During an auction, the auctioneer makes a bid on the vendor's behalf. What is this called, and when is it lawful?
Correct Answer
B) Vendor bidding, lawful if the right was disclosed and the bid is announced.
A vendor bid is a bid made by the auctioneer on the vendor's behalf. It is lawful where the conditions of auction disclose the vendor's right to bid and the auctioneer announces the bid as a vendor bid when making it. In NSW and Victoria only the auctioneer may make a vendor bid; the vendor bidding personally, or getting someone else to bid for them, is illegal.
Why This Is the Correct Answer
A disclosed vendor bid, made by the auctioneer and announced as a vendor bid, is lawful. It lets the vendor move bidding towards the reserve without misleading bidders about where bids are coming from.
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- → An agent in NSW quotes a property at $800,000-$850,000 but sets the reserve at $900,000. Three weeks later, the agent receives feedback that most buyers are interested at $820,000-$840,000. What should the agent do to comply with underquoting legislation?
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