To continue on with my Auction Series, this week I’ll explain the concept of the vendor bid. To view last week’s blog explaining the difference between a private treaty and an auction, click here.
In NSW, a vendor or seller of a property is entitled to make one bid on their own property at auction. This rule was introduced in 2003 with the theory behind it being that often buyers are reluctant to make the first bid. There is always those anxious few minutes where everyone sits on their hands so the vendor bid is useful to kick things off!
There are rules that apply to the use of a vendor bid:
- A vendor bid cannot be made unless the auctioneer has, before the commencement of the auction, clearly stated that a bid may be made by or on behalf of the seller
- If the vendor bid is used at the auction it must be clearly announced at that time
- If the property passes in with a vendor bid as the last bid of the auction, the result must be published as ‘vendor bid’ and not ‘passed in’. For example, the Sunday Telegraph or Sun Herald will publish the result as $600,000 VB.
- If the vendor bid is not the last bid, i.e. there are other buyer bids following the vendor bid but the property has still not reached its reserve and passes in, then it can be published as ‘passed in’.
Normally the auctioneer submits the vendor bid on behalf of the vendor, and the vendor bid can be made at any point during an auction.
