Vendor Bids at an auction

Yesterday, I was a sneaky beak and poked my head in at an auction for a house across the road.

I had never been to an actual house auction before.   There was quite a large gathering, maybe 25-30.   But it seems that most people there were locals or neighbours!   There only seemed to be a few people actually interested in bidding during the auction.

The thing that caught me by surprise was when the auctioneer put in a “vendor bid” and the price rose by $100k all by itself!!   I thought to myself, “What the? How and why would the vendor want to bid on his/her own property?”   And then he proceeded to ask for any raises on that at which someone did.   I was most confused!

In the end, the highest bid that was passed in hadn’t passed the reserve price and so the highest bidder has first dibs in negotiating with the seller.   The auctioneer insisted that the property was going to be sold that day – I don’t know how as the highest bidder doesn’t need to move any higher right?

I obviously don’t know much about auctions and would need to do heaps of research before buying or selling using one.   They’re not that common here in WA.

Have you used an auction to buy or sell a house?  Would you do it again?

Here’s a few links I found that seem to have useful info about auctions:

http://www.lawyersconveyancing.com.au/auctions.asp

http://beachandbay.com.au/realestateblog/the-vendor-bid-vs-the-reserve-on-auction-day/

http://www.jenman.com.au/BS_B_Auction.php

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