Offer on a house set to be auctioned. Agent compliance question.

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Networkn
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#1994669 12-Apr-2018 09:43

MurrayM:

Goosey:

If the auction paused and people got taken away for a chat then when the auction resumes, the auctioneer re-starts bidding where it left off if its close to the reserve or will simply begin the bidding at a suitable figure which someone in the side negociation indicated they were happy with....

I've never bought or sold a house at auction but I've wondered about those "little chats". Does the agent try to put pressure on the parties to rise their offer / lower their expectations? I think if I was buying and they wanted to drag me into a room away from the auction I'd say "No thanks, you've got my offer, don't bother trying to squeeze more money out of me".

Easy to sit here and make that commentary, when there is no pressure, no property you might really want etc. In reality it's something very different.

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bagheera

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#1994674 12-Apr-2018 09:52

Batman: On the contrary I've seen many auctioneers who appear to be very keen to pass in on the auctions. It's like they need to get to the bathroom or something.

most likely late for the next auction they are book to run

MurrayM

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#1994676 12-Apr-2018 10:05

networkn:

MurrayM:

Goosey:

If the auction paused and people got taken away for a chat then when the auction resumes, the auctioneer re-starts bidding where it left off if its close to the reserve or will simply begin the bidding at a suitable figure which someone in the side negociation indicated they were happy with....

I've never bought or sold a house at auction but I've wondered about those "little chats". Does the agent try to put pressure on the parties to rise their offer / lower their expectations? I think if I was buying and they wanted to drag me into a room away from the auction I'd say "No thanks, you've got my offer, don't bother trying to squeeze more money out of me".

Easy to sit here and make that commentary, when there is no pressure, no property you might really want etc. In reality it's something very different.

Nope, very easy for me to walk out of deals if I think they're trying to manipulate me to get more money. I can be very bloody-minded when I want to be! And you should never get emotionally attached to a house before you own it, that'll just lead to trouble.

mattwnz

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#1994998 12-Apr-2018 17:09

evnafets:

In my single experience of it, that little chat is basically "You're at $XXX, the seller wants $YYY" Are you prepared to go up? It went back and forth a few times.
We went up a bit, they came down a bit and we basically met in the middle.

I was actually prepared to pay the $YYY if the bidding went up that high - it's what I thought the house was worth. We were the only bidder (apart from 'Vendor bids' which basically bought it up to $XXX) Maybe we could have got it for less, but I'm not unhappy the outcome.

I would be very reluctant to 'have a chat ' with the agent during an auction. The fact is that the highest bid, is the highest price that someone is prepared to pay in the current market for that property. The vendor has decided to sell using auction as the method, and not by negotiation. So IMO, any pricing negotiation should be done in the auction using a vendor bid etc. Otherwise IMO they should pass the house through, and close the auction off as unsold. Then is the time to negotiate. But it is something that can take place over the next few days when peoples emotions have cooled down, and have had some time to think about it. Although I suspect agents want people to make a quick decision while the Adrenalin is running, but IMO that is not in the best interest of potential buyers, as an error in judgement could be made. You never rush a decision like that, because people have limits they are prepared to pay for a reason. The good thing about then moving to negotiation, is that the buyer can put due diligence clauses into the contract, which isn't really possible with auctions. So Auctions can be a huge risk for buyers if they haven't spent time and money doing full due diligence beforehand .

networkn

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#1995001 12-Apr-2018 17:14

mattwnz:

evnafets:

In my single experience of it, that little chat is basically "You're at $XXX, the seller wants $YYY" Are you prepared to go up? It went back and forth a few times.
We went up a bit, they came down a bit and we basically met in the middle.

I was actually prepared to pay the $YYY if the bidding went up that high - it's what I thought the house was worth. We were the only bidder (apart from 'Vendor bids' which basically bought it up to $XXX) Maybe we could have got it for less, but I'm not unhappy the outcome.

I would be very reluctant to 'have a chat ' with the agent during an auction. The fact is that the highest bid, is the highest price that someone is prepared to pay in the current market for that property. The vendor has decided to sell using auction as the method, and not by negotiation. So IMO, any pricing negotiation should be done in the auction using a vendor bid etc. Otherwise IMO they should pass the house through, and close the auction off as unsold. Then is the time to negotiate. But it is something that can take place over the next few days while peoples emotions have cooled down have had some time to think about it, although I suspect agents want people to make a quick decsion while the Adrenalin is running. But you never rush a decision like that, because people have limits they are prepared to pay for a reason. The good thing about then moving to negotiation, is that the buyer can put due diligence clauses into the contract, which isn't really possible with auctions. So Auctions can be a huge risk for buyers if they haven't spent time and money doing full due diligence beforehand .

Problem is, you might feel this way, but others may not, and I guess if you are happy to lose the place then fine, but others might want some additional assurances or something else considered before they extend their bids. I've never bought or sold at an Auction but I guess it comes down to how much you want a place. I'd take a house very personally as it's my living space, so I guess everyone is a bit different.

mattwnz

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#1995010 12-Apr-2018 17:25

Absolutely. My point was more that agents can put a lot of pressure on a buyer, and not to get sucked in by emotion and make a rash decision due to agent pressure. So people shouldn't feel that they need to be forced into anything that the agent wants, because the agent works in the best interests of the seller, not the buyer. This is why some people would benefit from using a buyer agent, as it could save them a lot of money. As the buyer, people do have a lot of control, especially on a house where they maybe the only serious buyer at that pricing level, and the only sticking point is price. I guess it is a different situation though, if there is a lot of demand for a house, including in Auckland (maybe not so much these days), or a special architect designed home, where you literally may have 20 people bidding. I have seen a recent architect designed one in Wellington that had 20 tenders for it, where a regular house would likely only get a handful of tenders. But it seems when there are a lot of bidders, the auction or tender price that has been set, will usually be exceeded anyway.

