Can an auctioneer refuse to take a bid? I was at an action in sydney today and the auctioneer pleaded for any bid to get started. Someone then made a bid of $200K which he said he couldn't accept because it was too low.
Refusing a bid
- Thread starter twobobsworth
- Start date
Property for sale prior at $340K. Owner had apparently knocked back offer of $320K. Goes to auction $200K refused bid, then $290K, $292K, $295K then passed in.
One I saw recently in our area was noted on the flier as being in the $1m to $1.2m range (a very expensive house for this area). A bidder tried to open the auction at $600K. The auctioneer didn't just refuse the bid, he actually laughed.
GP
I had a similar experience back about 4 years ago, going to an auction and put a bid of $220k. The price the property was being quoted for was $330k+. A summary of the exchange.....
Auctioneer: I will take any resonable bid to start with. Who will start me off for this "insert standard description of property".
Me: $220k?
Auctioneer: I said reasonable bid (in an arrogant and dismissive way).
I remember the auctioneer, and I swear that I would never use this agency for any rentals or sales of mine. Long memory....
The Auctioneer can refuse any bid.
I was at an auction for the sale of a piece of government owned land. The auctioneer read out the terms of the sale and mentioned that the land didn't have sewer or water. A discruntled prospective purchaser believed the governent couldn't sell the land with out the sewer or water. He got into an agressive argument with the auctioneer and then offered a 50c opening bid and the auctioneer took it. Sold for $277,000
I was at an auction for the sale of a piece of government owned land. The auctioneer read out the terms of the sale and mentioned that the land didn't have sewer or water. A discruntled prospective purchaser believed the governent couldn't sell the land with out the sewer or water. He got into an agressive argument with the auctioneer and then offered a 50c opening bid and the auctioneer took it. Sold for $277,000
I don't know why with auctions they just don't start the bidding at the Vendor's reserve price.
I mean; they're not gunna sell below that, so advertise the joint with the reserve quoted, start at this figure at the auction for the opening bid, see what happens and stop wasting everyone's time.
Gets rid of all that ridiculous theatrics the agents love to go on with. sheesh!
Agents won't go for this though, as they like to advertise the properties low so they get heaps of interest in the property that it probably wouldn't otherwise get.
It's a good way for them to collect names and phone numbers for future sales, and to condition the Vendor down in price after all the interest at the lower price ranges.
I mean; they're not gunna sell below that, so advertise the joint with the reserve quoted, start at this figure at the auction for the opening bid, see what happens and stop wasting everyone's time.
Gets rid of all that ridiculous theatrics the agents love to go on with. sheesh!
Agents won't go for this though, as they like to advertise the properties low so they get heaps of interest in the property that it probably wouldn't otherwise get.
It's a good way for them to collect names and phone numbers for future sales, and to condition the Vendor down in price after all the interest at the lower price ranges.
Finally someone said it...auctions are a joke, just look at ebay, soooo many cars unsold.
personally I wont buy at a auction.. and there are many others in the same position.
What I don't understand is aren't you meant to make the buying process as appealing to a buyer as possible? Why make it harder for the buyer? It will only turn them away.. If you want to sell something, you make it as easy/pleasant as possible.
Most people hate auctions, so I don't know why agents push them? Obviously for their own interest as it is more likely to get a end result at end of the auction. ie 'the market is telling you this is a fair price'
What I don't understand is aren't you meant to make the buying process as appealing to a buyer as possible? Why make it harder for the buyer? It will only turn them away.. If you want to sell something, you make it as easy/pleasant as possible.
Most people hate auctions, so I don't know why agents push them? Obviously for their own interest as it is more likely to get a end result at end of the auction. ie 'the market is telling you this is a fair price'
its a proven that Auctions are the worst way to sell.. they only get a price just above the second highest bidder.
Plus people hate Auctions.. hence this can't be good for the sellers.
Agents love putting pressure on the vendors when it comes down to the crunch. I saw a house go to auction last weekend which was being advertised for $280k+. The agent told the vendor it should sell between $300k - $320k. I thought this was a bit high and guessed it would go for $280-$290k. Anyway, come auction day they started the bidding at $250k. The vendor had a reserve of $300k however bidding only reached $267k. The vendor kept refusing but after all the pressure from the agents, they accepted $267k. They were obviously in financial difficulty and had to sell.
Ozi
You shouldn't less your personal dislike for auctions cloud the fact, that in a good market, with motivated buyers, auctions are indeed the best way to sell.
People's competitive instincts, the fact they don't want to be beaten, adrenaline, the theatre around the sale, the crowd, always advantages the seller. Sure, as a buyer that makes it more difficult.
As a buyer. I have found that at least at the auction, the bids are visible and transperant, instead of potential bluff and unsubstantiated information that can surround private sale negotiations.
In a more subdued market, then auctions will not be used as much. This happened in 2003-2006.
Which could still be a lot higher than if they whacked a price tag on the property and showed their hand first.
As mentioned, this makes more sense in a rising market.
I think 'conditioning' has been discussed before.
Auctions seem like a great way for the agents to condition the seller to sell for a lower price (since the market has 'spoken') and gets to charge an auction fee as well.
Not that I would suggest that agents are anything less than ethical and acting in the best interests of the vendor at all times...
Auctions seem like a great way for the agents to condition the seller to sell for a lower price (since the market has 'spoken') and gets to charge an auction fee as well.
Not that I would suggest that agents are anything less than ethical and acting in the best interests of the vendor at all times...
