One of my main bugbears with bidders at auction is sometimes that they play a game that only they seem to understand.
What I mean by that is they outwit themselves.
They think that bidding at auction requires some type of game, but it’s one that they often end up losing.
In a battle… with themselves
An example is an auction where the vendor was highly motivated to sell and a buyer who was super keen and ready to go financially and emotionally.
They were the only serious buyer leading up to auction day.
On the day, they registered to bid, but a second unknown party also registered, however, it was clear they were not really ready to buy so they weren’t a threat as such.
The situation was communicated to the keen buyer and we started the auction – even though the new bidders was unlikely to be serious or even to have the deposit ready to secure the deal. And then, well, nothing.
Now that’s not uncommon at all, but we knew that the serious buyer was prepared to pay a price above the reserve, and yet they didn’t make a solitary bid.
The buyer also knew that the other party was waiting for the property to be passed in to negotiate post-auction terms, which meant they alone were in the box-seat. All they needed to do was make a bid that satisfied the seller and the property was theirs.
But they did nothing.
We advised them that if the property was passed in, then everyone had the right to submit their best offer to the seller and they might end up losing.
Or they might end up paying well above what they would have paid if they had bid at auction.
Still they decided to wait for… something that I’m still not clear about! So, we had no option but to pass the property in, which prompted the serious buyer to ask for a price indication before we did so. We advised they should place a bid, which would either be accepted by, or negotiated with, the vendor.
Yet, they still opted not to do that, so the property was passed in.
Losing the advantage
During the post-auction negotiations, both buyers made an offer, however, a third party who hadn’t registered made an offer that was subject to sale, but which was significantly higher than the serious buyer’s, which was still a cash unconditional one as well.
The sellers opted to take the subject to sale offer.
It’s still difficult to understand what game they were trying to play.
Perhaps they were nervous about bidding publicly, however, it would only have taken a mere moment of courage to secure the property for a price within their budget.
Plus, that auction had almost the most fortuitous buying conditions you could have – there was an opportunity to directly negotiate with the seller and pretty much no competition.
And, yet, still they did nothing.
Plus, it wasn’t like their offer post-auction was any different to what they would have bid during the auction.
It’s clear that buyers shouldn’t play the game if the game doesn’t exist and sometimes a few seconds of courage can produce an amazing result.
And at the end of the day, auctions allow you transparency and that situation allows you to make informed decisions – as long as you actually bid.
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