Why does no one bid for right to be first to negotiate on passed in property?

[dodo_lurker]

Hello,


I'm in Vic.

I've been to a few auctions recently for a bit of a look, during which the REA will mention that if there are no successful bids, whoever has made the highest bid will have first rights to negotiation.

However, usually no one bids and the property passes in. Straight afterwards however, the REA is usually surrounded by 2-3 groups keen to negotiate.

Am I missing something? Why doesn't one of these parties put in a bid to ensure they're the first to be able to negotiate? I realise they may not want to give away their hand so to speak, but surely even a ridiculously low bid just before the hammer falls would allow them first dibs on negotiation?

Cheers.

 

[marg4000]

The high bidder may have the first right to negotiation, but not the only right. Any bidder who whispers in the ear of one of the agents that they are interested negates any advantage.

Some prefer to keep their interest under cover until the "real" auction starts, ie., the property is on the market and will be sold.
Marg

 

[Aaron_C]

Am I missing something? Why doesn't one of these parties put in a bid to ensure they're the first to be able to negotiate? I realise they may not want to give away their hand so to speak, but surely even a ridiculously low bid just before the hammer falls would allow them first dibs on negotiation?

Welcome to the nebulous world of Victoria's Saturday sport - the property auction.

Forget the agent's antics about the highest bidder having exclusive right to negotiate. It's all BS.

It is best (in my opinion) to wait it out, and go and talk to the agent afterwards to get an indication of the reserve price. Sometimes the reserve price is waaay above what was quoted during the auction campaign - and you should just walk away because there's no point negotiating at that stage. Let them sweat it out. By bidding early, you are showing your hand, showing you are too keen. Always play poker with agents because they always use your feelings against you.

Best of luck with it.

 

[Ms Jade]

It's hard to give a definitive answer to this right now. I have seen (and heard of many more) blind auctions after the property is passed in. This is one situation I avoid like the plague as a buyer (though as a vendor it was pretty good!). I think that media reports about the state of the market has made these buyers overconfident about where the power lies. Many of them do end up missing out because someone else wants the property & buys it straight after auction - sometimes for less money! This is crazy.
If I am there to buy the property I almost always bid - unless there is obviously NO other buyer interest. This is hard to know unless you've been to many of the opens & have asked the agent how many sec 32s are out & how many building inspections have been done. I know what I'm prepared to pay for the property, what represents good value and am confident in my negotiating skills; so I'll want the property passed in to me rather than someone else.

 

[Dazz]

Forget the agent's antics about the highest bidder having exclusive right to negotiate. It's all BS.

Agreed.

I'll want the property passed in to me rather than someone else.

No such thing - see above.


Until someone signs the Sales Contract, nothing has actually happened that is binding.


Banging a wee little gavel on a wee little clipboard, or slapping his left hand with a rolled up pamphlet in his right hand means nothing either. The yelling and hollering all up and down the street means nothing either.


Walk straight up the front steps, straight past the auctioneer bumping his gums and flapping his arms about, and go and sit inside with the Vendor. You can speak with them at any time. You don't need a "right" granted by the Agent to speak to the Vendor. The Agent doesn't have that power, so can't grant that right.


The Vendor is free to accept any written offer at any time. Any time.


The vast majority of Vendors have no clue whatsoever, cos it's usually a once in a lifetime thing, so they (the ones with the power) take their lead from the agents (the ones with no power).


My tip is to go inside with the person with the power, rather than the gaggle of nobody's outside being screamed at by someone with no power.

 

[goonandtell]

i have purchased 4 places after being the highest bidder on a passed in auction and lost 3. Of the 4 i have won 3 have been ex department houses and 1 a reposession, banks and the department love the rules so walking in won't work in fact the banks don't even have a rep on site which i find really odd and the department guy usually is out in the crowd (once standing next to me talking while i bid).

Why not play there game? If you are confident you are still miles off its value and under reserve it does give you a slight advantage that costs you nothing at the time and being the guy that walks away after it i think puts you in a decent position afterwards.

 

[Whataslowrider]

in one auction i saw last weekend, the ONLY bidder raised his hand to fight against vendor bid twice, yes , against vendor bid, when there was 0 indication the price was even near the reserve, i really don't get the logic behind it.

 

[wylie]

If the vendor bid is below what the vendor will sell for, I see no problem in bidding against it. At some stage the price will be reached that the vendor will sell for.

 

[Wise1InOz]

It's hard to give a definitive answer to this right now. I have seen (and heard of many more) blind auctions after the property is passed in. This is one situation I avoid like the plague as a buyer (though as a vendor it was pretty good!). I think that media reports about the state of the market has made these buyers overconfident about where the power lies. Many of them do end up missing out because someone else wants the property & buys it straight after auction - sometimes for less money! This is crazy.
If I am there to buy the property I almost always bid - unless there is obviously NO other buyer interest. This is hard to know unless you've been to many of the opens & have asked the agent how many sec 32s are out & how many building inspections have been done. I know what I'm prepared to pay for the property, what represents good value and am confident in my negotiating skills; so I'll want the property passed in to me rather than someone else.

It depends so much on the day of the auction and how many people end up interested. We were tracking two properties right from when they came into the market very close to where we live. We were quoted a range of $1.2-1.3M for the first one and something similar for the second one, based on "buyer interest". First one sold for 1.78M (on the market at 1.4 - around 5 bidders) and the other one for 1.7M Threw us off our balance completely and put us off auctions.

The one we ended up buying was in a private sale and far better than the two above!

 

[Aaron_C]

I find that the best properties don't sell at auction.

 

[Jaggannath]

in one auction i saw last weekend, the ONLY bidder raised his hand to fight against vendor bid twice, yes , against vendor bid, when there was 0 indication the price was even near the reserve, i really don't get the logic behind it.

Vendor bids have to be below reserve, so if you think the vendor bid isn't excessive why not, when the vendor bids stop appearing you know you're close