Questions about auction this morning

[wylie]

We are off to an auction today with a plan to bid up to a certain price. Agents know we are keen, but know that we are very aware of the negatives of this property and that we are not "in love" with it and will walk away if the price is too much.

They have been very careful to not quote a price AT ALL, but the range it is sitting in on the re.com page which is the only guide we have, seems too low. Vendors have to sell, so "apparently" it "must" be sold today.

Agent has suggested we open the bidding, which I have no real problem with, but I will decide whether to do this, depending on how many are there, how I feel etc. His suggested opening bid is pretty much our top bid .

If anybody bids (which is possibly unlikely as we "seem" to be the only ones able to bid under auction conditions - though there are others very keen) then I want us to be the bidders it is passed in to, if it doesn't reach reserve.

I asked the agent if it is passed in to us, do we get exclusive right to pay the reserve or negotiate with the vendor before they open up the negotiations to any other interested parties. He answered like a politician, and avoided giving an answer, but I persisted, but I was not happy with his non-answer. It gives me no confidence that other bidders who are not able to bid will not be consulted while we are negotiating.

I asked his offsider the same question and she stated that the laws have changed and the highest bidder no longer has exclusive right to negotiate before others (Queensland).

Question 1. If we do bid and it passes in to us, do we have the right to negotiate or can they talk to the other bidders (or anybody else) to get a suitable contract.

Question 2. Whether or not we are the only ones able to negotiate and pay the reserve, does anybody who goes to contract today do so under auction conditions, ie. cash unconditional? If so, when does that condition lift?

We can do cash unconditional, but I believe other interested parties cannot, so the vendor could wait, say, a few days to accept a higher offer (and risk losing us), or accept our cash unconditional.

If this goes too high (highly likely) we walk away and keep looking, no issues there.

I am 95% sure this will go too high for us, but I want to go in prepared.

Thanks.

 

[skater]

Wylie, we have bought much at Auction (NSW), however have been to many auctions where we have not been the highest bidder, infact many that we have not even bid at. Sometimes we like to just watch what is happening and then, if the price seems to be going nowhere, start bidding. Other times Hubby will jump in with a bold bid after it has been stalling for some time. We won't buy unless we know that it is a bargain.

Do not let the Agent get you to make the opening bid. If you choose to do that, sure, but don't let them pressure you into something. If we open, we will often open at a quite low figure.

Our experience has been that anything bought on the day of auction is done so under auction conditions, and you don't necessarily need to be the highest bidder in order for them to want to negotiate with you. In fact, the last one we bought, there were only a handful of bidders, and once finished they made a bee-line for us to negotiate. We were not the highest bidders, but they knew we were keen. I don't know why they didn't talk to the underbidders, but they certainly didn't.

Even if it passes in, with no bids, you can still negotiate. Again, we have done this. An auction with only two bidders, us and another. We both knew each other and we were both waiting for the other to bid.
http://www.somersoft.com/forums/showthread.php?t=21718&highlight=auction

Best of luck. Let us know how you go.

 

[Sheryn]

Do not let the Agent get you to make the opening bid. If you choose to do that, sure, but don't let them pressure you into something. If we open, we will often open at a quite low figure.

Best of luck. Let us know how you go.

Agree with Skater...
Get the feel of the auction action because as son as someone bids the game is on.


Kind Regards
Sheryn

 

[wylie]

Thanks Skater and Sheryn. I am undecided whether to start the bidding, but happy to do so if it helps us to be the passed in bid (assuming it doesn't reach the reserve). I figure if nobody bids, it can send a clear message to the vendor and perhaps make them more keen to negotiate hard afterward.

If we do open the bidding (and I am leaning on NOT doing this, just seeing what happens), it will be considerably lower than the bid suggested by the agent . I don't want to be used to get the ball rolling or even to make it look like the auction is a "success" because "somebody" bid.

My main reason for wanting to be a bidder is the upper hand in the negotiations, but it seems that this is not the case, according to the second agent. First agent wouldn't give a clear answer, so I think I will not bid, and let someone else do it.

The last few auctions I have attended have been no-bid situations. Everyone squirms around and looks at the ground .

I plan on asking the agents to please not pester me, and will be very firm with that. I don't need my hand held or any pep talk from an agent, and it annoys me that they hang around like blowies at a barbeque, trying to gee-up the bidders and talk them into "just one more thousand".

Last time I actually bought at auction was before all the pestering stuff, so I have not experienced the joy of having an agent trying to talk in my ear whilst keeping up with what is happening. I don't think I will put up with it and might have to be rude if they persist .

Anyway, I will be nervous as a kitten. I get nervous when an ebay auction is in the closing stages and I am bidding .

I'll update later.

