Auction - please clarify if this is acceptable behaviour

Today I saw an auction in Sydney. I was a bit late to the auction and saw from step 3.

1. Auction started
2. Bids made by 2 bidders and one bidder out either before or after vendor of $1.5 Mn
3. The auctioneer was asking one bidder to outbid the vendor bid by $25k. He was persistent, in the bidder's face for 10 minutes. Mean time the REA staff kept talking to the bidder also.
4. The bidder budged and bid $1.515Mn
5. Auctioneer called 1st, 2nd and 3rd final bid with that price and there were no new bids
5. The REA went in spoke to the vendor who was in the house and came back and kept talking to the bidder asking them to again increase their bid
6. After much deliberation of about 10 minutes the bidder increased it to $1.53Mn
7. REA consulted with vendor again and came back and kept pushing the bidder to again increase their bid
8. More in-your-face yelling by the auctioneer followed and the bidder increased the bid to $1.535Mn
9. Property sold at $1.535Mn

I would like to know if the following is correct practice:

A. once the auctioneer has placed the vendor bid, the property is on the market. So you can't pass-in if someone beats the vendor bid. Correct? Even after the bidder had increased their bid to $1.515Mn the auctioneer suggested that he would pass-in the house. Is that possible/ legal?

B. After the bidder has out bid the vendor bid and the auctioneer has called 1st, 2nd and 3rd final bid, how can they again consult the vendor and ask the bidder to outbid themselves twice?

Anyway, the pressure tactics of the auctioneer was very obvious and the Chinese buyers seemed quite disturbed by the auctioneer's behaviour. Onlookers apart from me too could not believe that it took 45 minutes of haggling of which almost 30 mins after the vendor bid was placed to secure the sale.

The market is cooling and the above exercise (REA desperation!) was quite painful to watch and a good learning experience. Your thoughts?

 

Doesn't sound very ethical, however doesn't sound like anything illegal went on.
A vendor bid does not necessarily mean the property is on the market.

The reason for consulting the vendor is to see if the vendor will drop the reserve (or at least appear to be doing that).
They appear to be trying to get the bidder to meet the minimum price that the vendor will accept.

My cynical mind is thinking the agent was probably playing the same game with the vendor and pressurising the vendor to lower the reserve. Not that any agent would ever put there commision above the interests of the vendor, would they?

A more ethical agent/auctioneer (IMO) would have passed the property in and this negotiation would have happened behind closed doors.

 

They don't do that for the simple reason to keep their auction stats up especially agents whose main bread and butter come from targeted auction campaigns. They negotiate during the auction after the final bid and then drop the hammer on the negotiated price - keeps their own personal auction clearance rate higher.

pinkboy

 

Don't fully understand NSW laws but I know in QLD and VIC you can put vendor bids below reserve. However once it has been called on the market the can no longer consult their vendors as it has met the reserve.

 

They were probably pressuring both the bidder and the vendor, emotions run high on such a day

 

By step 2 vendor bid was placed and only one bidder was left

 

Sounds like the vendor would be happy with the result. Let's not forget who the agent/auctioneer works for.

 

Vendor bid is not an indicator of the Reserve.

 

Seen this plenty of times....greedy vendor and bidder that does not know what is going on or who really wants the place then and there.

 

Why is the vendor greedy? I'd want every last dollar I could get when selling my property!

 

If an agent gets in your face like the above scenario could a bidder say out loud to the Auctioneer"I withdraw all my bids". Say they did this before the hammer fell. Does anyone know the law on this in NSW?
I ask this because I saw a similar thing at an auction about a year ago. The agent was really pressuring a bidder and it would have been kind of good to see him withdraw all his bids and walk off.

 

It may be different in NSW (unlikely), but in VIC a vendor bid does NOT mean that the property is on the market. It's often used by the agent to get the auction started.

If the highest bid is still below the sellers reserve, agents will attempt to get the highest bidder (and possibly the under bidder) to increase their offer.

As to the question of acceptable behavior, it certainly appears to be confronting and rude, but the agent is employed by the vendor, not the purchaser...

 

A vendor bid does not put the property on the market. I'm a Victorian but I've seen a number of auctions in NSW to know the process is somewhat similar to ours. Only difference I know of is that in Victoria the auctioneer can place as many vendor bids as he/she wants whereas under NSW law only a single vendor bid is allowed.

As Peter stated above, a vendor bid is usually placed to get the auction started if the auctioneer receives no bids from the crowd. However, sometimes the auctioneer will place a vendor bid even after receiving genuine bids from the crowd. This is usually done to help move the auction in a faster pace in order to get to the vendor's reserve and call the property on the market.

The agent running back and forth was probably trying to get the vendors and the bidder come to an agreement on what figure they'll accept to sell the property.

 

That's the kind of auctioneer I go for - someone who is able to extract every last cent on the table. I'm not paying their sale fees to get me a meek sheep. I want a killer shark.




Look at this guy, Damien Cooley. Champion, champion, champion.



Damien in training. What a f*ken legend.

 

The Auctioneer did well, the hardest part is getting the buyer who wants to pay bottom dollar and the seller who wants top dollar to meet.

Nothing unethical, the auctioneer was doing his job. The Vendor bid has nothing to do with reserve in Nsw the vendor gets one bid, which is suppose to indicate that the property is here to be sold and it's put in place to encourage more bidding.
If the auction stalls the last thing you want is an auction to pass in when it's 10k away, it's not good for the vendor if it does as it will then be on the buyers terms and not the sellers. Meaning the purchaser can then asked for delayed settlements, 5% deposits etc.

 

No this is clearly unacceptable behaviour by the vendors in having unrealistic expectations of what their property is worth and the buyers in not appreciating what the property was worth and wanting to pay less than it is worth. The auctioneerr should claim damages from both parties for causing undue delay in getting to the next auction.

 

Surely this is sarcasm.......

 

I walked past an auction being set up in a small country town yesterday morning. Population 700. About 20 houses sell each year, some propertieshave been listed for over 2 years on realestate.com.au

The agent was saying tothe Vendors that unless someone popped up the house would not sell at auction. The house was not significantly different to other houses for sale.

Why would the agent recommend auction? The only urgency that is conveyed is that the vendors are desperate to sell. Maybe they are, but that agent had another house for sale straight across the street not for auction.

There was so little interest that none of the neighbours was having a stickbeak!