Auction reserve price

legepe

Hi all..
Re: property auction. Does anyone know if the undisclosed reserve amount has to be (by law) within a certain amount or percentage of the guide pricesand ... and if so would the same apply to a conditional auction?
Any advice very welcome
Thanks legepe

eddddy

legepe wrote: »

Hi all..
Re: property auction. Does anyone know if the undisclosed reserve amount has to be (by law) within a certain amount or percentage of the guide pricesand ... and if so would the same apply to a conditional auction?
Any advice very welcome
Thanks legepe

Yes...

A ruling in 2014 by the ASA stated that where the guide price is a range of figures (for example £100,000 to £110,000) then the reserve must sit within that range, and where the guide is a single figure (for example £100,000 or £100,000+) then the reserve must be within 10% of that figure.

Link: https://www.eigpropertyauctions.co.uk/buying-at-auction/guide-prices-explained

In practice, that means auctioneers will always set the guide price 10% below the reserve.

legepe

Thanks for that info on guide price..
Additionally need to try and establish that in an online conditional auction that my understanding of it is correct and is also legally binding both with the buyer but also the auction.
1. Auction end time is extended by 2 min every time there is a counter bid after the official auction end time?
1. Once the auction has ended (counter gone to zero) can a post bid be accepted legally?
Hope I'm making sense

eddddy

legepe wrote: »

Thanks for that info on guide price..
Additionally need to try and establish that in an online conditional auction that my understanding of it is correct and is also legally binding both with the buyer but also the auction.
1. Auction end time is extended by 2 min every time there is a counter bid after the official auction end time?
1. Once the auction has ended (counter gone to zero) can a post bid be accepted legally?
Hope I'm making sense

You would need to read the terms of the specific auction that you're bidding on.

Typically, if you win the auction, all other buyers are locked out for a period of 56 days - i.e. you have 56 days to exchange contracts.


But look out for a non-refundable reservation fee. It might be 5% of the winning bid price + vat (with a minimum of £5k+vat = £6k)

The reservation fee is on top of whatever you bid, and you don't get the reservation fee back - whether or not you buy the property.

maas

Having just recently sold a property at auction I can say that the reserve was set well above the guide price. The literature said that they cannot set the reserve above 10%

Initially the guide was set, and we received a huge amount of interest (pre-auction offers at +20%). We then decided to proceed to auction but set the reserve at 20% (the highest pre-auction bid).

The house then sold for 47% above guide.

legepe

The auction process (as I understand):
1. Online auction running and bids are taken up to an official end time ie: 12pm
2. Any bid made just before the 12pm end time, the auction end time is extended by 2min and the time continues to extend a further 2 min on every counter bid made just before the new end time until there are no counter bids made and timer goes to zero.
My question is - LEGALLY
1. Within a conditional auction can the final and winning bid be accepted and then this 2 min extension not applied? (even if the auction team is awear no one else will make any further bids)
2. Can the auction accept a bid after the counter has already gone to zero?

eddddy

legepe wrote: »

My question is - LEGALLY
1. Within a conditional auction can the final and winning bid be accepted and then this 2 min extension not applied? (even if the auction team is awear no one else will make any further bids)
2. Can the auction accept a bid after the counter has already gone to zero?

Like I said - you need to read the specific terms of the auction (i.e. the contract) that you intend to bid on.


Parliament has not passed any specific legislation about bidding at online auctions.

So standard contract law applies - so you need to read the contract.


Edit to add...

If you want to provide a link to the terms and conditions of the auction website you are talking about, I expect people here will offer their opinions on your questions.

And perhaps more importantly, highlight the pitfalls/loopholes in the contract. (e.g. The ways in which you can lose your multi-thousand pound reservation fee.)

legepe

[FONT=&quot]Ok thanks for your advice so far..[/FONT]
[FONT=&quot]Its like this:[/FONT]

Link to their terms and conditions - https://www.iamsold.co.uk/modern_method_of_auction_terms_and_conditions


[FONT=&quot]Auction process - The auction finish time was extended by 2min when there was a bid made close to auction finish time of (12.00hrs) and thereafter extended a further 2 minutes each time there was a bid made close to the new extended auction finish time.
[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]What happened - I was entering bids using their online system (but being guided at the same time on the phone) My final bid could not be accepted online because their system would only accept a minimum bid of 500 and unknowing I was trying to increase it by 400 it was at this point the online counter had gone to zero, they then came back to me around 10 to 15 seconds later on the phone saying - Ive managed to get it for you!? Also, there was not a 2 min time extension applied at my final bid which was accepted after the auction had finished [/FONT]
[FONT=&quot]Issues:[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]1. Are they legally able to accept my bid after the counter had gone to zero? and what about the supposed person who placed the previous bid to mine - should they have not won it? or if not, been given the same 2 min extension to debate an increase?[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]Any advice very welcome...[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]Thanks[/FONT]
[FONT=&quot]legepe[/FONT]

eddddy

Do you want to buy the property, or is this just an 'academic' question?

If you want to buy the property, you are completely 'over thinking' this, and heading down blind alleys.

They have phoned you to make an offer...

• If you want to accept their offer - just say "Yes"
• If you don't want to accept their offer - just say "No"
• Or you could try submitting a lower offer, if you want.

If your question is purely academic, the law allows auctioneers to accept "off-the-wall" bids up to the reserve price. Perhaps the system was generating "off-the-wall" bids, until the reserve was reached.

legepe

eddddy wrote: »

Do you want to buy the property, or is this just an 'academic' question?

If you want to buy the property, you are completely 'over thinking' this, and heading down blind alleys.

They have phoned you to make an offer...

• If you want to accept their offer - just say "Yes"
• If you don't want to accept their offer - just say "No"
• Or you could try submitting a lower offer, if you want.

If your question is purely academic, the law allows auctioneers to accept "off-the-wall" bids up to the reserve price. Perhaps the system was generating "off-the-wall" bids, until the reserve was reached.

Hi Eddddy sorry for any confusion..

I have already parted with the reservation fee.. however, I pulled out and didnt complete.
They call this an auction which I presume must have rules to it. It is not a sale by tender or something simply agreeing the highest price. ie: the auction finish time and the 2 min extensions of time.

Or should I understand that the people running this type of auction can please themselves as to how it can operate?

I ended up biding 40% above the guide price.. and if I am correct in understanding rules around guide price and reserve price then this could not have been a system generated bid.

I was on the phone with an agent but I was making the bids online at the same time as the clock was counting down after each bid (they were guiding me so to speak as I was unfamiliar with this type of auction)
My issue without making this more complicated is I feel the auction process is not transparent. Why have a counter and extensions of time if they can manipulate it.

eddddy

So you think there was "shill bidding" (i.e. somebody was making fake bids), and you want to rescind (i.e. cancel) the contract because of that.

• If the auctioneer was doing the "shill bidding", they are a business so they would probably be breaking the ' Consumer Protection from Unfair Trading Regulations Act 2008' and perhaps the 'Fraud Act 2006'.

• If the property owner was doing the "shill bidding", and they are not a business, so they might only be breaking the 'Fraud Act'

I guess you can say to the auctioneer that you believe there was "shill bidding", so you want your reservation fee back...

... and perhaps threaten to report them to trading standards, the property ombudsman, or sue them in court.

But it's a serious accusation... so If I were you, I would go carefully.


Here's an article about "shill bidding" on ebay - but the same principles apply to other auctions.
https://www.inbrief.co.uk/consumer-law/shill-bidding/