Auctions - How to bid? And Vendor's bids?

[Curious]

Guys - I have never been keen on auctions and never actually bought a property in an auction but I've been to a few and noticed one thing I still don't quite understand - Vendor's bid or bid on Vendor's behalf. What is it good for?

Let's assume the bidding doesn't reach the reserve - as I understand it the highest bidder has the first right to negotiate with the vendor. What happens if the highest bid is the vendor's? Does the highest buyer-bidder still get the right to negotiate fist or is the property passed and becomes "by negotiation" by general public?

What I mean is - my wife fell in love with a new family home and convinced me to bid in the auction (we're under 80% LVR so all good). We want to bid to $700k but I guess it will be below the reserve. On the other hand at this price range I don't expect much competition, not right now anyway. Obviously once the reserve is reached the sale is unconditional and all that. But until it's reached - how to keep the price down with vendor bids pumping it up and up?

Does it actually make any sense to bid against the "vendor" if there's only one real bidder? I say $600k, auctioneers goes $610k vendor's bid, if there's noone else do I have to go $620k? Or should I let it pass? Am I still the highest bidder in that case?

BTW any tips and tricks for playing the auction to our advantage if there are multiple bidders?

Thanks!

[speights boy]

Do not bid against yourself, I believe.

If yours is the highest bid (below reserve) and they "pause" the auction to discuss with vendor...use that time to consider your next action with confidence.
If they come back and say " if you raise your bid 20k it is 'on the market' then know for sure that is what you want to do.
The 'on market' call may be the trigger for another bidder.
Or do you want to stick to your guns....have it passed in, and then negotiate.

Do not let the agents smell any fear.
If you are going to BS; BS with confidence.

The agent wants the auction to succeed.
That means it is usually in your interests to have the auction fail.....you gain the upper hand again.

I believe there may be a difference between negotiating as the highest bidder (still under auction terms & conditions), and actually negotiating normally at a later date.
Not sure on this.
Someone here will clear that up.

[Davo36]

Yeah don't raise against the vendor bid.

Just let it pass in and then negotiate.

[Ivan McIntosh]

Agree with Davo and Speights Boy.

There's no difference between being highest bidder and negotiating at a later date apart from the timing....obviously you get first crack at trying to reach a sale. But, if they want to wait, the vendor can just go away and refuse to talk to anyone.

[Xav]

If you bid against a vendor bid you're giving the vendor additional knowledge (that you're prepared to pay at least what you bid up to). So yeah, don't do it. Just let it pass in and then negotiate from there.

You don't get any sort of priority or preference from being the highest bidder, although obviously the agent knows you're interested so they should always start negotiations with you more or less straight after the auction. There is nothing to stop the vendor from accepting an offer from someone else though (even if it's less than your offer or what you bid).

[DaveW]

If the agent asks you to raise your bid $30k or whatever and it will "be on the market" and there are no other genuine bidders then let the property pass in and and ask the agent to show you the reserve figure. You might be surprised to see the reserve is less than what they tried to raise your bid to. If not, then perhaps try to negotiate a mid way point stressing the fact that you are cash unconditional?