Auction Winner Walks Away

Read this article this morning. A developer got the winning bid on a Mebourne property at auction. Then walked away leaving the vendor distraught. Apparently there is no obligation for the developer to go ahead.
Never head of such a situation. Has anyone else?

Winning bidder refuses to buy in auction drama

 

I love headlines. Winning bidder throws auction system into turmoil

Yes, the whole auction system is in turmoil.

I have heard of this before. Typically, the real estate agents will negotiate with the second highest bidder when this happens. As mentioned in the article:

"Mr Ievoli said the agency was talking with a number of other bidders and were hopeful the home would be sold soon."

 

@York

no registration required to bid at auction in vic
+
contract isn't a binding agreement until all parties signed.

you get the drift!

 

my guess is that from the area , the highest bidder is asian, and probably didnt read or grasp the basics of a property auction

 

or a dummy bidder

 

Or a sold as a commercial transaction without a buyer registration requirement (only applies to residential sales).

 

Good point @neK. I never thought of that. Dummy bidder that got stuck with the highest bid. But then if he was in on it with the agent/vendor then why the story?
Secondly, it's made ever worst if the property was announced as being on the market then the dummy bidder bidded after that? Risky.

Then again as @Be Developer said not binding until contract is signed.

@Be Developer being thats the way it is, isn't there an issue there regarding anyone just bidding at auction hard and fast. I mean you can go in strong, scare everyone else away...if you bid too high just walk away. If you bid a price you're happy with you sign.
Whats to stop anyone just bidding any price?

 

For everyone else - The fear that they actually have to pay perhaps?

There's a possibility this person understands the rules quite well and knows they can get away with it.

 

Yep. ...I say you're probably right.

 

They had to keep following through or get caught in their web of lies?

 

Ha....exactly what I thought. Sneaky buggers.

 

Not necessarily. There is a branch of law known as 'equity' which can over ride these things.

There are also precents for cases like this. It has happened many times. I think the agent may even be able to sign on behalf of the successful bidder. They generally considered to have entered the contract even though they have not signed.

 

AFAIK the auctioneer has the authority to execute the contract of sale. The issue is identification of the purchaser if not known to the agent.

 

Yeah good point. If no registration there is no way to know.

 

Last auction I attended (stickybeaking) the auctioneer included in his terms and conditions that he was authorised to sign a binding contract on behalf of the winning bidder if the person refused to sign.

This was a year or two ago in Queensland where bidders have to be registered before the auction.

Winning bidder went off to sign contracts, so no idea how effective this is in practice.
Marg

 

They'll have to pay the $55k fine here in NSW...
So what's the story udpate then ?

 

Thought this suggestion was interesting .

Mr Mericka said Consumer Affairs could improve the real estate auction system by producing guidelines stating registered bidders needed to sign a contract before auction to legally bind them to auction terms and bids.

Cliff

 

Very interesting Cliff. That would definately make things more transparent.

 

Auctioneer can sign on behalf of the vendor or purchaser or both, but a contract in some states is not binding till consideration is paid... which appears to be the issue here. So vendor can rescind or take legal action which will cost $$$, so purchaser is banking on them not chasing them.

 

I've seen people who had the highest bid leave auctions mid-way through and claim that they were swatting a fly and that their bid was misrepresented! I also know of an agent who experienced a similar situation like this down in Melbourne as well.

I am of Chinese origin too and I f***ing hate it when people with my background do sh** like this. It really doesn't help our stereotype.