chris the property man

Vendor bids are quite clearly announced so that the bidders know that it is a bid on behalf of the vendor. They can only be done up to the reserve price. Once the reserve is met, no more vendor bids are allowed, by law. Until the reserve is met, the property is not going to sell.

I can't see why this would be seen as a con. In the old days bids were 'taken off the wall' - same as a vendor bid but unannounced and even after the reserve was met. That was a con. The recent law changes have cleaned the whole process up to make it totally transparent.

Generally, people that won't buy or sell at auctions don't understand them fully. Once you know the ins and outs there is nothing to hate about them. Yes, you may end up paying more than you would had it been advertised with a price that was lower than where the bidding ended and you can't have any conditions (so you must have done your due diligence etc. before the auction), but other than that, it's a quick, instant way to buy/sell a property.

Back in the UK it is common practice for buyers (and sellers) to have the rug pulled out from under them on the day that the sale was meant to complete (settle) - called gazumping/gazundering. Now that's what I call a con. You can lose a lot of money and be left up the creek without a paddle by an unscrupulous buyer/seller.

Buying or selling a house will always be stressful, expensive and a pain in the a***. But, unless you want to rent forever and pay off somebody elses mortgage, it's a necessary evil. Either read up and learn all that there is to know about it or hire an agent you can trust to guide you through it.

Chris

chris the property man

By 'we did not invent the fee system', I am referring to us individual Real Estate Consultants (an Agent is actually the business owner that runs the Real Estate branch) - we do not have any say over what the company charge - that is set by the company. Obviously, somebody in the Real Estate game came up with this kind of fee based system many many moons ago but as salespeople, we can only work within that framework.

Chris

Synky

What would you say is due diligence before bidding in an auction? I've never done it so I'm curious.

Also, not all of the UK has gazumping....

Thanks Chris.

TommyLuck

Very true. The Scots have their house in order on this one

Synky

One in a thousand things ain't bad!

Snap Shot

What an intelligent answer ! My SIL went to some open homes/auction homes in Auckland last year and just watched to see how it went. Time and again the property was, 'passed in'. I didn't understand what this meant. I asked her and she gave my husband and I an overview of the bidding process. Basically, 'passed in' means, 'didn't reach the reserve price'. Her view was that the property was overpriced (which is code for, 'couldn't afford it').

Due diligence means, I assume, get the survey done, get your finances in order (so you can back up your bid, i.e. put your money where your mouth is.) plus anything else that needs to be done prior. However, just like Britain, if you are not the successful bidder, that's all that money spent on 'stuff required prior to the bid' for nothing.

Vendor bid ?

My kiwi husband is amazed how dreadful the house buying/selling process is in Britain. He much prefers the Scottish sealed bid system. Albeit, the two times we bought/sold a house it all went smoothly in Britain. We were in a chain of two here in NZ. Our vendor was buying a vacant house and our finance was in order - sweet as !

I'm aware of several nightmare stories of being let down/screwed on completion day. A friend of mine had her house all packed up and ready to go when the vendor of the house they were buying pulled out of the sale ! They had to move back into their own house without actually leaving.

chris the property man

The minimum checks as way of due dilligenge are checking the Certificate of Title is as it should be and that you know where the boundary lines are, and the LIM (Land Information Memorandum) to ensure all codes of compliance/certificates are in order. Get your lawyer to check over the Sale & Purchase Agreement as well - he might suggest some amendments to it.

As well as this you need to ensure that you have your finance sorted and done any building/engineers reports, thermal imaging reports if a possible leaky home etc. A registered valuation can help determine the value, but are not necessarily accurate - get five valuations done and you could get five values and it could sell for something more or less. As such, be wary of relying too heavily on these.

Yep, you're correct - Scotland has a fantastice system where no gazumping is allowed. Wouldn't it be great if that's how it worked here?

chris the property man

I had several nightmares trying to both buy and sell back in England. It is an absolute minefield. The NZ method is far from perfect, but give me it over the English method any day of the week.

MrsFychan

Chris - do you think having a pool in the garden adds profit or detracts?

got a pool man coming in an hour, see my rant about paddling pools and 4" or taller needing to be fenced.

Woodlea

The Scottish system is awful. Houses are advertised at offers over X and then the vendors can want up to 20% more, meantime people are putting in sealed bids and guessing how much others are bidding, if you lose you still get gazumped you just never know by how much, in the meantime you've wasted 1000 quid on a survey etc. Terrible system.

chris the property man

I see what you are saying, but everyone knows that the offers are expected to be around 20% above the advertised price - not sure why they don't just incorporate that into the advertised price!

Sealed bids don't allow actual gazumping, just being beaten by a better bid. Once the successful bid has been accepted and everyone notified, that's it...done.

In the English sytwm you can have an offer accepted, go through the whole process of preparing to move and on the day of completion/setllement, either side can change their mind and pull out. Now that's painful!

There is no perfect system. Generally, wherever you live there will be the people that are for and against the adopted system. In NZ we have a system that has it's negatives, but in general it's not all that bad... in my humble opinion, anyway.

Robbie2010

An auctioneer only announces that there may be vendor bids before the start of the auction ... during the auction he does not disclose where the bidding was coming from.... i.e "vendor bid $xxxx"!

If the property is "passed in" when there have been vendor bids then the prospective purchaser(highest bidder) will be negotiating from a false position.

I you see this as a big con trick as being OK ...then I can see why your an estate agent!

Synky

It's a bit different in Scotland now. Most prices are now either fixed - so first offer at that gets it - or in the region of so there is a bit if wiggle room. Most houses only have one or two interested parties due to the buyers market so often doesn't go to sealed bids. I've never had to do one. Also the home report means no surveys for younger houses necessary.

Synky

I'm terrified of auctions and all that stuff you be to do first and get bid out? Nightmare.

Anyway, not there yet!

chris the property man

I don't know what auctioneers you have had experience of but I can tell you now that ALL vendor bids should be announced as such by the auctioneer. If he does not then he is breaching the code of conduct for real estate auctioneers. He can be reported for this breach and could lose his license to run auctions. Doing it unannounced is going back to the dark days when taking bids "off the wall" was allowed and standard practice.

You have either not been to an auction since the laws changed, misunderstood or have been present at an auction that was run ineptly and illegally.

As I have already explained, without vendor bids a lot of auctions will get passed in and have basically been a waste of time. Once the vendor has set their reserve then bidding has to go up to that a least for a successful auction where the hammer is brought down.

My opinion is that this is not a con trick if you understand what is happening and why and the auctioneer does his job right. You obviously don't agree and that is fine, but please don't start with the insults. I'm not on this site to try and sell the NZ real estate industry and the auction process. I am simply trying to educate people so that they can make an informed opinion, not a half baked one. A little knowledge can be a dangerous thing. However, I realise that there will always be people that have already decided that all real estate agents are, what was it, "bottom feeding scum". Whatever.

Chris