Benjamin Tobin, chartered surveyor and director of Strettons, has been selling properties by auction since 1979. Each month he has corrected our common auction misconceptions, giving us the real answers from the Rostrum, but now he opens the floor to your questions…

Over the past few years there have been a stream of television programmes on the subject of buying properties at auction. Frequently these have followed a similar format; the camera follows a buyer or buyer around the property market, inspecting buildings, most frequently houses or flats (but occasionally small business premises) with the suspense provided by following the auction process and watching either the joy or the disappointment of the successful bidder at the auction.

I have featured on numerous such programmes and I am still questioned by clients who see me on daytime satellite TV selling a property that went through our auction sometimes several years earlier. One lady tells me that her trips to the gym would not be the same without me selling (or occasionally not selling) a property.

But why the fascination with part of the property market that the vast majority of buyers never get to engage with? My guess is that it is the element of the unknown with the roulette of whether the buyer, the seller or sometime both, are overjoyed, disappointed or merely satisfied with the price, particularly when competition forces them to pay over their target price!

Bridging Lenders frequently use auction and yet sometimes without a detailed understanding of how it works. The rational seems to be “it does work, so don’t get involved”.

In any event, there is never any shortage of questions when people (whether or not they are from a property background) find out that I am a property auctioneer.

With that in mind I have gathered some of the most frequent questions and answers which will follow as a series over coming months, but why not start at the beginning.

What is “off-the-wall bidding”? How often does it occur and how can you spot them?

 

The essence of an auction is to get competitive bidding – the aim of the pre-auction marketing is to get a number bidders in the room, having inspected, completed their due diligence, organised their finance, cheque books in hand, ready to bid.

 

It is the competitive bidding that is the key to success at auction and sometimes this is harder than it looks. It is not unusual for us to know that bidders are in the room for a lot but they don’t open their mouths or put their hand up. After the lot is withdrawn, unsold they come to make an offer and when asked, say that they were nervous, or shy, or just wanted to see whether there was any other bidding.

 

For this reason, almost all conditions of sale reserve the right for the seller to bid, or for the auctioneer to bid on his behalf. This is known as “bidding off the wall”, “bidding off the chandelier” or “puffing”.

 

At its most basic level, it is fictitious bidding, however the law recognises that it is a necessary part of the auction process and thus regulates, rather than prohibits it. The auctioneer can bid up to the reserve but not at, or in excess of it, furthermore he should not make consecutive puffed bids.

 

What is the rationale?

 

As I have said above, it can actually be helpful for bidders. If they come in with a low bid, below reserve, they are not going to be able to buy and if they are the only bidder, then without the auctioneer bidding the sale would go nowhere.

 

Of course if the property were to be withdrawn, the bidder could try to buy after the auction but then he is competing with all the bidders who make a practice of waiting to see the unsold lots in the hope of picking something up cheaply as a deal, but not if you are interested in a specific property.

 

It does happen often and sometimes frequently. As to how you can spot it, that is really down to the skill of the auctioneer but there are some clues:

 

- Does the auctioneer ever withdraw a lot where there hasn’t been a single bid?

 

- Do repeated lots get withdrawn just one or two bids below reserve

 

- After a lot is withdrawn or sold, do any of the auction team go out into the room to talk to unsuccessful bidders

 

- Does the auctioneer ever point out the unsuccessful, or under bidders to his colleagues?

 

Puffing is an integral part of the auction process and so long as it is used with restraint and common sense, it is of value. In my experience, bidders quickly become distrusting if they can see that an auctioneer is abusing it.

 

Benjamin Tobin

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