The silent auction

Does it deliver sellers the best result?

As a seller determined to achieve the highest possible price in the market, one thing you should never do is let your interested buyers know what other offers you have received.

When buyers’ competing offers are disclosed at an auction, bidders will never focus on offering the highest price they are willing to pay. Their focus is on beating the competition and winning the auction.

When you line up all your interested buyers next to each other and shout at them with a pointed hammer (as happens at a public auction), you invariably end up with a series of $500 or $1000 bids to close out the sale. But what happens if the final bidder was prepared to pay $50,000 more than the second highest bidder? In that case, as often happens at public auctions, the seller loses $49,000 they could have pocketed if they hadn’t chosen that selling method.

Every Saturday across Australia, sellers sell their homes for less than the buyer was prepared to pay for it. It amounts to silent pain for the seller and silent gain for the buyer. Never allow your interested buyers to know what other offers you have received, whether it be by public auction or Dutch auction.

A Dutch auction is where agents personally negotiate the sale but continually disclose competing offers to each of the interested parties. It is done in a futile and incompetent attempt to force buyers to leapfrog the competing bids. A Dutch auction is worse for a seller than a public auction because buyers usually refuse to partake in the process given its grubby nature.

As a seller, never have your agent put buyers through a Dutch auction process because you will probably lose your best buyer on principle.


Negotiation experts (and card players) all agree that you should never let the other side know what your position is. During a hand of poker, have you ever seen a card player turn their cards up for

everyone at the table to witness and ask the competitors for advice? As a property seller, why let the buyers see your cards? Agents often talk homeowners into an auction as the best way to

‘create competition’. What is often overlooked is that buyers are competing for the property and are not bothered by the process used to sell the property. Interested buyers will compete for the home, regardless of which sale process is used. Bidding at a public auction is not competitive — it is

comparative. If a bid of $1,000,000 is made at an auction, the next bid will likely be $1,005,000, or $1,010,000. It won’t be $1,200,000.

Many buyers who are the under-bidders at an auction make an off-hand comment that they stopped bidding because the other party was just going to keep going. What the bidders are actually saying is: ‘I let the other buyer have it cheaper by dropping out. If we cannot compete with that buyer, why make them pay more for it?’ This regularly happens at public auctions but would never happen using the silent auction process.


Public auction campaigns focus mainly on maximising the number of interested buyers and setting a deadline for those buyers to act. Yet this is what all agents should do regardless of the

sale process chosen by the vendor. Having a publicly known deadline creates just as much pressure for the seller as it does for the buyer. Agents orchestrate this scenario to ensure that a sale is made. Remember that at a public auction, getting a sale on the day in front of the crowd is the agent’s main priority.

Silence is golden

In Scotland, when agents are ready to close out a real estate transaction all the interested buyers submit their best and final offer in a sealed envelope for the seller’s consideration. Some call this a ‘silent auction’. In most, if not all cases, the owner sells the property to the party with the highest offer.

Scottish people do enjoy a quid. The Scottish know that if you let a $1 million dollar buyer know that the next best offer you have received is only $900,000, you will only be offered $910,00 from the buyer who was prepared to pay $1 million. How could the seller justify asking for that extra $90,000?

One real estate firm which regularly conducts silent auctions in Australia explains below how the sale of a prestige family home in Sydney achieved the highest possible price using a silent auction. Not only did it achieve the highest possible price, it achieved a price that would have been mathematically impossible using a public auction where bidding is transparent.

This is how it worked:

The property generated enormous interest in a short period of time so a deadline was set. This date was not advertised because it may have pressured the buyers, and this also saved the seller from a public failure should the best offer fail to meet the reserve price

The homeowner set their private reserve at $2 million. All four interested buyers submitted their best, highest and final offer on or before the deadline. Each offer was submitted on a binding contract with a deposit cheque. The offers came in at $1,950,000, $2,050,000, $2,150,000 and $2,210,000 respectively. Contracts were exchanged for $2,210,000 providing the owners with a $55,000 windfall that a public auction would have failed to achieve.

If the property had sold at public auction, many people would have understandably left the auction mightily impressed. The newspapers would have reported how the property sold for a whopping $155,000 above the reserve price. The $55,000 left in the buyer’s pocket would be a silent victory for them when it would have appeared to everyone that the owners had a public victory.

Most of the positive marketing components in play at a public auction work equally well for a silent auction. It is the silent auction method’s ability to determine the highest price in the market without pressuring sellers or producing spectacular public failures that makes it an elegant solution.

2 thoughts on “The silent auction

  1. A_Buyer

    The solution to this underhand, money grabbing, disgusting tactic for the buyer is to just put in a low (under market) offer, assuming that all other buyers do it too. It will be a spectacular waste of time by the seller and agent. They will be forced into a real negotiation, which is where these things normally end up anyway.


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