MurrayM

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#1995361 13-Apr-2018 11:35

mattwnz:

Absolutely. My point was more that agents can put a lot of pressure on a buyer, and not to get sucked in by emotion and make a rash decision due to agent pressure. So people shouldn't feel that they need to be forced into anything that the agent wants, because the agent works in the best interests of the seller, not the buyer.

Exactly my thinking. I don't like the idea that the seller's agent is trying to manipulate me to screw every last cent they can get out of me. Probably why I avoid auctions!

tdgeek

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#1995368 13-Apr-2018 11:50

Disagree, as these chats are part of the auction, the hammer hasn't fallen. Bidding stops before reserve. So what if the auctioneer/agent/whoever seeks if there is an opportunity to get past the impasse? If no go, its passed in. 50% of auctions pass in. But if the chat gets it over the line, then the buyer and seller are happy. When this happened to use both times when selling, the auctioneer then announced its been sold, bang went the hammer, now the auction is concluded

If you didnt have that chat then buyer is back looking again and seller back selling again, whats the issue?

tdgeek

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#1995371 13-Apr-2018 11:54

MurrayM:

mattwnz:

Absolutely. My point was more that agents can put a lot of pressure on a buyer, and not to get sucked in by emotion and make a rash decision due to agent pressure. So people shouldn't feel that they need to be forced into anything that the agent wants, because the agent works in the best interests of the seller, not the buyer.

Exactly my thinking. I don't like the idea that the seller's agent is trying to manipulate me to screw every last cent they can get out of me. Probably why I avoid auctions!

Forced? Manipulate? The buyer has 100% control, they bid, then they stop. If they had the chat and took the number up a but and got the home, they win. But they can also say, no, that's me done, and walk away. If anybody gets forced to buy a home, they should have got someone to do it for them

tdgeek

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#1995375 13-Apr-2018 12:03

MurrayM:

Exactly my thinking. I don't like the idea that the seller's agent is trying to manipulate me to screw every last cent they can get out of me. Probably why I avoid auctions!

In that chat, the buyer and the buyers agent are doing exactly the same thing

If it was an offer and acceptance sale, its the same. The seller wants more, the buyer wants less. Both ways if they get to a number that works for both there is a sale

mattwnz

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#1995419 13-Apr-2018 12:33

tdgeek:

In that chat, the buyer and the buyers agent are doing exactly the same thing

If it was an offer and acceptance sale, its the same. The seller wants more, the buyer wants less. Both ways if they get to a number that works for both there is a sale

Although there isn't the same sort of pressure, as having to do it in an auction room on the spot where you also have other people waiting. For agents to ask if they can borrow extra money from family or friends just puts more pressure, and if the bank wasn't able to lend them enough, then borrowing more from elsewhere isnt a wise idea, ans banks will only lend an amount that they believe you will be comfortable paying back. Borrowing from friends or family is often never a good idea(from first hand experience), and if doing that, it needs a professional contract anyway, which takes time to arrange.

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#1995444 13-Apr-2018 12:49

In a house auction, there are only a number of possible scenarios (keeping in mind some people need to sell, some people would sell if they get a certain amount, some people are in different situations altogether)

1. Multiple bidders bidding above reserve, profit.

2. Single bidder bidding to reserve, profit.

3. Multiple bidders, not meeting reserve

a. negotiations with one of them seals a sale, profit

b. buyers don't want to meet seller's price, seller not dropping price - house then is marketed with a price, or "by negotiation" with or without deadline, or sale negotiated with interested parties gained during marketing (a bit like 3a, but taking a few days longer, maybe with extra conditions etc)

4. Single bidder not meeting reserve. Same as 3 a, 3 b.

5. No bidder, same as 3 b.

6. House is sold before auction, profit.

tdgeek

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#1995450 13-Apr-2018 13:00

mattwnz:

tdgeek:

In that chat, the buyer and the buyers agent are doing exactly the same thing

If it was an offer and acceptance sale, its the same. The seller wants more, the buyer wants less. Both ways if they get to a number that works for both there is a sale

Although there isn't the same sort of pressure, as having to do it in an auction room on the spot where you also have other people waiting. For agents to ask if they can borrow extra money from family or friends just puts more pressure, and if the bank wasn't able to lend them enough, then borrowing more from elsewhere isnt a wise idea, ans banks will only lend an amount that they believe you will be comfortable paying back. Borrowing from friends or family is often never a good idea(from first hand experience), and if doing that, it needs a professional contract anyway, which takes time to arrange.

Same in reverse in fact the seller has more pressure, invariable the house sale leads to something else. New build, conditional offer on another home. The buyer holds all the cards. Why not tell the seller to reduce and borrow from family to make up the shortfall? And when the buyer says they are maxed out, is that true? Or is it part of the game? The auctioneer is trying to get the last cents, the buyers agent is doing the same. There is not nice and honourable party there, they are both negotiating. Both can say no, and often do.

eracode

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#1999704 20-Apr-2018 10:04

@billgates Interested to know what happened.

Sometimes I just sit and think. Other times I just sit.

billgates

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#1999712 20-Apr-2018 10:21

Auction for house in question that we put in offer for is end of next week.

I did however recieve a phone call from agent of the house we went to auction for and lost to vendor bid and agent not passing our offer on negotiating table to the vendor. Asked if we were still interested in buying the house and will reduce the price down for us back to $1mil 40k which it was prior to auction and few hours later was bumped to $1mil 70k after auction failed. I told the agent that I will think about it.. Not going to happen with them anyway.

Do whatever you want to do man.

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