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09 December 2007

Who represents who at an auction?

At a typical auction, you will encounter the following parties:
1. Vendor (selling party)
2. Real Estate Agent/s (or "vendor's agent")
3. Auctioneer
4. Bidders
5. Buyer's Agent
When you're the buyer, who's acting in your best interests at an auction?
We can obviously rule out the vendor, as they are trying to get the highest possible price for their property. Who can blame them?
To get the highest price, the vendor uses a real estate agent (or "vendor's agent"). The vendor's agent will promote the property and try to attract as many buyers to the auction.
The vendor's agent will often give you advice about how to increase your chance of 'winning' at auction. This blurs the relationship between agent and buyer. Many buyers have the mistaken belief that the vendor's agent is acting in their best interest. Remember, the vendor's agent has a legal obligation to achieve the highest possible price for the vendor, so take this advice with a pinch of salt (or a good sense of humour).
The auctioneer also works for the vendor. Their role is to drive the price as high as possible. Some of the tactics used by auctioneers are questionable, as highlighted in REA blog article "The Turkeys are out"
It's common to see other agents floating around the auction, offering 'advice' to buyers. This typically sounds something like, "Just one more bid of $5k and I'm sure you'll knock out the competition", "Put in a strong bid and you'll end this quickly", etc. These agents are sometimes easy to pick, especially if they're wearing a uniform or displaying a badge. However, some operate a little more covertly. This is where I would recommend all buyers to be careful about how openly you discuss your bidding strategy. It's not healthy for your auctioneer to know what your highest bid would be.
The auction is packed full of people, but how many are serious bidders? A trained eye can eliminate the 85-95% of bidders who are the vendor's neighbours, family, friends, spectators, etc.
So, who's left? The Buyer's Agent is the one person acting in your best interest. A good Buyer's Agent will develop and document a bidding strategy before you start, but remain flexible to take advantage of opportunities as they arise. A good Buyer's Agent will also ensure you stick to your bidding limit when the bidding gets out of hand.
Want to learn more about auctions? Call us on 1300 727 586 or send us an email -

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