When should you use a vendor bid?

You're house is being auctioned off and the proceedings have stalled - significantly.

You feel like all the buyers need is a little push, but they aren't moving - and the highest bid is well below your reserve.

Suddenly, you're wishing that you had authorised your auctioneer to put in a vendor bid on your behalf to keep the ball rolling.

A vendor bid is just what it sounds like - a bid from the seller to help push up the price at auction. The regulations around vendor bids vary from state to state, but in general, an auctioneer must announce if a bid is being made through the vendor.

Everyone wants to do what they can to push up the price of their property at auction, but when exactly do you use a vendor bid?

Vendors certainly don't have to bid on their own property. If a vendor does want to put in a bid, it should only be put in if the prices are hovering below the reserve price, and shouldn't be put in above the reserve price.

In fact, once you've passed your reserve, making a vendor bid is illegal in some states and known as a false bid - if you're not willing to accept a price above your reserve, you should have set your reserve higher. After the reserve is passed, the highest bid must be accepted by the vendor as the sales price (assuming finances all come through as they should).

Similarly, if your auctioneer doesn't announce that the bid came from you, it becomes a dummy bid - also illegal. The same goes for bids made by your family or friends if they don't intend to purchase the property.

In New South Wales, only one vendor bid can be made, while other states accept multiple vendor bids. If you're selling a property in NSW, carefully talk over when you should make a vendor bid (if necessary) with your auctioneer before the auction, because you only get one chance.