The Vendor’s Bid at an Auction

I had a serious discussion with a seasoned Real Estate Veteran about auctions recently when I put it to him that the whole concept of a Seller at an auction having the right to bid is a crazy one gavel sale

I mean, why would a Seller want to bid for the purchase of their own property except to artificially increase the price that they get you to pay for it.

His feedback to me on this point was that it was legitimate for a Seller to be able to do so and it was really no different to a Seller making a counter offer on a property where an investor made an offer to buy it by way of a Contract of Sale, rather than through the auction process.

No it isn’t

If a Seller made a counter offer in that way and it was accepted by the Buyer, then the Seller would be bound to sell at that price.

Rarely will this be the case with a Vendor’s bid as the property won’t be “on the market” at that stage. 

In the case of a sale by a private contract too, this all takes place in the clear cold light of day and not in the excited environment of an auction where pushy salespeople hover around you, encouraging you to make a bid, or if you have made one to increase it.

There are no flashy photos of the property and the area continually rolling across the screen in front of you with upbeat music pumping up the atmosphere in the room where the subliminal message is “buy buy buy”, “bid, bid, bid.”

The other point to be made is that I thought an auction was a bidding process by potential Buyers.

How does a Vendor bidding on their own property fit into this process? 15404997_l

In my opinion it doesn’t.

It is just another example of the day being stacked against you as an investor and show that auctions are no place for beginners or the inexperienced.

Research, preparation and education are the keys to successfully buying and selling at an auction.

If you have those keys in hand and you have a will of steel when it comes to when to bid and how much to bid, it can work for you.

Or get a great buyers agent on your side to level the playing field for you.

Want more of this type of information?

Rob Balanda


Rob is a partner in the Gold Coast based law firm MBA Lawyers. He is a highly regarded educator of property investors and estate agents and the author of the "Made Simple" series of books and CD's.

'The Vendor’s Bid at an Auction' have 1 comment

  1. June 6, 2016 @ 9:07 pm Rob

    Sorry Rob I don’t agree with your comments regarding the use of a vendors bid.
    Some points of clarification if a vendor makes a counter offer to a buyer and the buyer accepts that counter offer the vendor is still not legally bound to sell to the purchaser. No doubt in my opinion they have a moral obligation however Until a contract is exchanged either party can and in my experience about 10 to 15% do withdraw from the purchase or sale. Admittedly it is more often the purchaser.

    As an auctioneer I much prefer not to use a vendor bid at all however it can if used effectively create a sale from where no sale would occur. It is important to remember if the vendor bid creates a situation where the buyer is successful both sides have had a win.

    In the article Rob indicates the buyer had in some way paid too much or been fooled or duped in some way. What if the reserve was 440,000 bidding stalls at 410,000., the auctioneer vendor bids at 420,000 under the vendors instruction as the vendor is never going to accept 410,000. The highest bidder then bids say 425,000 and after some procrastinating the vendor places the property on the market and sells at 425.000.

    In the example above the buyer secures the property locking out all buyers that may come in if the property is passed in and offered for sale by private treaty. So they have a win. The vendor secures a deal they perhaps don’t feel is what they want but it’s acceptable to know the deal is done.

    Please note legislation in NSW may be different to QLD.


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