Auctions - bidding against the auctioneer

[Dom Tuk]

Why is it legal for an auctioneer to raise bids when no one is raising the bid from the floor. This is termed as bidding against the wall. The auctioneer generates a bid (off the wall so to speak) and ups the ante, even though no one from the floor has made that binding committment. So you are practically bidding against the auctioneer and he is pretending all the time that someone else is bidding against you. This is clearly a money making exercise and totally a lie. The bidder loses out. Why is it allowed?

[Chessman]

i've attended quite a few auctions in the past, one of my hobbies, and i've never come accross this before, have done a quick web search, and can't find it, I als have some auction handbooks, and its not there, so i'll be keeping a close eye on this thread, as a thought, is it possible he was trying to raise it to the reserve price?.

[Dom Tuk]

This happened during a recent Channel 4 auction programme (something to do with houses). A couple from manchester were bidding for a house and the price kept going up and they decided not to raise the top bid. The auctioneer then announced that the house was unsold. The presenter then explained what had happened (as above in the question)and the couple confronted the auctioneer. he said that what he did was legal and that he was sorry but thats the way it is.

[jake-the-peg]

I don't know this for a fact. But I'd image that this is allowed in the case where there is a reserve and the auctioneer doesn't take it so that he's forcing you above the reserve price.

In that case you could consider it that he was bidding for the item himself.

If there were a reserve of �100 and he bid �95 and you bid �105 and bought it I'd think that would be a different matter as it would if there were no reserve or the reserve had been passed

Definately questionable behaviour though

[Chessman]

I've never been to a house auction, maybe the rules are different, but if it was the case, that it never reached the reserve price, then the decent and honourable thing to do, would be to say that it is withdrawn because it hadn't reach the RP. as jake says, definately sounds dodgy, the next one I go to, i'll find out, then let you know.

[Dom Tuk]

I dont think the reserve price had anything to do with this. betting off the wall is where the I believe the auctioneer tries to get the best price for the item and if he can get phantom bids off the wall he will. It increases their commission, only the bidder is fooled. I really would like to know more about this and how and why it is allowed.

[kempie]

A good question indeed.

The only reference I have found so far for this "deception" is within this explanation of proxy bidding.

[kempie]

...also referred to as 'bouncing' here, but although the author says that "there is nothing you can do about it without proof" he doesn't clarify the legality of the situation.

[mart533]

This happened again recently on the channel 5 program "how to be a property developer". I would suspect therefore that it goes on all the time but most bidders are blissfully unaware that they've been duped. The two woman in this case were effectively bidding against themselves and they ended up paying thousands more for the property than they needed to. It cannot be legal. It has to be fraudulent because the bidders would not have entered into the contract if they'd known this was going on. It would be interesting to hear an explanation from an auctioneer or a clarification from a legal standpoint. Shame on the auction profession I say. Channel 5 ought to follow it up.