Fixing the Dutch auction scenario for agents

An auction is a very popular method of sale for residential property, but they can make buyers and sellers nervous, especially in Australia, where the price and level of competition can be completely unpredictable.

In an attempt to regain some control, potential buyers often ask the Real Estate agent, “Is your seller open to offers beforehand?” with the hope that they can avoid the situation altogether.

It makes sense and it happens almost every day; however, the reality is that often, the agent receives multiple pre-auction offers, which may force them into difficult territory, known as a Dutch Auction.

So, what can the agent do to solve this and create a result that leaves all parties happy?

What is a Dutch Auction?

A Dutch Auction occurs when an agent receives a first pre-auction offer of, for example, $600k, and then proceeds to tell a second bidder that they need to beat $600k, so they offer $620k. The agent then goes back to the original bidder and tells them $620k is the new price to beat, so they increase their offer to $630k, and the agent then tells the other party that they need to beat $630k, and so on.

Where does it get difficult for the agent?

The problem with a Dutch Auction is if your vendor is open to offers beforehand, it’s up to you to play the middle-man and negotiate between both your seller and potential buyer. If there are multiple offers like this on one property, which is often the case, not only does this make the process difficult, you end up with a confusing silent auction which takes considerable amounts of your time and can leave many frustrated.

“What ends up happening,” explains Peter Clements from Mint Real Estate, “is that you spend all of your time orchestrating an auction before the actual auction, and it’s a tough situation to find yourself in.”

Due to the lack of accountability and transparency, the buyers quickly become suspicious of the agent, as there is no way for them to know if they were ever telling the truth.

While Dutch Auctions are not illegal, they are considered an ethical grey area, and the situation has the potential to tarnish your reputation as an agent. It’s a small world out there, and unhappy buyers can quickly become very vocal if they feel mistreated, turning it into a potential PR disaster.

“The reason why it’s not ideal,” says Jason Eldridge, who is a sales strategist within the industry, “is because the trust factor isn’t there. Buyers can accuse you of fictitious bidding or collusion, your seller can become anxious, and you just don’t know how many other potential buyers are hiding in the wings. You may miss out on bids and put your seller at a disadvantage.”

How can an agent facilitate this process better?

“What solves this is transparency between all parties. That’s why we created Openn,” says Managing Director Peter Gibbons. “The Openn process uses a technology platform which works on PCs, Smartphones and tablets, to facilitate this entire process and make it clear to the agent, the seller and all buyers what’s happening at all times.”

Basically, the Openn process is a fair way to replace the Dutch Auction completely. It combines the best aspects of private treaty, auction, expression of interest and end date sale into one fair and open process, where approved buyers compete for the property together.

By allowing the seller and all potential buyers to see everyone’s price and setting a time limit, a fair and final result can be achieved by encouraging healthy competition.

This way, the seller can personally watch the process unfold to reach true value, the buyers can bid confidently without missing an opportunity, and the agent acts as a professional facilitator, championing the exchange.

“Not only does this take all of the pressure off you as an agent,” says Peter Clements, “it frees up your time by not having to manually coordinate everything in the background.”

What to know more about Openn?

Openn is a revolutionary, new way to offer buyers and sellers more as their trusted real estate agent.

This ground-breaking technology makes the process exciting, enjoyable and rewarding for all parties, and doesn’t leave anyone frustrated in the dark.

To find out more, visit our website at, or sign up to Openn to become an observer to see the process for yourself.

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