I went to an auction the other weekend in Kelmscott, WA. It was a 3x1 unit in a block of 14. Nothing special so I wanted to see why it was being auctioned when so much similar product is already on the market.
Lots of theatrics from the auctioneer, a two piece band providing warm up entertainment, and food and soft drinks laid on, so it was worth going just for that.
In short, only one bid of $250k, the auctioneer puts in a vendor bid of $280k, and it all comes to a standstill. Two weeks later and it's back in the paper at $290k.
Obviously the auction process has been an unhappy one for the vendor, but why go to auction with a product that is so similar to plenty of others on the market?. If that is what I was after I would make low offers on plenty of them and gradually come up until the first one cracked.
Lots of theatrics from the auctioneer, a two piece band providing warm up entertainment, and food and soft drinks laid on, so it was worth going just for that.
In short, only one bid of $250k, the auctioneer puts in a vendor bid of $280k, and it all comes to a standstill. Two weeks later and it's back in the paper at $290k.
Obviously the auction process has been an unhappy one for the vendor, but why go to auction with a product that is so similar to plenty of others on the market?. If that is what I was after I would make low offers on plenty of them and gradually come up until the first one cracked.
The reason most vendors like the auction process is because it allows the vendors to deal with unconditional buyers who can settle within a 30 day period, they like the set marketing structure leading up to the Auction. I explain to my vendor's an auction campaign is a 3 stage process its not all about selling on the day.
1. Pre Auction - Buyers can submit offers and try to buy the property by submitting offers and try to tempt the vendor's from going to Auction. Vendor's can consider these offers.
2. The Auction day - Allows the vendor's to see what interest there is in their property from unconditional buyers up to a set price if its better than their reserve it sells if not I myself advice to them is to pass in the property so we can deal with all buyers unconditional and conditional. Also the auction is completely transparent, so the buyers can see who their bidding against and what the other bids are unlike the private treaty method, buyers don't know what the interest level is from other buyers.
3. Post Auction - The vendor's can negotiate to see the interest in their property from all buyers conditional and unconditional.
I don't sell a lot of Auction properties as I prefer the private treaty method and auctions aren't the normal in the areas where I sell but I don't see why the process isn't fair to all involved.
1. Pre Auction - Buyers can submit offers and try to buy the property by submitting offers and try to tempt the vendor's from going to Auction. Vendor's can consider these offers.
2. The Auction day - Allows the vendor's to see what interest there is in their property from unconditional buyers up to a set price if its better than their reserve it sells if not I myself advice to them is to pass in the property so we can deal with all buyers unconditional and conditional. Also the auction is completely transparent, so the buyers can see who their bidding against and what the other bids are unlike the private treaty method, buyers don't know what the interest level is from other buyers.
3. Post Auction - The vendor's can negotiate to see the interest in their property from all buyers conditional and unconditional.
I don't sell a lot of Auction properties as I prefer the private treaty method and auctions aren't the normal in the areas where I sell but I don't see why the process isn't fair to all involved.
I was at an auction in Geelong on Sunday it was for a 2 bed unit in a nice area. Opening bid was $170k, Auctioneer would not accept it & said the place was worth around $200k The auctioneer then put in a vendors bid in at $195k. And thats were is stayed & pased in at that. It then sold to a young couple after auction who didn't bid for $225k.
go figure.
go figure.
You forgot the 3 stage process for the agent
1) Prior to the auction advise the vendor you received an offer from an indian (because everyone knows they like to bargin) but it was $100K less than what the vendor expects, so you told him to go away. This is the first part of the conditioning process.
2) Under quote the price you think the place MAY go for to potential buyers. Careful, as there are now some new laws & you could get you a slap on the wrist from that tough consumer watch dog the real estate institute. Whatever you quote, make sure at the end you say you really don't know, it's up to the "market". The buyers then go and spend a couple of hundred bucks on inspections.
3) Pay day... I mean auction day. Unfortunately like more than 50% of auctions the bidding will not meet reserve. The agent slinks over to the vendor. The conversation now goes two ways. There is the "if we put it on the market now we should see more bidders come out of the woodwork" and then there's "mr smith, we've done everything we can, a massive advertising campaingn, and this is what the market is telling us it's worth. If you want us to pass it in that's okay, over the next few months we'll work hard to get you the extra $5 or $10K, or maybe more. You could also put it on the market and some more bidders that are holding out, might come in and you'll get the price you're after".
1) Prior to the auction advise the vendor you received an offer from an indian (because everyone knows they like to bargin) but it was $100K less than what the vendor expects, so you told him to go away. This is the first part of the conditioning process.
2) Under quote the price you think the place MAY go for to potential buyers. Careful, as there are now some new laws & you could get you a slap on the wrist from that tough consumer watch dog the real estate institute. Whatever you quote, make sure at the end you say you really don't know, it's up to the "market". The buyers then go and spend a couple of hundred bucks on inspections.
3) Pay day... I mean auction day. Unfortunately like more than 50% of auctions the bidding will not meet reserve. The agent slinks over to the vendor. The conversation now goes two ways. There is the "if we put it on the market now we should see more bidders come out of the woodwork" and then there's "mr smith, we've done everything we can, a massive advertising campaingn, and this is what the market is telling us it's worth. If you want us to pass it in that's okay, over the next few months we'll work hard to get you the extra $5 or $10K, or maybe more. You could also put it on the market and some more bidders that are holding out, might come in and you'll get the price you're after".
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