Appointing Sales Agent to Bid For Me at Auction (Remote buyer)

Discussion in 'The Buying & Selling Process' started by C-mac, 23rd Nov, 2016.

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  1. C-mac

    C-mac Well-Known Member

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    For a property I'm interested in bidding on; seeing as I'll be remote/out-of-state during the actual auction, they've offered a free service to appoint one of their sales staff on auction day, to bid on my behalf at auction.

    To do so, I need to pre-inform the agency of what my maximum bid price/'walk away' price actually is (along with sign a bunch of legal / responsibility paperwork etc.).

    But this agent offer to bid for me... has anyone done this before?

    Even if the sales agency sign something to the effect of "We promise we will not disclose your maximum bid to the vendor" - how can I believe this? If I signed an authorisation document say, a week prior to auction, what is stopping the sales agent from quietly disclosing to their vendor on the phone (not over email of course!) "Hey, so... this bidder has appointed us to bid for him, and guess what, his ceiling price is $XXX". This seems to be a conflict of interest, no? I.e. let's say the reserve is set at $500K, and on my forms I indicate I'm willing to bid up to $530K maximum. If the auction is a quiet one, and bidding peters out in say the $510's, if the vendor secretly knows my maximum, what's stopping them from submitting "vendor bids" against me to push me up to just before my maximum (I.e. $529K); knowing that my appointed bidder will then place a final bid of $530K (my maximum).

    Alternatively, I could pay a BA or other professional a small fee to turn up and bid at auction for me, which I'm happy to do, to mitigate this risk. But just curious if anyone has had this situation before?

    FYI - I'd already made a pre-auction offer to try and take the property off the market but the vendor is determined to go to auction, despite acknowledging that is was an offer price they'd be happy with, if it was achieved on auction day.

    I don't want to disclose the market/suburb this property is in, on the public forum. But it isn't one that is crazily high-demand or anything; and even the sales agent acknowledged that this auction (around mid-December) is awkwardly timed and that considering the condition of the property they aren't convinced that it'll go for that much more than the reserve price. Also, in this particular state, the laws are that if a sales agent advertises an auction property with a price guide $XXXK amount on the ad, they are legally not allowed to set a reserve price greater than 10% higher than the list price they advertised, so I already have calculated what the highest reserve price actually is, ahead of auction day.

    Is this all just smoke blown by a sales agent trying to get me to crazily bid-up the price at the auction? Does the agent know something I don't? Maybe they know that with a low reserve, it'll go for like $100K more than reserve as opposed to $10-$20K more than reserve?

    Any thoughts/experience on this would be super helpful!
     
  2. Agent30yrs.

    Agent30yrs. Well-Known Member

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    Is there any reason why you can't bid over the phone ?
     
  3. Mick Butterfield

    Mick Butterfield Well-Known Member

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    I have not come across this before, however, do not really deal with auction properties. From what I can see there is a huge conflict of interest here. The agent/agency has a fiduciary obligation to the vendor to act in their best interest (get the best price for them). If you give them your best price I anticipate that that is what you are going to pay. I feel that you would be better served getting a BA to do it on your behalf or as @Agent30yrs. says have someone attend on your behalf and bid via phone.
     
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  4. spludgey

    spludgey Well-Known Member

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    Might not be allowed, depending on the state. I had to find someone to bid on my behalf in SA because this wasn't allowed.

    Personally, I'd prefer to pay $200 (which is what I paid) to get an impartial person to bid for me rather than having an agent with conflicting interests bidding for "free".
     
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  5. DaveM

    DaveM Well-Known Member

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    Appoint someone as your proxy. A friend, a buyers agent, etc. The selling agent is not the best choice.
     
  6. Big Will

    Big Will Well-Known Member

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    I would engage a BA or someone who you trust very much.

    You might be able to bid through their sale rep through a phone call but likely you would need to pay a deposit before.
     
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  7. Propertunity

    Propertunity Well-Known Member

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    Don't as in DO NOT let a staff member of the selling agency bid for you. They are representatives of your contractual adversary, the vendor.
     
