I’ve noticed that sometimes a bidder will show additional funds in order to continue bidding (presumably they reached the limit of what they showed previously). Are there any official rules about whether showing additional funds (one or more times) is permitted, or is it possible that the auctioneer may not permit this? When I’ve looked over the rules of auction for some trustees, I didn’t see any specific discussion of this issue.
The auctioneer will request to see additional funds if they have exceeded the amount that they showed to qualify. I am not aware of any limit to the number of times an auctioneer can request to see additional funds. If a bidder cannot produce additional funds then the auctioneer will not accept any additional bids from that person.
Michelle is right … the last property I bid on took 108 bids and two full bid-sheets. About half-way through everyone had to re-qualify (show me the money!). I appreciate when auctioneers are scrupulous about qualifying bidders.
When auctioneers fail to inspect what they expect … stuff happens. I once witnessed a winning bidder getting a last minute (post sale) hard money loan to get the necessary cash in hand to pay the trustee. That dubious transaction would not have happened had that auctioneer re-qualified the bidder once the bid had passed by his initial qualifying sum.
Danny, it’s interesting that everyone had to re-qualify in that auction. I wonder if that means it’s fairly common for people to show less than their real maximum bid at first (I assume it wasn’t the case that every bidder in the auction happened to change their real maximum bid after the initial qualification).
Although I expected showing additional funds would always be allowed, I’ve heard some conflicting information on this point. One representative of an auction company claimed an auctioneer might simply refuse in their discretion to allow additional funds to be shown, which I found surprising. However, another representative claimed that the auctioneer should never permit nor refuse any request to show additional funds without asking the trustee about each such individual request, which I also found surprising, since I’ve seen auctioneers permit additional funds to be shown without asking the trustee, and I thought a trustee would have a standing policy on this issue rather than being asked each time.
On a related point, I was also told by the auction company that every request to hold a sale, even for just a few minutes, must be passed on the trustee for a decision. However, I’ve seen sales held after a casual request by some bidder, with no apparent attempt to contact the trustee. I recall a comment on this site that such holds seem unfair to better prepared bidders unless such bidders are given the chance to object, which makes sense. However, the auction company said they don’t consider the presence or absence of objections to be relevant. Even if no one objects, they supposedly should never hold any sale, even briefly, without getting the trustee’s permission. Conversely, even if one or more bidders object to a requested delay, they supposedly should never simply proceed with the sale without first asking the trustee. They claimed the trustee would probably not care about any objections (perhaps because any such delay would only seem to harm prepared bidders, not the trustee or beneficiary).
Hi Jo … when the auctioneer begins the process, he/she will make sure anyone stepping forward to bid has at least enough to make the opening bid. Typically investors will show significantly more so that they aren’t asked to re-qualify once the bidding pushes the price upwards. As I mentioned, I’m careful not to show my checks (when qualifying) to anyone other than the auctioneer. The auction scenario I mentioned was quite competitive (108 bids) and once we pushed the amount $50K past the opening bid, the auctioneer asked everyone to re-qualify … He hadn’t written down the amounts we initially showed, hence he was being cautious. It might have been more appropriate for him to write down the amount we each showed, but that raises the “spying eyes” concern. But I’m not overly concerned about this, as I know many investors don’t show all of their checks when initially qualifying (I don’t) and just because you see the amount someone has to play with doesn’t mean that aren’t carrying extra funds.
On your second question re “temporarily delaying the start of bidding to benefit a particular group of investors” … I’ve written about that before. It’s one of my pet peeves … I am okay with this BUT ONLY IF the auctioneer makes a clear public (very audible) announcement that there has been a request to delay this particular sale for 15 minutes … if anyone hereby objects, there will be no delay and it goes to sale NOW! This would apply to properties that have been given clearance to go to sale. Any such delay benefits the pros who work in teams and have people in their earpiece who are scrambling the finish their research (usually occurs due to last minute opening bid being posted). This delay hurts investors who’ve done all of their homework and are prepared to bid right then and there. No reason to give your competition even 60 seconds more the come up to speed.
As far as the auctioneer having to get approval from the trustee to accommodate the 15 minute delay (requested by bidders) … not sure this has been spelled out in any particular trustee’s set of auction protocols??? … I don’t think this scenario is covered under Civil Code 2924 … so this protocol would more likely be left to each trustee’s and auction company’s discretion. I doubt many trustees would object to the 15 minute delay as it may make it more likely that the bid will be more competitive. But it certainly IS unfair to those who have done their homework.
As an investor you should not be a shrinking violet … If you hear a request to delay whispered to an auctioneer (on a property w an opening bid and clearance to go to sale) and you’re ready … Just say “NO!” Seriously, I’ve done it … Tell the auctioneer you’re ready NOW to qualify and bid and there is no bonafide reason to delay other than favoring one investor over another.
D.B. - A counter argument:
It is the Trustee’s duty to get the highest bid. Bearing that in mind, what is the harm in delaying the sale 15-30 minutes? This would be especially true if an opening bid wasn’t announced until the last minute.
OTH, as a bidder, I wouldn’t want a competitor to have those extra few minutes to decide whether to compete against me.
miketh … yep I acknowledge your point and made the same in my second to last paragraph - “I doubt many trustees would object to the 15 minute delay as it may make it more likely that the bid will be more competitive.” (i.e. mo $$$)
I think were probably mostly in agreement. I prefer a level playing field for all. And I am okay with the auctioneer granting a “bidder requested” delay (15 to 20 min) as long as it’s very clearly (audibly to all) announced and no one has any objection to the delay. But if someone IS ready to qualify and bid (right then and now), and the subject property has been given clearance to go to sale, then I say sell it w/o any further delay … otherwise you’re showing favoritism. Delays provide an advantage to pros who work in teams and have someone (doing research) talking to their bidder in an earpiece.
When you think about it, can you imagine a brand new steps buyer showing up at a trustee sale, and asking the auctioneer for “another 20 minutes please” because he wants to call a friend to do some last minute checking. That cocky newbie would be booed off stage … it would be quite entertaining to watch … “Who the $#@%! are you buddy?” … “That’s not the way things are done here!” … “No one asks for (or gets) a delay unless we (auctioneer included) know who you are and you’ve already flipped at least a half-dozen steps buys!” Okay, that dialogue might be a bit dramatized for effect … but you can bet that’s what a few vets might be thinking ;).