Hoping someone would help me understand how the bidding process works at an auction. Today a property that was taken back by the lender (private) had a minimum bid of $76k. There was only one loan in the amount of $300k (property was worth about $200k). The auctioneer rushed through the bid. When one of the bidders became frustrated, the auctioneer said “Don’t worry, you wouldn’t get it for that price anyway.” What just happened? I’m relatively new to this and would appreciate learning more.
The lender can instruct the auctioneer to make bids on their behalf, or to set a ‘reserve’. Usually an auctioneer will let the bidders know that they are bidding on behalf of the beneficiary (lender) before the bidding even starts and sometimes they will state what the ‘high’ bid will be. They do that to dissuade everyone from bidding forever and wasting their time. In this case, the auctioneer probably does not state this up front, of this specific beneficiary asked him to set a ‘reserve’ which cannot be revealed.
So, when he said that… he means that there was a reserve/high bid and the minimum bid was just a teaser.
The low opening bid is not a “teaser”. There are several practical and legal reasons for having a low starting bid. This has been discussed in other threads.
That makes a lot of sense. Thank you for your response.