Before the auction work out a figure which is your absolute limit and write it down on a bit of paper. So if you are prepared to pay up to £105,000 write that down and do NOT exceed it. Otherwise you will find that you have paid £135,000 - decide in haste, regret at leisure.
Do I do this? Um, yes, generally speaking. But when I don't I always regret it
In the USA, a real estate auction is best compared to a religious revival meeting - everybody gathers in a big tent and the auctioneer raises the tempo to fever pitch. There will be crashing cymbals, drums and a band of acolytes urging on the bidders in a state of hysteria - a pretty girl will literally come and stand right in your face screaming at you to bid more money. Impossible to describe unless you have been there (I have so believe me)
If she stripped off naked and climbed on top of you, you would just assume this was all part of the normal process - the atmosphere is so electric
Then when it is all over, there will be a delay while the owner decides what to do - in my experience of several such auctions, what he generally decides to do is nothing. He declares the auction nul and void and everybody goes home. A nice day out and nobody lost any money - good result
In the UK, auctions are sombre affairs. Generally, a catalogue will come out three weeks before the auction and you decide which lots you are interested in and then get your solicitor to carry out legal enquiries. Then the auctioneer invites bids and if yours is the highest bid he brings down the gavel and that is it. You will then be invited to pay a 10% deposit - by cheque normally. A month later, legal completion takes place.
Things you need to know:
There are two types of property you can sensibly sell at auction - those that are impeccably good where you will achieve the very highest price for an item in great demand. Or indescribable garbage which you need to get rid of at any price.
To collude with another party before the auction is a criminal offence
When the gavel descends there is a legally binding contract between you and the seller
Auctioneers do NOT allow questions during the auction (see below to see why)
An average auctioneer will sell about 20 lots per hour so you are not rushed - unlike some types of auction where the auctioneer literally knocks down a lot in seven or eight seconds.
Each lot will generally have a guide price which in theory is the auctioneers guess as to what it will sell for. But in practice, this is a "come on". If the auctioneer thinks it will sell for £250,000 they will put on a guide price of maybe £200,000 to encourage people to show up and bid.
Each lot will have a reserve price below which it cannot be sold
Auctioneers literally take bids "off the wall". This is legal and necessary. Suppose the lot you are interested in has a reserve (unknown to you) of £100,000. As it happens, you are prepared to go up to £110,000 if necessary but you are the only bidder in the room. So you bid £90,000. At this point the auctioneer will take a bid off the wall for maybe £95,000 and then invite you to bid £100,000. But you actually bid £96,000 so he invents a bid of £97,000 but now it get tricky because you bid £97,500 and he has to manipulate you into actually bidding £100,000. If he gets confused he can look like an idiot to all the cynics who understand what is happening (ie me). But generally he gets it right and you go home having bought the lot unaware of what actually happened.
The auctioneers will use you ruthlessly if you express interest in a lot prior to auction. But if you don't express interest they may sell it prior to auction to another party. I was told by an auctioneer last year (2018) that a lot they were selling in Scotland would be mine if I bid £750,000 on the day. So I went all the way to London and bid right up to £1.5m for the lot but was outbid. The party who outbid me came across for a chat and it turned out they had bid over one million prior to auction. So, the auctioneer had lured me there purely to drive up the price. Bastard.
You can make a bid via phone if you are so wealthy that the odd ten or twenty thousand pounds does not matter. Because if you bid on the phone you have no idea what is really happening and ignorance is always expensive.
In my opinion, the only genuine reason for sale is death - everything else is an excuse
In 1979 I started an auction company in Manchester called Northern Property Auctions. I ran round Manchester persuading people to put lots in the auction and produced a nice catalogue for the auction which took place every couple of months in the Midland Hotel - the best hotel in Manchester. I am not a qualified auctioneer and so I did a deal with Howard Gooddie who was the senior partner at Longden & Cooke.
In one particular auction we had four vacant houses in Oswaldtwistle which were offered without reserve. Just as Howard was about to offer them, a man stood up and said "if these four houses are empty, how come they all have bottles of milk outside their doors?". Obviously, we had no idea if that was even true but everybody thought it was very funny. Now you know why auctioneers no longer allow questions during the auction.
Then Howard invited bids but nobody was interested. Eventually, I turned to him on the rostrum and said, very loudly. "I will give you £80 for them". Again, everybody thought this was hilarious. Howard then explained to the audience that this was totally legal (which it was) but he was not about to give them away at that level especially to somebody sat next to him on the platform. He then spent several minutes (and I do mean several minutes) trying to get another bid.
But nobody was buying and eventually he knocked them down to me for £80. Yes, I do mean twenty pounds per house. If we ever meet I will tell you what happened next but really you do not want to know - trust me.
Bob Cory
Modified on 16/09/2019 at 08:30:46 by ℗ Bob Cory