need to have their documentation and strategies prepared well in advance.
Do not change your mind about the reserve price. Remember, if the bidding does not go well the auctioneer will make bids on your behalf.
How the auctioneer bids the price up - in practice
(the auctioneer has a reserve of £45,000):
AUCTIONEER: On behalf of the auctioneers, I give notice that they reserve the right to bid, through me or otherwise on behalf of purchasers who have left bids with them, or on behalf of vendors, or as agents, or as principals for any lots.
AUCTIONEER: I now wish to offer lot number one, a charming and desirable residence with vacant possession at 10 West Road, Lewisham. Where may I start the bidding? £50,000? (Silence)
AUCTIONEER: Well, ladies and gentlemen, it is in your hands and not mine as to where we start the bidding. Should it be £45,000? (Silence)
AUCTIONEER: Will £35,000 tempt someone to bid? Thank you, sir, I have your bid (as bidder number one waves his catalogue vigorously in the air).
AUCTIONEER: I am bid £35,000. Do I see £37,500? £37,500 anywhere? (No one moves in the room.)
AUCTIONEER: £37,500 I am bid.
Note: This is a bid which the auctioneer has interjected on behalf of the seller. The bidding level is well below the reserve of the lot but the auctioneer wishes to keep the momentum of the bidding going and has seen no signs of anyone else wanting to bid in the room and has therefore exercised his right to bid on behalf of the owner.
AUCTIONEER: £40,000 anywhere? (Bidder number one nods his head discreetly) [Mike: Bidder 1 has been sucked in by a dummy bid to lift his bid by £2,500.]
AUCTIONEER: £42,500? (No one moves in the room.)
AUCTIONEER: I am bid £42,500.
Note: This is the second bid that the auctioneer has made on behalf of the seller because there is still no momentum in the bidding and the reserve has not been reached.
BIDDER NUMBER TWO: £45,000.
AUCTIONEER: £45,000 I am bid. £47,500 may I say? (Bidder number one nods his head.)
AUCTIONEER: £50,000? (Bidder number three winks)
AUCTIONEER: £50,000, I have your bid sir. £52,500 anywhere? Any further bid? I am bid £50,000. I am looking for £52,000. Are you all done, has the bidding finished? I am bid £50,000 for the first time, for the second time.
Note: The auctioneer is now above his reserve. He cannot take a further bid on behalf of the owner/seller and is therefore about to bring his gavel down if there are no other bids from people in the room.
AUCTIONEER: Sold at £50,000 (looking at the successful bidder pointedly). May I see your paddle number, sir? (Bidder number three shows his paddle number as 142.)
AUCTIONEER: Sold to 142 at £50,000 and for my next lot....
------------------------------------------------------------------------------------------------------------
If anyone is interested in the book it can be ordered through Amazon.co.uk. Bear in mind that it is written for the UK but it is chock-full of interesting info so you should find a lot of it useful. I know this post has been off-topic but I thought you wouldn't mind. My next post will address the exercise.
http://www.amazon.co.uk/exec/obidos...51506/sr=1-1/ref=sr_1_2_1/026-3298226-0149233
One customer review said this:
An interesting guide which takes some of the mystery out of the world of property auctions.
Whether you are looking to buy a new home for yourself, or purchase property to develop/let, this book clearly illustrates the pros and cons of buying at auction. It assumes no previous knowledge of the subject and presents a clear step by step guide to what happens both before and after the auction.
The author is clearly well versed in the world of auctioneering. He does an excellent job of explaining the auction process and exposes tactics used by auctioneers and bidding strategies.
Well, the time has come to wind this great thread up. Thanks to everyone who participated, especially GeoffW for putting in the first offer. It got the discussion moving and led to many interesting points. I've learned a lot from both Part 1 & 2 and will share some of those thoughts, later.
I wish I could credit myself for creating those exercises but I'm not that clever. The exercises were lifted from a book I recently acquired from attending a property investment show. I saw it displayed with the title Buying Bargains at Property Auctions by Howard R Goodie. Well, with a title like that how could you not pick it up. I read the back cover first and learned that the author was an experienced property auctioneer. Well, since most books in my collection seem to be written by investment gurus, solicitors or accountants I thought a book by an auctioneer would be different to anything I had. I quickly scanned the contents and some of the chapters and in only a few seconds I realized there was a bunch of information in the book which I had never come across before. An insider's view of the auctioneer's trade. Very useful, I thought, to know how the auction is being manipulated.
