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 really.
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?
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.