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Hello,What happens to a property that does not sell in an auction as it did not reach the reserve price? I understand one can approach the auctioneer to see if there is a deal to be done after the bidding for the particular lot has passed. However, what if there are multiple interested parties who start another informal bidding in that little room after the formal bidding? I know ideally the auctioneer should sell it to the highest bidder in that room (if they can). However, are they obliged to do so? As in, are they obliged to sell it to the highest bidder post an auction or is it at their discretion who to sell it to?The reason for this a bit twisted question is that the property I am interested in is potentially 'set up' for a bit of a scam. This is being sold in a remote auction, not being marketed properly and there is no for sale board on the property either. Catalog has been out 13 days now (about a week more to go) and I have been the only person who has been to view the property thus far! So I think it is unlikely to sell in the room and as I am informed, there is a 'deal to be done'! The property (mixed use) is with receivers currently who are selling it.I am ready to buy the property even at the guide/reserve price however wondering whether I should wait if it does not sell and try reaching a deal after the bidding has finished - hence my question. Or should I jump start with a guide price bid so that it has to sell in the auction room itself!? Thanks again.
Depends on the auctioneer and how you approach them or they you.
I have bought 2 after auction
1 was unsold and I rang the next day and the auctioneers accepted my offer there and then. Although other offers were put forward they were declined because mine had been accepted and it went through like a normal sale and not an auction sale. I had not previously sent in any deposit or other paperwork for that auction.
The second was when I had been outbid at auction, after I had been telephone bidding. They rang me back 5 minutes after end of auction to say the next bidder had won but had not got his deposit present, so was not allowed to buy it. I said yes, at my bid price, and that went through as if I had bid and won at auction, Having sent in my deposit and all my paperwork previously.
You can also make an offer prior to auction, that may be accepted and then the Lot is withdrawn. This has never worked for me yet, though.
hope this helps.
Thank you Derek useful.
Just out of interest, do you see any practical difference between telephone bidding and in person bidding please by being in the room physically? Does the in person presence has any extra advantage over the remote bidding please?
As Derek stated " lots of Psychology"
For me staying away and bidding on phone works better .
Case 1 you describe I did the same, but you need to pay attention to make an offer within or outside the auction term. You seem to have done an offer outside the auction term, a simple offer subject to contract (I did the same).
Case 2 happened to a friend, we were together at the auction, and I think the guy bidding against my friend was a "fake" bid, from auction house itself or organise with the seller. How otherwise they let bid someone that did not posted the due deposit?
I tell you more, reading small print of auction term, basically they claim they may bid against you.
Auction is funny place. My friend declined the kind offer from auction house, claiming he could not be bother less if they let bid people with no deposit/credential. We did learn from that day...
Telephone bidding, they may not be able to get hold of you on the day and will not bid for you if they cant speak to you.
You can do a Proxy bid, where they bid for you, up to your limit, they don't need to speak to you for this.
With both you have to send in or take in all your paperwork before the auction, usually a couple of days b4.
In either case you wont be able to go over your maximum bid because they will have got your 10% deposit before, but only cash it if you win.
Advantages of being there are. You can sus out who you are bidding against. You can bid how you see fit, ie wait till last second then jump in, although you can do this on telephone as well. If the bidding has slowed down and you think it is about to sell you can up your limit by whatever you want. You may not want to lose it for sake of £500 of £1000. I also like to show myself confidently bidding fast and not slowing down, so they have no idea how close you are to your limit.
Lots of psychology. If you want the benefit of going over your limit then attend. If you don't want to be tempted to go over your limit then telephone or proxy are good. Depends how well disciplined you are or if you easily get carried away.
Finally by being there you can ask to see the legal documents and look through yourself before bidding. just to see if there is anything that was missed.
Very Very useful and experienced tips! Many thanks Derek - I think for this one I will have to take the train then!
Thanks again and god bless you.
What happened PD Malik - intrigued to here the end of the story.
a couple of points from my knowledge - its crucial to be in the room if there's a chance no-one will bid against you. The reason being is you want to buy at the best price. Auctioneers are 'allowed' to make up bids (not sure about exact legal stance on auctioneer making up bids but most auctioneers do it on virtually every lot). this means if you're happy to pay the reserve price they'll bid you all the way upto that price if you're proxy or phone bidder. They're good at making it look like there's a bidder in the room - 'the man at the back, the lady at the front...etc always look for that exact person bidding - chances are they're not! I've been to many auctions and can read most of the staff's tells like at poker (important if room is very crowed). You can nearly always buy below reserve after the auction as vendor and auctioneer are more desperate, auctioneer might reduce their fee too helping a deal be made.
I've had every experience you can possibly imagine at auction - a few experienced pro's bidding on the same lot - all not bidding, realizing the lot wouldn't reach reserve then a huge 'bidding war' after auction to get at best price. Normally its the first person to bid the reserve price who will sign contract in that circumstance, i've even seen a property go above reserve post auction as auctioneer worked out experienced auction bidders all didn't choose to bid in the room but we were all willing to pay above reserve and a mini auction post occurred..
Auctioneers are crafty - they'll tell you what you need to here to sign a contract - that 'there's another bidder post auction just below you - that they might increase their offer at any point and the vendor is considering selling to them if no higher offers occur' The thing is you never really know if they're telling the truth or not unless you have a close relationship with that auctioneer / member of staff. A lot of staff are trained to bend the truth slightly.......ok trained to completely lie out of their backsides to get a sale.
how many auction properties come with issues, location, ;layout, legal, condition, subsidence, knotweed, major damp......etc how often do they come with these issues yet when you ask them if they're aware of any - the best response you generally get is (i'd read the legal pack - meaning there's something there but they don't want to tell you hoping you might miss it and still buy) the worst is 'not to my knowledge' which might be true but it also might not be. Again helps to have relationships with staff and directors of auction houses.
auctions are a land of opportunity to buy really cheap but you have to really be able to do due diligence correctly.and be strong standing by your maths. And you have to know what finance is possible and its costs if not buying cash.
regards Andrew Peers - property investor / sourcer - 07912674181
Property Redress Scheme Number 011436 NLA member 174404
This is a very detailed and useful reply - many thanks for this.
In terms of what happened with me - the property was withdrawn 2:54 PM just before the auction day - I lost part of my legal pack evaluation too which are a bit high for a commercial/mixed use property anyway as you know. I knew the owners were trying to rescue it all this time and they succeeded I think just in time!
They were dealing with a dodgy bridging company and their rep broker so may be had a 'deal' done somehow - so that's one lesson to learn here I think!