 

[Perp]

Question 1. If we do bid and it passes in to us, do we have the right to negotiate or can they talk to the other bidders (or anybody else) to get a suitable contract.

You have "first right to negotiate", but in reality, I don't know how powerful that is. And it doesn't seem to be an exclusive right, so I don't see anything preventing them "sniffing around" while you're negotiating, to see what other interest is about. The only thing I don't think they could do is accept an offer from another party, until such time as you've "negotiated out". So as far as I can see, it may be worth making a low offer and being the highest bidder.

Question 2. Whether or not we are the only ones able to negotiate and pay the reserve, does anybody who goes to contract today do so under auction conditions, ie. cash unconditional? If so, when does that condition lift?

It's still cash unconditional, but you do get the five days "cooling off".

Reference for both: Fair Trading

Good luck!

 

[wylie]

Thanks Perp. I understand the two other contenders may not be able to buy under auction conditions so they are probably waiting for it to pass in so they can negotiate.

Assuming neither of them do bid, perhaps it is better for us to make a low bid, have it passed in to us and then see what happens, but I think I will let the auction run a while and if it seems nobody will bid, perhaps I will put in our low bid before it is passed in.

Of course, the reality may well be different. This is a house that my son wants to buy, so my gung-ho attitude must be tempered by the fact that I am not spending my own money .

 

[Ms Jade]

Thanks Perp. I understand the two other contenders may not be able to buy under auction conditions so they are probably waiting for it to pass in so they can negotiate..

This info is gold if it is true, and I'm not sure why they would give it to you. In Vic, if you buy the property within 3 days of the auction it's on the auction contract - i.e. unconditional. This means anyone who can't bid will be waiting for a few days before being able to buy.

 

[Propertunity]

Agent has suggested we open the bidding, which I have no real problem with, but I will decide whether to do this, depending on how many are there, how I feel etc. His suggested opening bid is pretty much our top bid .

I would not be taking auction advice off the representative of your contractural adversay. You play your own game.

Question 1. If we do bid and it passes in to us, do we have the right to negotiate or can they talk to the other bidders (or anybody else) to get a suitable contract.

I'm not sure that this was ever the 'law' but it was generally the observed 'rules' (rules by the way which I've seen broken).

Question 2. Whether or not we are the only ones able to negotiate and pay the reserve, does anybody who goes to contract today do so under auction conditions, ie. cash unconditional?

Yes

If so, when does that condition lift?

12 midnight (in NSW)

 

[Perp]

I know why real estate agents don't promote the fact, but are others aware that it is possible to make a conditional bid at auction? You approach the auctioneer prior and say that you want to bid "subject to finance", or whatever your condition is, and the vendor has the choice as to whether they want to accept it or not. Real estate agents will strongly discourage vendors from accepting it, but I think this is because they don't want any chance that their commission won't eventuate.

If I were a vendor, unless I were sure I'd get a great unconditional price, I'd certainly consider it, because you retain the urgency of an auction, but open up the bidder pool considerably. If you don't sell at the price you want at auction, you end up having to consider such offers anyway, so why not?

 

[wylie]

This info is gold if it is true, and I'm not sure why they would give it to you.

I believe they are wanting to keep us interested by detailing the problems the other two very keen parties may have with buying today. We have made it clear that we are not going to buy on emotion, that we like the place but are fully aware of its downsides.

I suspect they may think without some "encouragement" we might not attend.

If only I had a crystal ball.

 

[Propertunity]

......If I were a vendor, unless I were sure I'd get a great unconditional price, I'd certainly consider it, because you retain the urgency of an auction, but open up the bidder pool considerably.

I was bidding on behalf of a client at an auction a couple of weeks ago. Another keen purchaser turned up to register with a Deposit Bond as his form of deposit in the event that he was successfull. He was denied permission to register by the auctioneer, after seeking such and being turned down by the vendor. This is the first time I have ever witnessed such an event. Most agents will accept any form of payment if it means a sale

The auctioneer then approached me and asked if I had "a proper cheque" (which I did). I've never been asked that before either.

It always pays then, if you plan on using a Deposit Bond to get approval from the vendors or their agents BEFORE turning up to bid at auction.

All the best for yours wylie.

 

[handyandy]

It always pays then, if you plan on using a Deposit Bond to get approval from the vendors or their agents BEFORE turning up to bid at auction.

All the best for yours wylie.

That's an interesting point.

Why would you bother clearing it with the 'powers to be' until you were successful at the auction and then let them worry about whether they will accept it or not.

What will they do reauction I think not they will accept your deposit bond or go around the room looking for an under bidder. Either way you are no worse off.

