A bid made by the auctioneer on behalf of the seller.
In NSW, it must be clearly announced and cannot exceed the reserve price.
Vendor Bid (Real Estate Auctions)
A Vendor Bid is a bid made on behalf of the seller (vendor) during a property auction. It is used by the auctioneer to help move bidding forward when genuine buyer bids are slow or absent.
In New South Wales, vendor bids are regulated under the Property and Stock Agents Act 2002.
What a Vendor Bid Means
A vendor bid:
- Is not a real buyer offer
- Is made by the auctioneer on behalf of the seller
- Helps increase momentum in the auction
- Cannot exceed the reserve price
It is essentially the auctioneer saying:
"We will start the bidding at this level."
Example:
Auction starts with no bids.
Auctioneer says:
“I’ll place a vendor bid at $900,000 to get things started.”
This means the bidding now starts at $900,000, even though no buyer made that bid.
Why Vendor Bids Are Used
Vendor bids are typically used to:
- Start bidding momentum
- Signal the seller’s price expectations
- Avoid awkward silence at the start of auctions
- Move the price closer to the reserve
They are common when:
- Buyers are hesitant to make the first bid
- The opening bid is far below the expected price
Example Auction Flow
Auction scenario:
- Reserve price: $1,200,000
Auction sequence:
- Auction starts — no bids
- Auctioneer: Vendor bid $1,000,000
- Buyer: $1,020,000
- Buyer: $1,050,000
- Auctioneer: Vendor bid $1,100,000
- Buyer: $1,150,000
Once the reserve price is met, vendor bids stop and the property may be “on the market.”