Insider Secrets: I am not quite sure whether it is out of pride or pure habit that in the speech I give before every auction I record its number in the sequence of auctions that I have run.
As it happens, the one where I took the rostrum was my 185th. Perhaps you will say that there doesn’t seem anything particularly significant in that, and you would be right. Indeed, I was bragging to one of my competitors shortly afterwards, rather proudly, and was distinctly put in my place when he, a practised campaigner who visits auctions at venues all round the country, was complacent enough to comment that he was looking forward to his 1,000th!
My sale six weeks before this one was buoyant. Four houses in particular, kept especially for the end of the sale, attracted significant attention because they were larger inter-war semi’s ready for refurbishment situated comfortably close to a new motorway. In that instance, I misjudged their values; the guidelines were much too low. The public knew better than I and the result was a packed room, hectic bidding and four sales at nearly twice my reserves.
With just under 20 lots on offer, I thought I could sail through quickly in a room that was certainly not as crowded as it had been six weeks prior. That we did, and to my surprise the level of demand was exceptionally good; there was strength in the bidding, our success rate was high and our proceeds in excess of £750,000.
Lot 5 was a very solid, vacant ex-bank premises on a main trunk road. The bidding was firm but not spectacular and the successful bidder - a lady in red attire with a red hat who had bid firmly and determinedly all the way through - raised her paddle to scoop the prize at £70,000. Without more ado I moved on to the next lot whilst my staff identified the bidder from her paddle number, and went to take her across to sign and exchange the contract. She indicated, as quite a few buyers do, that she would do this shortly, and subsequently spoke to my Auctions Co-ordinator indicating that she was going out for “just a minute or two” to eat her hamburger and onions, which were by then making themselves very obvious by the strength of their smell. Either then or shortly afterwards the young boy who had been with her in the sale room also walked out. By the end of the auction neither they, nor the hamburger, had returned to the room. After waiting for half an hour she had still not returned and was not replying to telephone messages.
Matters became more disturbing when our Auctions Co- ordinator and I visited her address (in a district that was not all that prepossessing) half an hour later to find her house empty. A note I left through the letter-box produced a telephone call from this ‘bidder in the red hat’ the following morning, when she told us that she had “bid for the wrong property”. She claimed she believed that she was bidding for Lot 9. This claim seemed most unlikely since lot 9 had a reserve of over £100,000 higher than she had bid for lot 5! Furthermore, it was a pair of houses which has been used as a hotel and more recently had been converted into flats. Although she was present in the room at the time that lot was offered, she had not bid for it. Unfortunately, in fact it was withdrawn.
The position has not been resolved. The vendor has been to see her and is still hoping to encourage her to buy the ex-bank. She claims she is looking for premises in which to open a nursery. Personally I doubt that the building will be appropriate for nursery use and do not expect her to complete the purchase. I have already reserved a slot for the property in my next auction catalogue.
This story rather prompts me to discuss, for our readers’ benefit, what the vendor ’s and buyer ’s positions are in such circumstances.
Firstly, the signing or exchanging of a contract or memorandum is not a fundamental necessity for a sale in the auction room. The moment on which the bidder enters into a contract on his or her behalf and the auctioneer enters into a contract as agent for the vendor is the point at which the gavel bangs down. The exchange of documents after that is a convenient way of recording the terms of the sale that has been entered into but is not, as it would be in a sale by private treaty, a necessity to ensure both sides’ obligations. Therefore, our ‘lady in the red hat’ has contracted to purchase. Usually, the General Conditions of Sale in an auction give the vendor the right to revoke the contract if the purchaser does not pay over the appropriate deposit within a reasonable time after the gavel has fallen. That right is usually expressed as to be at his choice. Should the vendor not make that choice, then the auctioneer is entitled to sign the contract on behalf of the purchaser as long as it is done in the saleroom within a reasonable time. Interestingly, the auctioneer can also sign the contract on behalf of the vendor. If he chooses to do so he would have a situation where two contracts were exchanged with the same signature being written on behalf of both parties, something I have enjoyed doing five times in my career. In the current case, neither half of the Memorandum has been signed, nor has the vendor revoked the contract.
By the time you are reading this article we will know whether the purchaser decided to go ahead or not. If she does not, then the solicitor acting for the vendor could, within the time stipulated in the General Conditions of Sale (usually a month) serve a notice on the purchaser to complete. If the purchaser fails to do so then she is in a rather invidious position. Should a deposit have been paid then this would be forfeit and the vendor would be entitled to retain it. Furthermore, the vendor can then choose to re-offer the property. He has a duty of care to the ex-purchaser and has to obtain the ‘best price obtainable’. After the resale he is entitled to retain the deposit, and if his losses and costs have been greater, entitled to take proceedings against the original purchaser for his losses over and above the amount of that deposit. Those losses will include the difference between the price at which he sold, and the original price in the first abortive sale, plus his costs, which will certainly include his auctioneer ’s and solicitor ’s costs on the second sale.
Personally, I am amazed that in the knowledge that my firm always sells in numerical order, that in this instance there was no unusual withdrawal of lots, and the care that I take to ensure that the property is fully described from the rostrum by lot number, address and description, that anyone can bid on the wrong lot at my sales. Yet in my career it has happened approximately once every 200 lots - if my apparently disorganised bidders are telling the truth.
The lesson here is: listen avidly to the auctioneer ’s introductory speech. In the case of my ‘lady in the red hat’ we know that she came into the auction late and probably didn’t hear any of my opening remarks. She was obviously not a PAN reader! Her failures could well have cost her dear.
During any auction, however nervous you are, do please concentrate on the proceedings, listen attentively throughout, and be very sure you bid for the right property.
The Secret Auctioneer