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  8. Brady

    Brady Well-Known Member

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    NO WAY! haha that's amazing that they're even looking to operate in this way.

    Get an independent to bid for you - if you don't know anyone local employee someone.
    Can you look to do this based on performance say pay them
    - flat fee for bidding
    - extra amount for being successful up to $X
    - more again if under $Y
    - even more again if under $Z
     
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  9. C-mac

    C-mac Well-Known Member

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    Thanks everyone for your thoughts!

    Yes - alarm bells rang when the sales agent offered this service.

    Surprised that this is even allowed - in any state!
     
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  10. Ouchmyknees

    Ouchmyknees Well-Known Member

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    Sorry but this is the most ridiculous thing I've heard all week, this REA is so desaparate.

    If I were you I will exploit the cr@p out of this "opportunity". just tell them (don't put anything in writing of course) " ok this is my max please bid for me" (but use a low ball number say 15% lower than your max). At the same time hire an BA, use a friend etc to bid on your behalf with your real willingness to pay. This way you effectively nudged the agent into believing your max is lower than what actual is and gives you the upper hand.

    Not sure whether it is legal to do this though...
     
  11. dabbler

    dabbler Well-Known Member

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    I would do it by phone, then it is ok to have the agent/an agent bid, am thinking of doing this right now to save a lot of driving, but even that may be a dis advantage.

    Giving any agent all the details and a right to bid independent of direct instruction, no, would not go for that. Why can't you just phone in ? You can bet even if they did not reveal to vendor, they will all (in the agency) be informed of your info. Sounds like a silent auction already.
     
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  12. C-mac

    C-mac Well-Known Member

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    I was told that there needs to be a human physically there not for the bidding part so much, but upon winning, a physically witnessed signature needs to be inked on the day, in person. cant they just pre-email me the pdf, i print/sign/witness locally in sydney then scan back
     
  13. dabbler

    dabbler Well-Known Member

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    No, you can get them all to agree to use electronic versions, otherwise things would grind to a halt, agent trying to control things by sounds of it.

    Also most will agree to an electronic deposit as well.
     
  14. DaveM

    DaveM Well-Known Member

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    The auctioneer can sign on behalf of a registered bidder generally
     
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  15. mcarthur

    mcarthur Well-Known Member

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    I assume the $200 wasn't for a BA but more for a "friend" - the quote I had a few years ago from a BA was another zero at least!
     
  16. Big Will

    Big Will Well-Known Member

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    I find the ones that don't allow EFT after the auction are the biggest pains... Who keeps a cheque book or 50,000 in cash?

    It leaves you with either getting a bank cheque or depositing money the day before if the rea allows it.

    I had one agent tell me they will take a personal cheque from someone else and we can swap it for a bank cheque on the Monday. Even said the personal cheque doesn't have to have any funds in it and they would prefer this over an EFT after auction with an emailed receipt...
     
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  17. DaveM

    DaveM Well-Known Member

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    Sounds expensive... many BA auction bid services are around $500 attendance/bid fee then a success fee to attend to paperwork.
     
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  18. spludgey

    spludgey Well-Known Member

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    It was actually a real estate professional (I think he works for the council) that I found on air tasker for this specific purpose. Nice and knowledgeable guy.
    The amounts that BAs seem to charge for basic stuff like this is horrendous especially if you just want them to bid and still have to pay that amount of money. I got a quote from one first as well and I think it might have been $500 to bid and $1000 on top of that if it's successful. Silly money in my opinion!
     
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  19. C-mac

    C-mac Well-Known Member

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    I guess up to $500 I think is acceptable. Any more than that though, and you are getting into "I can buy day-trip flights plus taxi/uber costs from airport to property, cheaper than that" territory.
     
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  20. D.T.

    D.T. Specialist Property Manager Business Member

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    You're not really including their expertise in that though. Its like saying a handyman's rate is lower than a dentist's but they have a similar drill - open wide! :D

    Most BAs offer this as a standalone service. I know Dave M does.
     
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