Example: Advice to a Vendor
Do not bid yourself unless agreed beforehand with the auctioneer. The auctioneer will wish to judge if it is necessary to make bids on your behalf to maintain the momentum and rhythm of the bidding.
Do not wait to fix the reserve until the last minute. Auctioneers need to have their documentation and strategies prepared well in advance.
Do not change your mind about the reserve price. Remember, if the bidding does not go well the auctioneer will make bids on your behalf.
How the auctioneer bids the price up - in practice
(the auctioneer has a reserve of £45,000):
AUCTIONEER: On behalf of the auctioneers, I give notice that they reserve the right to bid, through me or otherwise on behalf of purchasers who have left bids with them, or on behalf of vendors, or as agents, or as principals for any lots.
AUCTIONEER: I now wish to offer lot number one, a charming and desirable residence with vacant possession at 10 West Road, Lewisham. Where may I start the bidding? £50,000? (Silence)
AUCTIONEER: Well, ladies and gentlemen, it is in your hands and not mine as to where we start the bidding. Should it be £45,000? (Silence)
AUCTIONEER: Will £35,000 tempt someone to bid? Thank you, sir, I have your bid (as bidder number one waves his catalogue vigorously in the air).
AUCTIONEER: I am bid £35,000. Do I see £37,500? £37,500 anywhere? (No one moves in the room.)
AUCTIONEER: £37,500 I am bid.
Note: This is a bid which the auctioneer has interjected on behalf of the seller. The bidding level is well below the reserve of the lot but the auctioneer wishes to keep the momentum of the bidding going and has seen no signs of anyone else wanting to bid in the room and has therefore exercised his right to bid on behalf of the owner.
AUCTIONEER: £40,000 anywhere? (Bidder number one nods his head discreetly) [Mike: Bidder 1 has been sucked in by a dummy bid to lift his bid by £2,500.]
AUCTIONEER: £42,500? (No one moves in the room.)
AUCTIONEER: I am bid £42,500.
Note: This is the second bid that the auctioneer has made on behalf of the seller because there is still no momentum in the bidding and the reserve has not been reached.
BIDDER NUMBER TWO: £45,000.
AUCTIONEER: £45,000 I am bid. £47,500 may I say? (Bidder number one nods his head.)
AUCTIONEER: £50,000? (Bidder number three winks)
AUCTIONEER: £50,000, I have your bid sir. £52,500 anywhere? Any further bid? I am bid £50,000. I am looking for £52,000. Are you all done, has the bidding finished? I am bid £50,000 for the first time, for the second time.
Note: The auctioneer is now above his reserve. He cannot take a further bid on behalf of the owner/seller and is therefore about to bring his gavel down if there are no other bids from people in the room.
AUCTIONEER: Sold at £50,000 (looking at the successful bidder pointedly). May I see your paddle number, sir? (Bidder number three shows his paddle number as 142.)
AUCTIONEER: Sold to 142 at £50,000 and for my next lot....
------------------------------------------------------------------------------------------------------------
If anyone is interested in the book it can be ordered through Amazon.co.uk. Bear in mind that it is written for the UK but it is chock-full of interesting info so you should find a lot of it useful. I know this post has been off-topic but I thought you wouldn't mind. My next post will address the exercise.
http://www.amazon.co.uk/exec/obidos...51506/sr=1-1/ref=sr_1_2_1/026-3298226-0149233
One customer review said this:
An interesting guide which takes some of the mystery out of the world of property auctions.
Whether you are looking to buy a new home for yourself, or purchase property to develop/let, this book clearly illustrates the pros and cons of buying at auction. It assumes no previous knowledge of the subject and presents a clear step by step guide to what happens both before and after the auction.
The author is clearly well versed in the world of auctioneering. He does an excellent job of explaining the auction process and exposes tactics used by auctioneers and bidding strategies.
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