Just had to hedge it a little….from CAR:
This law, on and after July 1, 2015, with respect to an auction that includes the sale of real property, prohibits a person from causing or allowing any person to bid at a sale for the sole purpose of increasing the bid on any real property being sold by the auctioneer.
The law, however, does allow an auctioneer or another person to place a bid on the seller’s behalf during an auction of real property if notice, as specified, is given that liberty for that bidding is reserved. The law also requires in this regard that the person placing that bid contemporaneously disclose to all auction participants that the particular bid has been placed on behalf of the seller.
The law exempts a credit bid made by a creditor with a security interest in the property that is the subject of auction when the credit bid can result in the transfer of title to property to the creditor.
Finally, this law prohibits a lender or an auction company that is retained to control aspects of a residential real property transaction from requiring, as a condition of receiving a lender’s approval of the transaction, a homeowner or listing agent to defend or indemnify the lender or auction company from any liability alleged to result from the actions of the lender or auction company and declares a clause, provision, covenant, or agreement in violation of this prohibition to be against public policy, void, and unenforceable.
Assembly Bill 2039 (codified as Civil Code §§ 2079.23 and 1812.610) (effective July 1, 2015).
Most of the auctions I have been to have been scams LOL.
I have seen the Bid won by the inside bidder, then the property re-appear later in the same auction.
I will need to attend one after the this goes into effect to see if anything really changes.
I think what it means is that shills can bid until it hits the reserve price.
Can you imagine the conversation?
Do you allow shill bidding?
Yes, to make sure we reach the reserve price!
What is the reserve price?
I can’t tell you.
Gosh more than a decade now since I said and you agreed that a reserve auction was not an auction?
Spider: There’s a party in my web, and everyone’s invited!!
Flies: Yay!!
I spent a few years as an officer for an auctioneer of construction equipment with 5-6 sales per year of 10-20M. The absolute guaranteed way to ensure the best sales price is to disallow buy-backs (i.e.: shills) and sell everything “no minimum, no reserve, no buy-back” because buyers trust that they will get the item/machine/house if they are the highest bidder. Period.
It’s counter-intuitive, contrary to human nature and filled with anxiety if you’re the seller. Therefore the auction process will never be the general practice in real estate unless auctioneers give guarantees in place of reserves. We had to do it all the time but I don’t see Auction.com or any other outfit willing to do that and not corrupt the bidding with shills.
IMO
1) The whole point or a “for profit” auction for the seller is to get someone to over pay.
2) The whole point or an auction for the buyer is to find a deal.
So who do you think wins here?
So far of the few “for profit” auctions I have been to the buyer’s over pay IMO.
Anyway good luck.