One of the questions at our recent Auction Boom seminar was “what if there is only one bidder?”
I believe this isn’t an issue and can still work in the favour of both the seller and the buyer.
At an auction you often have two competitive environments. The first occurs with bidders who have the first opportunity to buy, and the second includes those buyers who aren’t in a position to bid, such as subject to finance, who are waiting to see if the property is passed in so they can make an offer.
When there is only one bidder you might ask why the seller doesn’t let the property get passed in and let all potential buyers compete together, after all there is the possibility just might get a higher price.
While that might happen, the huge advantage of dealing with a bidder is that they will make a cash offer, one that is unconditional and not based on the need to get finance arranged or for another property to sell. The seller gets a quick sale, and quick settlement. If you choose to wait you take the risk that a subject to finance buyer may take a while to get their finance approved and it may fall through, or a subject to sale buyer may take a long time to sell their home.
As for the bidder, why would they want to wait and take their chance competing with other buyers, losing their exclusive opportunity to secure the home.
So how does an auction work with just one bidder?
The auctioneer uses vendor bids, and in WA you are allowed to use up to 10 bids, to indicate to the buyer where they need to be to secure the property. Essentially you are negotiating under auction conditions to get a result.
Even having no bidders is not a problem, you can still have a very competitive environment when a property is passed in. And you can still achieve a very good price, but you may lose the benefits of speedy resolution to the sale.