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Auction Winner Walks Away

Discussion in 'The Buying & Selling Process' started by York, 6th Nov, 2015.

  1. York

    York Finance Broker Business Member

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    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
     
  2. Perthguy

    Perthguy Well-Known Member

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    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."
     
  3. Be Developer

    Be Developer Property Developer Business Member

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    @York

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

    you get the drift!
     
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  4. TMNT

    TMNT Well-Known Member

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

    neK Well-Known Member

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    or a dummy bidder ;)
     
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  6. Scott No Mates

    Scott No Mates Well-Known Member

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

    York Finance Broker Business Member

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    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?
     
  8. neK

    neK Well-Known Member

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    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.
     
  9. York

    York Finance Broker Business Member

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

    Azazel Well-Known Member

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

    York Finance Broker Business Member

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

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    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.
     
  13. Scott No Mates

    Scott No Mates Well-Known Member

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    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.
     
    Last edited: 6th Nov, 2015
  14. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yeah good point. If no registration there is no way to know.
     
  15. Marg4000

    Marg4000 Well-Known Member

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    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
     
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  16. Tekoz

    Tekoz Well-Known Member

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

    See Change Timing Lord Premium Member

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    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
     
  18. York

    York Finance Broker Business Member

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

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    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.
     
  20. Peter L

    Peter L Active Member

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    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.