Property Auction - Strange going on

Hippo

Mate of mine was after a property that was up at auction. Guided at £180K.

He couldn't physically get to the auction so arranged a phone bid facility. He said it was a hard to value property with not many local sales to go by. We discussed it and thought £165 to 180 was fair but as it was auction he decided on a figure somewhere between the two.

I was working with him when they rang. They started at 140 in the room. Then 150 on the net. Then 160, 170, 180, all from the net. Guy on phone indicated bidding was slowing and pushed for a bid. Mate said 181 followed by no, no, no to stop the bid. Too late as bid was made. He was quite happy when bloke on phone said it's now 182 on the net. My mate said he was out. It was sold for 182K

Talking about it after he said he was caught by auction fever and was sorry he bid 181 as it was too much and was happy he was out bid.

We were just packing up when his phone went. Its the auction house. The top bid didn't go though and they were going to the end bid of 181 which was his. Did he want it? Thankfully the auction fever had gone and he knew his final bid was no longer binding. He told them to call him back in 3 days to discuss as he was still interested but wanted time to think about it.

So it's probably fair to say the 140 opening bid was off the wall. Fair enough. He did say the 10K increments were quite high for that value and was expecting 5K.

He's obviously questioning if the 182, 180, 170, 160 were all off the wall.

He wants the property but obviously wants to pay as little as possible. What are people thoughts?

Gwendo40

Almost certainly those bids will have been off the wall... crazy that such a practice is perfectly legal.

I'd offer the figure ''somewhere between the two'' that he was initially prepared to pay.

anselld

There are two types of auction fever...
(1) seeing the bids rise and thinking it must still be good value and bidding too high
(2) before the bidding thinking you are going to pick up a bargain well below market value.

Your mate is suffering from both and if he can't pull himself together and work out a sensible valuation he shouldn't be going to auction.

If this is a genuine auction and he declines 181 they will just go back to the 180 bid anyway, although it does sound like a cowboy outfit.

eddddy

Hippo wrote: »

Guided at £180K.

'Off the wall bids' are allowed until the reserve is met.

Typically, the guide price will be below the reserve price.

But, the ASA have stated that guide prices must be within 10% of the reserve price.

So, my guess is that the reserve was £200k. Had your friend confirmed his offer of £181k after the auction, I suspect they would have told him that it was below reserve and said they would put it to the vendor, to see if they would accept.

Slinky

I'm confused here. 'The top bid of £182 didn't go through.' How can this not situation occur? Isn't that bidder now liable for a percentage of the purchase price at least? I can understand if a few days/weeks along the line something happens that the bidder can't get a mortgage, but on the same day?

Can somebody please explain?

DaftyDuck

It happens. Details left don't check out, a commercial bid that is subject to additional terms, c0ck up by the auction house, or bidding up by the house (which I believe is actually legal, even with property, when below the reserve price).

It does happen quite frequently at general auctions.

eddddy

Slinky wrote: »

I'm confused here. 'The top bid of £182 didn't go through.' How can this not situation occur? Isn't that bidder now liable for a percentage of the purchase price at least? I can understand if a few days/weeks along the line something happens that the bidder can't get a mortgage, but on the same day?

Can somebody please explain?

As mentioned above, it was probably an 'off the wall bid' (i.e. fake). This is legitimate. This how it works:

• Nobody really bid £182k. The auctioneer was just making up bids to try the get bidding up to the reserve price, so that the property could be sold.

• So the OP's friend's bid of £181k was probably the highest bid from a real person.

• So... If the OP's friend had agreed after the auction, the auctioneer would have said to the seller "The house didn't reach your reserve price, but the best bid was £181k - would you accept it?"

A bit of info: https://www.propertyinvestmentsuk.co.uk/what-is-off-the-wall-bidding/

Hippo

As an update:

He spoke to the auctioneer late on Friday who was obviously pushing for him to submit his last bid as an offer. When he asked for an explaination of what went on he was told it was a problem with the systems going from 10K to 1K increments.

He called their bluff and told them if the 182 bid wasn't genuine then he suspected then was the 180? He told them to go with the 180 bid but if it fell through then come back to him as he would submit an offer in the 170's.

The house was valued by an agent at 180 and he learnt the reserve was 190 so we both thinks its likely that every bid except his was off the wall.

eddddy

Hippo wrote: »

The house was valued by an agent at 180 and he learnt the reserve was 190 so we both thinks its likely that every bid except his was off the wall.

Yes - so everything is legitimate then.

The auctioneer was using 'off the wall bids' to try to get the bidding up to £190k so that the property could be sold.

You seem unhappy, but I'm not sure why you should be. If you think you have been disadvantaged in some way, how is that?





Edit to add...

If the reserve is £190k, and there is only one buyer in the room who is prepared to pay £190k...

... the auctioneer has to use 'off the wall bids' to get the bidding up to £190k.

Otherwise, that buyer is unable to buy the property.

SkyeKnight

eddddy wrote: »

If the reserve is £190k, and there is only one buyer in the room who is prepared to pay £190k...

... the auctioneer has to use 'off the wall bids' to get the bidding up to £190k.

Otherwise, that buyer is unable to buy the property.

Or just tell everyone the reserve price - or is that too easy and honest?

lincroft1710

SkyeKnight wrote: »

Or just tell everyone the reserve price - or is that too easy and honest?

May get no interest by doing that. If you start auction below reserve, you usually get some interest and people bidding each other up, or with "off the wall" bids. Auctioneer and vendor hope that competition will ensure bids reach at least reserve.