I understand how you can miss the shill bidding. By design shill bidding is clandestine. Next time you attend a REDC auction here is how you can spot the shill bidding:

The tough way to spot shill bidding - live as it's happening:

• Stand don't sit, near the back of the seating area. Position yourself so you have a clear view of the audience, the Auctioneer, and the Bidder Assistants.
  
• The Auctioneer leads the price raises, almost all properties will have a real bidder at the lower opening values, as the price is raised by new real bidders many of the early real bidders will drop out as the price goes beyond their comfort level.
  
• At some point there will be only one real bidder remaining. If the property has meet the unpublished reserve or come within a limit of the unpublished reserve he will be declared the winner.
  
• BUT: If the bids are too far below the unpublished reserve the Auctioneer will continue calling for new bids. Then quickly and smoothly the Auctioneer will motion as if a new bidder has out bid the final real bidder. But there is no new bidder. None the less the price has been raised and now the Auctioneer will be calling for a new higher bid. That's it... it just happened that quickly in under 5 seconds the real bidder was 'out-bid' by no one! Most of the time the real bidder will not notice what is happening and will raise his bid even higher in hopes of out bidding whoever just out bid him.

The easy way to spot shill bidding - when the gavel falls:

When the gavel falls the REDC Auctioneer will announce one of the following three statements:

1. "SOLD" - The property actually sold... it met or exceeded the unpublished reserve price and a real person was the high bidder.
   
2. "SOLD SUBJECT TO CONFIRMATION" - The high bidder was a real person. He will be required to pay the deposit. Then he waits until the seller (usually a large bank or asset management company) reviews his high bid. It takes about 14 ~ 20 days to review the high bid. They will respond to your high bid in one of three ways:
   • They will accept it at your bid amount. Escrow will be opened and you will have 30 or 45 days from that point to pay for the house.
   • They will counter your high bid with a higher price. It's your choice to hold firm or pay the extra.
   • They will deny your bid and not give you the chance to raise your price.
   
   
3. "CLOSED THE BIDDING" - Shill bidding!!! - The Auctioneer raised the price higher than anyone in the room was willing to pay. So he 'closes' the bidding. Many times the property will come back later in the day and REDC will try again to rip someone off.

In the last 18 months I won the high bid 9 different times. Each time I won "sold subject to confirmation". Only twice was my high bid accepted by the sellers.

The REDC team are very good at what they do, they are smooth, and I have personally seen buyers pay thousands over their current high bids because they thought a real person was bidding against them. REDC is dishonest. They willfully trick buyers into paying more. If you ask REDC about the practice of shill bidding they will deny they 'shill bid'... but they do admit to 'bidding on the sellers behalf'. It's printed right there in the REDC rules. From the REDC rules item number 3:Reserve Price

"Except where prohibited by law, the Auctioneer may open bidding on any Property by placing a bid on behalf of the Seller and may further bid on behalf of the Seller, up to the amount of the Reserve Price, by placing successive or consecutive bids for a Property, or by placing bids in response to other bidders."

What's the definition of shill bidding? This definition from Wikipedia sums it up:

"A shill is an associate of a person selling goods or services or a political group, who pretends no association to the seller/group and assumes the air of an enthusiastic customer. The intention of the shill is, using crowd psychology, to encourage others unaware of the set-up to purchase said goods..."

Now you know something very few people at a REDC auction know. You have an advantage. Lessons: know what you are getting into. Do your home work. Read the legal fine print. Read my blog.

Take care my friends,
Larry.