Need some feedback regarding an auction we went to, where our bid was passed in

le3lee on 02/03/2014 - 12:23
Last edited 03/03/2014 - 11:44

Went to an auction last Saturday in VIC and had my solicitor bidded for us. He was the one and only bidder (amount was within the price range estimate) however the price didn’t reach its reserve. During the back and forth negotiations, which our solicitor liaised on our behalf offering 41K above our first bid (we didn’t go in), the auctioneer and agent did entertain an offer by a second couple who walked in straight after the auction concluded and offered $23K+ higher than ours.

It went like this
Our offer: X83,000
Auction concluded
Our offer : X27,000
other party: X50,000+ Subject to finance
our offer: X50,000
This is when we had to go in excess of the other party, but no guarantees. So we decided against it.

Is this the normal and fair procedure? I thought and believe that the highest bidder during the auction (without reaching the reserve) has the first right to negotiate a deal before the auctioneer can entertain any other offers.

We aren't wanting to win the propety back, just seeking for any suggestions so we're aware for next time. Thanks :)

Home & Garden

Comments

  • PissLUR on 02/03/2014 - 12:30
    +4

    whats the advice from your solicitor? I would have thought your solicitor knows more about this.

    • le3lee on 02/03/2014 - 12:45

      We would have thought so too after speaking to a few friends. We are yet to get details from him. When the couple went in, our Solicitor made an offer 41K above our first bid, then we were told that the couple has offered another 23K+ above ours. So we would have to outbid them if we wanted it - not knowing what they offered, and it will be our final offer from both parties… therefore it will be called SOLD

  • cuteduck on 02/03/2014 - 13:23

    You have been given another chance to outbid them.. but you decide not to triumph them. When the property is passed in, it is now under private treaty.

    • 777 on 02/03/2014 - 14:09

      spot on, that their excuse

    • Almost Banned on 02/03/2014 - 17:42
      +2

      Did you mean 'trump'?

      • cat06969 on 03/03/2014 - 10:20

        Donald Trump

  • 777 on 02/03/2014 - 14:08

    it is not optimal practice but don't think they have broken the law
    Have seen so many "mini" auctions and phone calls auctions after the passed in auctions
    So nothing unheard of

  • 777 on 02/03/2014 - 14:11

    why you going for a solicitor to bid on your behalf of you ?
    Having some experience with real estate - never be emotional Thats when you pay higher and loose some money

    They are their to sell and will budge if they don't find anyone else, in most case they don't

    • le3lee on 02/03/2014 - 15:15

      Thanks. He was bidding for us because he's done it for ppl we known and was successful. So it was a favor he did for us.

      • aggregate on 02/03/2014 - 22:00

        As 777 said above, don't get emotional with buying real estate. Once you become emotional, you will end up paying above the fair price or the price you can afford.

      • blitz on 02/03/2014 - 22:07
        -4

        So it was a favor he did for us.

        If you didn't pay him, he doesn't owe you anything.

  • altomic on 02/03/2014 - 18:06
    -5

    Need some suggestions regarding an auction we went to, where our bid was passed in

    go to another auction and bid the highest.

  • le3lee on 03/03/2014 - 10:22
    +1

    Thanks 777 for sharing your experiences.

    I think some of you have misinterpreted my question. I'm not attached to the place, and glad our emotions didn't pay for the extra.

    I just wanted to know if it's normal practice from the real estate agents or not.

    • Dumax on 03/03/2014 - 11:08

      Your offer was under consideration by the vendor, just because you were "first" doesn't automatically give you exclusive right to buy the property (your "solicitor" should of explained this to you). They are obligated to NEGOTIATE with you as the highest bidder, but are not obligated to accept any of your offers.

      They negotiated with you (as their reserve had not been met) and told you in no uncertain terms that you would need to up your bid by over $23K - and you declined - meaning that they went with the higher offer.

      • le3lee on 03/03/2014 - 11:37

        We know that the vendor didn't have to accept our offer.

        It was more the fact they let the other party go into negociate as soon as the auction concluded.

        • cuteduck on 03/03/2014 - 13:19
          +2

          But you have been given 1st opportunity before the other party and you declined to up the offer on the 2nd round. It is an open market and getting hotter in Sydney/Melbourne (i.e. seller market)

  • cuteduck on 03/03/2014 - 13:18

    BTW, how much did you pay for solicitor to do bidding for you?

