Some good auction stories from the vault

Yesterday I caught up with a good friend of mine, Max. We met almost two decades ago, when I assisted Max and his partner with a property acquisition. As a lawyer who saw the paperwork side of property transactions, Max was ntrigued by the auction process., In fact, he was so intrigued that he asked me if he could trail me on Saturdays and learn the craft. Max eventually did learn the craft, completed his real estate qualification, and he worked as an emergency bidder within our business for a period. These days when we catch up, Max always asks me about auctions.

Yesterday, he said “Have you had any good auction horror stories?”

While I wouldn’t use ‘horror’ as a descriptor, his question did get me thinking about some juicy auction stories I could share with Max.

No so long ago, we had an interesting situation at an auction. The vendor set an auction reserve well above the market value of the property. To the agent’s dismay, the reserve set was well beyond the level previously discussed. With four active bidders in the crowd, the bids tapered off at very similar price points. I rallied one bidder for the right to negotiate, but their budget outpaced ours and the property passed in to them.

I had a hunch at that time. Something about the vendor’s erratic reserve price setting suggested the pass-in negotiation may be challenging for the uninitiated.

As the agent approached to shake my hand and thank me for my bidding, I told him to call me if anything went pear-shaped with the impending negotiations. And as I drove off, the highest bidders walked inside with the agent. Forty minutes later, my phone rang. Negotiations had broken down and the bidders had left. The vendor hadn’t budged from her auction reserve price, and a deal had not been done. I updated my buyers, and instructed the agent to advise the vendor that we would honour our last bid if she had a change of heart about her price tag.

By 6.15pm, my clients signed the contract with a price matching our last bid, which was $5,000 less than the highest bid. Two things had occurred that enabled the situation to play out the way it had. Firstly, the highest bidders had enough time lapse to talk themselves out of wanting the property. Despite bidding to the highest amount, somewhere in between 10.40am and 6pm, their excitement about the property waned. Secondly, the vendor had a chance to take stock of the situation. She would have considered the four bidders and the tight price range that they all bid to. And time would have enabled her to focus on the reasons why she was selling in the first place. Not all vendors can cope with the time-pressure immediately following an auction pass-in.

Another auction I recall involved a random bidder who didn’t wake up with a plan to bid at auction. I was representing a couple who had targeted a beautiful block in Melbourne’s east for the site of their forever home. The dwelling was rugged and original, and the land had no overlays. We had two other keen buyers bidding against us, and my clients had a generous budget for the property.

As the bidding slowed and the hint of success became palpable, a lady who was walking her dog stopped to watch. She interrupted the auctioneer to ask if she could go inside. I gulped and thought to myself, “She can’t be serious.” The auctioneer responded with, “No, Madam. The property was open for half an hour, and now it’s about to sell.”

She looked at the house from the footpath and said, “OK, I’ll go fifty.”

That slam bid of hers eliminated us from the runnings completely. The auctioneer double checked, and she eagerly nodded.

It was the most deflating auction experience I’d had, and my buyers were in disbelief. The contract was signed and the sale went through.

My last fun auction story for Max is about the property that I secured with a one dollar bid. It was during the pandemic when our auctions were held online. This particular property was being auctioned in a group of four other properties; an ‘in-room’ auction event.

The vendor had apparently instructed the agent to accept all bidding increments. Once the price hit the reserve, one joker in the online crowd thought it would be a good idea to bid in one dollar increments. The agent tolerated the bids for a few minutes, but as the clock ticked, it became obvious that others were getting annoyed. The other bidders awaiting subsequent auctions became vocal, and the auctioneer took a break to talk to the vendors. By this stage, I was holding the last bid.

The agent returned to re-open the bidding and stated, “Ladies and Gentlemen, we will not be taking any bids lower than $500 increments.”

This same buyer bid with his dollar bid.

The agent put him on notice and said “Sir, I will not be taking your bid. You need to bid $500 if you want the property.”

The buyer continued with his one dollar narrative. He clearly underestimated the agent’s willingness to implement this auction rule.

The hammer fell. The buyer was very unhappy, carrying on about having the highest bid. We secured the property after one of the most long and drawn out auctions I’d ever bid at.