21 May 2019

Standing by your call

As an auctioneer, a lot depends on your experience and expertise. As soon as the hammer falls, that property is sold – it’s a binding transaction.

But what do you do if someone contests your call? 

This was the topic of a recent chat with auctioneer, Peter Matthews, and what turned into a great case study for auctioneers and sales agents. 

So what was the issue?

Matthews says the auction was like any classic auction – registered bidders, spirited competition and a realistic reserve that was exceeded. Everything was going smoothly.

That is, until the third and final call.

“There were two bidders left,” says Matthews. “One to the left and deep in the crowd. The other up front and to the right. 

“The deep bidder – who we will call Mr Smith – had been waiting until the last moment to bid consistently during the auction. The bidder to the right – let’s call him Mr Jones – was surrounded by well-meaning family and was nervously confident in his style. Neither buyer could see the other.

“At the final call, Mr Jones held the bid. I did the first call and referred to Mr Smith for his interest, to no response. On the second call, I referred to all other under bidders, but there were no further offers. On the third and final call, I went back to Mr Smith, but again, no response.”

Then the unthinkable happened. “With the gavel on its unstoppable fall, Mr Smith raised his card,” says Matthews. And therein lies the rub.

What happened next?

Matthews says he immediately stated that the bidding card was raised prior to the fall of the hammer and that he would accept the bid.

“Mr Jones was silent. However his entourage was not, and was quite upset at my decision,” he says.

Matthews stated to Mr Jones and his entourage that, in the event of a disputed bid, the auctioneer is the sole arbitrator and their decision is final.

“They did not accept this,” he says. “I reiterated the position and said if they want to buy the property they will need to bid again. I also stated I would be happy to consider a more modest increment.

“I then advised Mr Smith that I expect a swifter response to his bidding, should it continue.”

Matthews says, at this point, Mr Jones refused to make any further bids and left the auction with his entourage. So he closed the auction and the property was sold to Mr Smith.

“Immediately after the auction I made a record of the event, as I saw it, for future reference,” says Matthews – an action well worth his time.

Not the last from Mr Jones

In the weeks following the auction, Mr Jones’s solicitor contacted the vendor’s solicitor to inform them that they would be taking further action. Even going so far as suggesting a caveat be lodged on the property to prevent it transferring to Mr Smith.

“The vendor’s solicitor requested all relevant information on the auction from myself and the selling agent,” says Matthews. “They then engaged with Mr Jones’s solicitors with an exchange of information disputing their claim.

“After many threats from Mr Jones’s solicitor, the property was settled to Mr Smith.”

The terms are clear, Mr Jones

Matthews says the terms and conditions of an auction are clear.

“In the event of a disputed bid, the auctioneer is the sole arbitrator and the auctioneer’s decision is final,” he says. “Additionally, the auctioneer may refuse to accept any bid that they believe isn’t in the best interest of the vendor. 

“The first of these terms is critical to voice confidently immediately after an incident. Time is the enemy in these situations, and auctioneers are given a responsibility to be decisive. It is not appropriate to defer the decision to another party, such as the vendor or selling agent, as they have no authority.”

Matthews says auctioneers are licensed in NSW and, therefore, are educated and aware of the law and their responsibilities. 

“The public at large is not and this is why it is important to communicate the terms and conditions that exist up front and not just accept that they are understood,” he says.

“It may take a little longer – and while not legislatively required – explaining the terms and conditions clearly provides transparency and clarity, and builds confidence in all the parties that you know what you’re doing and are acting in a professional capacity.”

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