When selling or buying property at auction, it’s important to know your rights and understand the conditions of the auction event (whether that would be on or offline).
To this end, you’ll need to understand the position of the auction house – and what they may or may not do in relation to your lot or bid. For example, can an auctioneer reject any bid you make?
As a professionally-regulated UK auction house, in this article, we explore whether companies like ours are obliged to accept all bids made on a property, building or plot of land.
Does an Auctioneer Have to Accept a Bid at a Property Auction?
It is, of course, important for an auction lot to receive multiple suitable bids. If this doesn’t happen, the property will fail to sell or may be withdrawn.
To this end, it is within the auctioneer’s best interests to accept as many valid bids as possible. But must they accept each and every one?
Official UK auction regulations state that an auctioneer can reject any bid or withdraw any lot at their own discretion – without having to provide any reason.
Why Might an Auctioneer Reject a Bid?
While no auctioneer is obliged to publicly provide a reason, there are a number of situations where auction participants and observers can see why a bid has not been accepted…
The Bid Did Not Meet the Reserve Price
The amount offered does not meet the reserve price established between the seller and the auctioneer.
What is the Reserve Price?
This figure represents the lowest bid a seller will accept. The seller and the auctioneer agree to this amount privately in advance of the marketing and bidding process. The reserve price usually lies below or equal to the guide price determined by the auction house.
Should a bid be lower than the reserve, it will automatically be rejected.
The Auctioneer Suspects the Bidder of Dishonesty or Fraudulent Activity
Most auction houses will undertake checks on all sellers and bidders upon registration. These are necessary to prevent identity theft and fraud.
If there’s a problem during this process – or anything of concern is flagged – the auctioneer may reject any bid attempts.
Note that this issue usually only appears with traditional “in the room” auctions. Here at Property Solvers Online Auctions, buyers will not be able to bid without full approval.
The Auctioneer Believes that the Bidder May Have Made a Mistake
If an auctioneer feels strongly that there has been a misunderstanding regarding a particular lot, its value or guide price, they may turn a bid down on that basis.
After all, when it comes to traditional auctions, once the auctioneer accepts the bid and the hammer falls, the buyer and seller immediately enter into a legally binding contract.
The bidder effectively becomes a committed buyer. If, for instance, he/she cannot make the payment within the set timeframe, the seller can take legal action and put the buyer in the position of losing a significant sum of money.
If there is any suggestion that a bidder does not know what they are “getting into”, complications may be easily avoided by the auctioneer disregarding their bid.
In online auction environments, as long as the auctioneer verifies all bidders (before bidding begins) – issues of this sort rarely appear.
With modern method auctions, should the bidder have made a mistake after the fall of the hammer, he/she may be willing to lose the non-refundable deposit. In our experience, however, things usually run smoothly.
What Happens if an Auctioneer Rejects My Bid on an Auction Property?
If you attempt to place a bid on a property and the auctioneer rejects it, there are a few actions you can take.
It may simply be that your initial offer did not meet the seller’s reserve price. You can easily resolve this by bidding a higher amount within the set timeframes of the auction.
However, it is vital that you budget carefully prior to the auction. You need to decide on set bid amounts, including the highest figure you are willing to bid.
Never bid more than you can afford at unconditional (traditional) auctions, as you will be legally liable to pay the deposit and fees should you win.
If the auctioneer rejects your “final offer”, don’t attempt to bid higher. There will be other properties better suited to your budget at future auctions.
Make an Independent Auction Offer
Perhaps the auctioneer has rejected your bid, but has later withdrawn the lot. Other times, the lot may have failed to sell at all.
If either is the case, you still have an opportunity to make an offer. Many sellers will accept post-auction bids from buyers.
After all, sellers may well be keen to sell the property, even for an amount below their reserve price. They may refuse – but it’s almost certainly worth trying.
Note that this must be done through the auction house.
Revise Your Auction Registration Information
If you have failed the auction house’s background checks, try and find out why.
You may have failed to provide them with sufficient identification documentation, proof of funds or other information. Make any changes that seem necessary before approaching any other auctioneers or bidding on any further lots.
The auctioneer’s office will be able to guide you accordingly.
Ask the Auctioneer
As mentioned, an auctioneer is not bound to give any reason for rejecting a bid. However, there is no harm in asking what went wrong. They may not give you an answer. However, if they do, it could give you valuable insight.
To browse a wide range of superb lots, check out what we have on offer here at Property Solver Online Auctions. For further information about our services and practices, feel free to get in touch with our team. We’ll be very happy to help you…