    • le3lee on 03/03/2014 - 15:26

      nothing, it's a family friend, and he's done it for other clients before and has been successful. It was our first auction and we didn't want to pay more because of our emotions so we gave him our budget and he bidded.

  • skyva on 03/03/2014 - 15:19
    +1

    Interesting that the offer you made was within the advertised range and yet not up to reserve. I wonder what would happen if you bid at the top of the range, coul htey still call it as below reserve?

    The way auctions are done in Vic at least is shonky, and the government doesn't seem to want to do anything.

    • le3lee on 03/03/2014 - 15:35
      +1

      Yup, I agree, it's a serious issue in Melbourne (that I know of) ppl are wasting money with inspections because they think they can afford it. Luckily this place was new, so we didn't spend anything prior to auction - just time and petrol.

      The listed price was $X50,000 to $X10,000, the reserve was $X75,000, 65k more than the highest "estimate". We were told that the vendor can change his reserve price at any time. At time of inspection we were told that what we were looking at spending def gave us a position in the "game".

      IMO if someone bids within that range, they should get it. That will prevent r/s agents for underquoting and listing an amount out of the equation imo.

      • jumbuck on 03/03/2014 - 19:34

        Vendor doesn't have to disclose the reserve, not even to the auctioneer.

        (in theory) the agent advertises an expected range based on their experience in the area, or advises what "other interested parties have said they will bid". if they are told a reserve by the vendor, then i assume that must be included in the range. my agent explicitly told me not to tell him the reserve during the advertising campaign. i guess this gives him wiggle room when confronted by unhappy bidders, but also flexibility to drive the price higher for the seller.

        even if the current bid when the auction stalls is above the advertised price, they will still have to talk to the vendor for instructions. when i sold my house at auction, even though i had told the auctioneer my reserve just before the auction, and bidding quickly surpassed it, he still "reffered to the vendor". his excuse to me was that "he wanted to make sure i was happy". i can only assume that there have been some cases where sellers have taken action against their agent for selling too low at a hot auction, even though they sold above reserve.

    • kungfupanda on 04/03/2014 - 08:37

      Almost all properties auctioned in Melbourne always had reserve price above the price range. I now hate going to auction because you will always find yourself outbid if not the reserve price will be above the price range.
      For example, in doncaster you will see a property advertised 630-680k at the end it will be likely to sell for 800++ and if it's passed in it will be advertised with price above 800k… Ridiculous !! It's the real estate agent who needs to be blamed!! Don't believe what they say is my advise…

  • pebee47 on 03/03/2014 - 15:31
    +1

    I'd suggest that yes, lowest bidder has some rights to first negotiate. You took the right and offered more. Even though (and probably because) another offer was sitting to one side, the vendor refused your amended offer. At that point the negotiation came to a close, as they didn't amend the offer and return it for your acceptance.
    They could have had a myriad of reasons to go with the other party; from not liking the tone of your solicitor's voice (or the fact they were dealing with a buyers agent) to finding out they had some sort of link emotionally with the other buyer (kids in same sport club etc), or any other reason. They are at that point still the owner and are free to sell or not to whoever they choose.
    People do get an emotional attachment to their home. After all, they've usually lived with it for years, and gone through all sorts of family crisis and celebratory times in it. Sometimes they just want to sell their castle to "some nice people just like us".
    - Ex Real Estate Representative

    • le3lee on 03/03/2014 - 15:45

      Fair statement, and I regret we didn't go in to negociate.

      I had connection in the construction industry who knew the seller (hence i knew about this place on the market). He is a developer that has a project waiting to commence and needed the funds it was rented out, and is now vacant, and it was very open that they wanted a short settlement date. Maybe the r/state agent wanted the extra 5k commission or maybe they didn't like the solictor or even us because we did offer $x50,000 pre approved and can settle in 30 days.

  • Musing Outloud on 03/03/2014 - 21:57

    I take a different view from all the others commenting here. Whilst the bottom line is all sort of legal, but less than ethical issues happen, in your case I think you (or your solicitor) were just too hard nosed and it got people offside.

