Property Auctions: Off-the-Wall Bidding Explained
At property auctions, 'off the wall bidding' is where an auctioneer invents a bid to drive bids in the room higher towards the reserve price. It sounds bad but it isn't. If the reserve price isn't met then the bidder, being pushed higher, could not have bought the property, anyway.
Off The Wall Bidding
Amy: Can you tell me what the term, 'bidding off the wall', means?
Andy: "Off the wall bidding", is an auctioneer's term. It is where an auctioneer will make up a bid, essentially.
People, when you first say what it is, think it's a bit underhand but I'll explain it and why it makes sense.
So, obviously, a property auction only works if there's more than one person bidding on a property and, as we've covered, there will be a reserve price that secures for the seller, an amount that we can't sell below.
So, the auctioneer is allowed to do what's called, 'bidding off the wall'.
As long as it's below the reserve price, they can invent a bid, to encourage other people to bid.
So, if you were selling a house for £100,000 and the reserve was £100,000. If there was a bid of £90,000 but there was nobody else to bid, then you, as an auctioneer, could bid off the wall.
There's no other way of getting that person from £90,000 to the £100,000 that we could actually sell it for.
And we don't know, the bidder might be prepared to pay £120,000 for example.
So, what the auctioneer would do is bid off the wall at 95,000, after which, the genuine bid in the room would be up to 100.
And at that point, we're able to sell the property. I can't stress this enough... that only happens below the reserve price.
So, we're not making somebody pay more money than they could have done otherwise. So, that bid at 90 could never buy the house because it was on reserve at 100.
So, it's a very fair and honest way. Not a lot of people know it's happening. The auctioneer acknowledges a bid that didn't happen pointing to 'the gentleman over there with the glasses', and ultimately, there's isn't a man with glasses there at all.