When is an auction bid not really a bid :)

[Bluekiwi]

Well I have been told today that the rules that govern auctions have changed, as of today.

And that at an auction, when you bid, you can actually then retract it

Possibly with the comment "Naaaa.. just joking" !!

Does anybody know or have clear detail on what all these new rules are ???

[speights boy]

www.comcom.govt.nz/fair-trading/changes-to-the-fair-trading-act/changes-that-come-into-effect-later/

[speights boy]

also
When the law comes into effect on 17 June, vendor bids will still be allowed but only in restricted circumstances. They may only be made if all three of the following conditions are met:

• the property at auction has a reserve price
• the bid is clearly identified by the auctioneer as a vendor bid, and
• the reserve price has not been reached

Further, if the property is unsold at the end of an auction, any subsequent reference to a vendor bid (if it was the highest bid in the auction) may not be used.
To do so would be a false or misleading representation under section 14A(4) of the Fair Trading Act. The only amount allowed to be quoted will be bids from genuine prospective purchasers.

[jimO]

most auctions i have been to if it wasnt for vendor bids nobody would be bidding

[Bluekiwi]

www.comcom.govt.nz/fair-trading/changes-to-the-fair-trading-act/changes-that-come-into-effect-later/

I cant see anything here about real estate auctions, or am I going blind.

[speights boy]

^ No there aren't any about real estate auction.
That's why I would be going back to your source, and asking them.

Big changes to online auctions such as held on trademe, but they may have simply got the wrong end of the stick.

[Davo36]

also
When the law comes into effect on 17 June, vendor bids will still be allowed but only in restricted circumstances. They may only be made if all three of the following conditions are met:

• the property at auction has a reserve price
• the bid is clearly identified by the auctioneer as a vendor bid, and
• the reserve price has not been reached

Further, if the property is unsold at the end of an auction, any subsequent reference to a vendor bid (if it was the highest bid in the auction) may not be used.
To do so would be a false or misleading representation under section 14A(4) of the Fair Trading Act. The only amount allowed to be quoted will be bids from genuine prospective purchasers.

That last part is important to me. At commercial auctions, there are often no bids, so the auctioneer starts off and then passes it in. The info afterwards then says "Passed in at $800,000" say, not "No bids". Which is quite different.

[Gladdynook]

That last part is important to me. At commercial auctions, there are often no bids, so the auctioneer starts off and then passes it in. The info afterwards then says "Passed in at $800,000" say, not "No bids". Which is quite different.

Same is done at residential auctions. I don't agree with vendor bidding at all. Why should anyone have to bid against the vendor? If they are the only bidder, then the house should be passed in and negotiation can begin then.

[donthatetheplayer]

I agree Gn. I don't bid against vendors. If they want it to be sale by negotiation that's fine but I won't get into the negotiation with them on the auction floor!

[Bluekiwi]

I only like a vendor bid to get the blimin auction underway.
I hate waiting 10 minutes for the auction to be just about passed in, before some plonker puts in an offer.
Good to prompt the punters into action.

But yep, never bid against the vendor to hit the reserve.
Unless, you see real value and want to secure it unconditional before a bunch of others put their oar's in with conditional offers.
But you dont need to do this on the auction floor, do a backroom deal, in case some sneaky fellow is waiting waiting to bid at last minute.

[Davo36]

I was speaking to a real estate salesperson the other day and she told me that a house up the road had sold for a really good price. $675k for a 2 beddy. She then went on to say there was only one bidder and the auctioneer got them right up to that figure. The reserve was $680k - but they decided to come down $5k and sell it there and then.

So why on earth would someone do that? Bid against themselves effectively until they bought it?????

I have seen this sort of behaviour - buyers raising their bid because the salesperson comes up to them in the room and asks them to - even when they are the highest bidder! - and other stuff, many times. Totally nuts IMHO. I always say to them "Why would I bid against myself?" to which they have no answer and kind of just fudge around with nonsense stuff like "It's a really good property" or "It's a fantastic opportunity" etc.

[elguapo]

So why on earth would someone do that? Bid against themselves effectively until they bought it?????

Commitment bias.

http://en.wikipedia.org/wiki/Escalation_of_commitment

[Davo36]

Well yeah, they could have been through several times, got a LIM, building report etc, been looking for ages and kinda fallen in love with it etc.

And then they might miss out and have to start all over again... with the papers saying house prices are going up $20k a month or what have you.

[elguapo]

Yeap, Actions play very much to the flaws in people's thinking and the costs of due diligence just add to that.

[Wayne]

So why on earth would someone do that? Bid against themselves effectively until they bought it?????

Really it becomes negotiation.
I brought a house at auction last year, I was the only bidder and we basically negotiated on the spot (without changing conditions though). They were in a wee room getting massaged by the agent and I was still on the floor.
In the end I got what I wanted at a price I found acceptable and the agency got to say it sold at auction.