I was at an auction recently intending to purchase in a trust name. Auctioneer made some announcement about having to have this cleared with him but no further instructions as to how exactly to do this. So I didn't on the basis that I would deal with this issue if I was successful. Turns out I wasn't successful so it didn't become a problem.

Regarding the issue of talking to other unsuccessful bidders. I have been at auctions, particularly on site, where having reached an in-passe with the highest bidder to which the property was passed in the RE's will simply walk around all the other bidders canvassing for a offer matching the vendors expectation. No pricipals no scrupulous.

Cheers

 

[gronk007]

Two rules (my own) that have served me well in the past...

1. Never bid until it is "on the market"
2. Never bid until the "second call".

 

[start-up]

In fact, the last one we bought, there were only a handful of bidders, and once finished they made a bee-line for us to negotiate. We were not the highest bidders, but they knew we were keen. I don't know why they didn't talk to the underbidders, but they certainly didn't.

Sounds like you were you were up against a dummy bidder.

 

[mary&mat]

Good luck today wylie. Keep us posted on how it all goes

 

[wylie]

Thanks for the tips everyone.

As expected, it went too high for our son to afford. The annoying thing is that I was looking mid $300s and said he could stretch to high $300s for the right house or for a fourth bedroom. You can imagine that inner Brisbane there are not a lot of houses that fit his budget.

He wants to buy inner Brisbane because of travel time and his friends will not travel from further out and he needs to rent out rooms to help with the mortgage. As his salary increases, his options open a little.

Anyway, the two agents insisted that these vendors HAD to sell today, were extremely motivated, committed elsewhere, two other bidders having issues with being able to buy under auction conditions, yada, yada, yada.

We were approached to open the bidding before it started, and I simply said no, we will wait and see what happens. Agent sat on our shoulder (again as expected) and I just gave him short shift each time he tried to engage me. He took the hint and left me alone.

Bidding started at $350K, straight to $400K, asked for $450K (what the?) but auctioneer stated he would accept $425K and said "I've just saved you $25K" to the young couple who did bid at $425K. Stalled, chat to vendors, take away highest bidder, come back with a $445K bid, try to squeeze another $5K, no go.... tried for another $1K, no go...

There were only three registered bidders and I was out and fairly disgusted (but not at all surprised) at having been told "it might go for around your figure" though he was careful to never use a figure or range. Telling me it "might" go in my son's price range was not quite a lie, but only just. Pigs might fly too .

Anyway, I'm glad the young couple got it for $445K and looked happy. It was probably worth $445K as land value was $385K but son just could not afford it at that price. It was a nicely presented, but basic house in a pretty nice street.

When the agent tried to get me interested in taking it from $425K to $450K I said "I've been digging on the net, and once we get to mid $400K he can get a similar house with legal head height downstairs and a legal height fourth bedroom". They just ignored me after that .

This house had a great second living room and bedroom downstairs, but not legal height, so no way were we prepared to "pay" for these extra rooms, and that would always have been an issue, but for the right price, my son could have rented out thee other rooms and with that second living area, it would have been perfect...... if it was around or under $400K.

Anyway, the next bargain hit my inbox this morning.....

 

[Propertunity]

I was ........out and fairly disgusted ......at having been told "it might go for around your figure"

What???? The REA lied to you? . I'm shocked and amazed.

......the young couple got it for $445K and looked happy. It was probably worth $445K as land value was $385K

Now hang on a sec.....you're saying that prices have not fallen 40%? But surely the vendors must be suffering mortgage stress by now?

Ah well wylie, another bargain just around the corner........or at least a few more kms out, for your son's budget.

 

[wylie]

What???? The REA lied to you? . I'm shocked and amazed.

Yeah!! Didn't really lie, but was happy to let me think it might go for an ABSOLUTE bargain. I never really bought it, but we were prepared to go along, as strange things can happen at an auction.


Now hang on a sec.....you're saying that prices have not fallen 40%? But surely the vendors must be suffering mortgage stress by now?

I'm not sure what this bit means. I believe the block of land was worth around $400K if it was vacant but the house had a Super Six roof, asbestos all through it, not legal height under, brick cladding (well done) over original timber. There were reasons I don't think the house was up to par with the block. If my son was earning more, he could afford it, but he just couldn't.

Ah well wylie, another bargain just around the corner........or at least a few more kms out, for your son's budget.

Exactly!!

There will be others. We are cashed up, he doesn't need finance approval as we can settle without it so he is in a very good position to swoop. He does need it to be in a position that will rent rooms easily and he does need to be able to meet the mortgage.

 

[Peterw]

Wylie, sorry to hear that things did not work out quite the way you wanted, and good luck with the house hunting.

 

[wylie]

Thanks Peter. I have already been in touch with your office regarding some units he is interested in.