    As I understand it you (or your solicitor) offered X83,000 tops at the auction before it was concluded. This very act sets the bar for post-auction negotiations. The reason is if the closing auction price does meet reserve, then no sale will occur unless both sides close their positional gaps. They have a reserve and you have a maximum in-auction bid. Sales will occur between these two positions. You may very well have won the property with a matching post-auction offer of X83,000, or you may have won it for perhaps just a little more at a X88,000 offer, but now you will never know.

    At the post-auction negotiations, you (or your solicitor) created the wrong perception by way underbidding yourself by re-starting negotiating at X27,000 or some $56,000 short of what you were prepared to pay just minutes before. This kind of approach can and does leave a sour taste in others' mouths.

    Yet this other couple (who did not bid) were happy to offer X50,000 which you were only prepared to match (yet not beat) was still nowhere near your original in-auction offer of X83,000.

    Managing perceptions is the lesson to learn here. You need to make it clear you are a serious bidder and you should in future negotiate from your your highest bid when the auction closed (most especially when it doesn't meet reserve).

    Personally, if I wanted that house, I would have been hard-nosed at sticking to the the X83,000. The other couple appeared from your comments to have been unable to match this. But if somehow they did, I would have offered $1000 more - not the same!

    This is what I mean about managing perceptions. You have to appear serious.

    If this scenario arose from your solicitor's advice, I think you need to find, contract with and pay for a Buyers Agent. I am left to wonder why your solicitor has not been in contact?

    TLDR: Seems that solicitor bidding on buyer's behalf during in-auction offer which did not meet reserve, subsequently offered a significant underbid in post-auction negotiations that left such a bad taste in Vendors mouth they refused to negotiate further.

    • Geewhizz on 05/03/2014 - 06:43

      Umm, I think you'll find the after auction offer was higher, not lower than offered at auction, with the X representing a variable number.

  • le3lee on 04/03/2014 - 07:53
    +2

    Thanks for ur advice everyone. Spoke to my solicitor last night and said that we had no choice one way or the other because right after the auction concluded if we couldnt meet the reserve, they were able to entertain others and negotiate from there.

    Nevertheless it was a good learning experience.

  • airzone on 04/03/2014 - 11:15

    Curious… I bought my place at auction under similar circumstances.

    Me: 100k (as an example)
    Vendor bid: 110k
    Me: 120k
    Passed in.

    I then had first right to negotiate.
    Me:130k
    Vendor: No
    Me: 135k, no more
    Vendor: Yes

    Although I was the only bidder (and there were a few interested parties), once the auctioneer closed the auction, the real-estate agent was only going to talk to us until we decided to pull out. No other parties were admitted into the room while the negotiation was in place. At which point, the other potentials left. I thought it was strangely honourable of the agent… But I suppose it was all part of his strategy to ensure a sale took place.

    • le3lee on 04/03/2014 - 11:26

      maybe they didn't like the fact we had someone bid for us, someone whom the realstate agents have never seen walk thru the property.

      after the auction concluded, the r/s agent came up to my partner and said. For $x83,000 it's a bargain, why didn't u bid. Then he found out that we did.

      what would a true ozbargainer do if say the approval falls through and they call us back?

      Offer them $x27,000 or be nice and give them the $x50,000?

      hahahah

      • airzone on 04/03/2014 - 11:53
        +2

        Heh, 2 days earlier I had a bank loan approval fall through for a pre-auction sale for $20k more than our final buy price… When I finally did sign at the auction, the real estate agent told us that we had gotten a bargain, and only 2 days before someone had an offer of 20k more. He then went to show us the offer letter… And then realised that it was my offer..

        Happily he was a good sport about it, but I bet the vendors would have been pissed if they found out :)

        So it can happen, and you can ozbargain yourself all the way into depressing levels of debt :)

        • le3lee on 04/03/2014 - 14:05

          that's great luck for you!

          we'll see how this one plans out. Do you know how long they're allowed to have to get pre approaval? Or as long as they get it by settlement date?

  • Cheeper on 05/03/2014 - 12:29

    Op… The way I look at it is … the auction ended, reserve not met.
    At that point the auction process is ended so the seller has the right to sell to any buyer.

    It is not as if an offer had been accepted and you were gazumped..

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