Participating in an auction can be nothing but exciting full of adrenaline rush during a live auction. When the hammer pounds, it should be sealing the deal.
But what happens if in any case you are not comfortable buying the items? How will you work on not purchasing it?
It is important that we first know how the process goes, for us to understand if dropping the deal is even possible in the auction house.
There are few different kinds of auction sale, there are auctions where the items/property is being publicly shown to the buying public.
The auction house will define a certain number of days or weeks when the items/property will be up for bidding.
By the end of this defined timeframe, the highest bidder will automatically be the winner.
There are also live auctions where the items are being shown right there and then and the bidders get to bid for a short period of time and when the hammers pound, the last highest bidder will be the winner. Either process is binded by auction rules and law.
In the auction process, it is not just between the buyer and the seller. There is a mediating body who are the auction agents that will facilitate the appraisal and recommend a minimum reserve amount to every item/property.
Legally speaking, the law describes an auction as “the public sale to the highest bidder”.
The law recognizes the right of the seller to receive the highest possible financial gain from the purchase.
Depending on what type of auction there is, you can find two types of seller, one with a reserve and the other that does not have a reserve which are classified as an absolute auction.
The seller that has a reserve will simply mean that the seller has the final say whether or not to sell the items or property.
Here, the seller will provide an “invitation to make contract” where the seller can withdraw the property before the gaven drops to close the sale.
Same goes if the bidding amount is way too low for the seller then he or she can withdraw anytime. The seller without any reservation is way too risky as you can only wait for the highest bidder whether the price is right or not.
This is the risk you have to gamble if you choose to be on an absolute auction side.
FAILURE TO PAY
Most auction houses require a bond or an amount of money being put up to act as a deposit and guarantee that the bidder has the capacity to pay for whatever items he or she may want to bid to.
Given this deposit, there are some that still cannot pay for the bid if the amount is way bigger than the deposited bond.
Legally, the auction company can file a lawsuit against the bidder to demand a payment. This process however could be draining.
Another option is to amicably arrange a set-up with the auction company where other payment options can be discussed, this will depend if the bidder is a regular clientele of a bona fide bidder or not and if the seller would agree with the terms.
Instances like this where the bidder backs away from the deal is being handled by the auction company confidentially. They at times protect the anonymity of both the seller and the buyer.
Furthermore, cases like this are not out for public scrutiny to discourage backing away from your winning bid.
Most of the cases like this are just the item or property being peacefully returned to the seller. There are some cases where the auction house is willing to buy back an item but with a significant cut on the price you just paid for it.
This is a good way for you not to leave a negative impression as a bidder. There are others who file a complaint against the item or property they bought by citing something negative about the item, this is a very dangerous way to retract a bid, very radical that it may cost you trouble ahead.
One of the best ways to deal with it is to put the item or property back into the auction. This way, you will not put your reputation as a bidder at risk and have everything played fair and square.
You will have a greater chance to get the amount you have paid for if not more. Just make sure you’ll have it rest for a bit before putting it back to the auction so the market won’t remember it being auctioned a while back.
By waiting a bit longer before putting it back to the auction you’ll have the chance that the item or property might acquire additional value over time which means more revenue as you put it back in the auction.
Approach towards resolving this issue varies on what kind of property or item it is that you have won.
Property can simply be returned to the consignor given you have sincerely negotiated with them and be honest with what issues you have why you are not able to push for the sale.
We know that property is valuable and it involves a serious amount of money so instead of the seller being tangled with a troublesome deal they will choose to have the property relisted for auction instead of pushing you to buy it.
For artworks though is a very tricky one. It can involve hundred millions of dollars in a single piece, pushing to buy it can be an advantage as its value can grow overtime which can eventually make it an investment for you and put it up for auction once the value strikes up. The same goes with valuable jewellery and antique items.
The best thing to do here is to be extra cautious of your actions and be mindful of every decision you are making to prevent predicament like this in the future.