84㎡ property in Eunpyeong-gu, appraised at KRW 800 million, sold for KRW 670 billion… Presumed to be a mistake in entering the amount
Risk of losing 64 million won bid deposit… Even salvation is difficult
According to the auction and public auction industry on the 23rd, on the 19th, an 85㎡ property exclusively for Eunpyeong New Town, Jingwan-dong, Eunpyeong-gu, Seoul, was sold for a whopping 670 billion won. This is more than 1,000 times the lowest bid price of 640 million won, and the successful bid price to appraised price ratio reaches 83,750%.
Auction participants are expected to give up on the auction contract as they cannot cover the winning bid amount of 670 billion won. The 64 million won bid deposit already paid was lost in the air. If you abandon the contract or fail to pay the balance, you will not be able to receive a refund of the bid deposit, which is 10% of the minimum bid price.
It is not uncommon to find cases where large deposits are lost due to a simple mistake in entering numbers. According to GG Auction, among the auction items in the metropolitan area this year, there were a total of eight auctions with a winning bid rate of 500%.
Last June, an apartment in Hwaseong-si, Gyeonggi-do was sold for 3.16999 billion won, 806.6% of the appraised value. In this case as well, it is estimated that the winning bidder did not receive back the deposit of approximately 30 million won that he submitted during reconnaissance.
According to the industry, the bidder has reportedly requested the court to ‘disallow the sale’. However, if the bid sheet is submitted by mistake, it is unlikely to be recognized as a reason for disallowing sale, so relief is not expected to be easy. This is to prevent cases where the auction progress is interrupted by presenting an exorbitant bid
Lee Ju-hyeon, a senior researcher at GG Auction, said, “Beginners often write down the price incorrectly, but it is very rare for them to write 670 billion won on the bidding table.” He added, “Of course, it is impossible to pay the balance, and the auction will probably be held again later.” explained.
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What are the common mistakes bidders make during auctions that can lead to financial losses?
Time.news Interview: Understanding the Auction Madness
Editor: Welcome to Time.news! Today, we’re joined by Dr. Jin-soo Park, a real estate economist and auction expert, to discuss the recent shocking auction incident where an 85㎡ property in Eunpyeong-gu sold for a staggering KRW 670 billion—over 1,000 times its appraised value. Dr. Park, thank you for joining us.
Dr. Park: Thank you for having me. It’s a pleasure to discuss this intriguing situation.
Editor: Let’s dive right in. This property was appraised at KRW 800 million but ended up selling for KRW 670 billion. That’s an astronomical difference! What do you believe led to such a massive discrepancy?
Dr. Park: This case seems to be a perfect storm of factors, primarily an administrative error. Mis-entering numbers in auction bids isn’t exceedingly rare, but in this instance, the stakes were extraordinarily high. It’s crucial for bidders to double-check their inputs, as the consequences can be dire, as we’ve seen.
Editor: You mentioned similar incidents happening, with a case in Hwaseong-si this past June where a property was sold for 806.6% above its appraised value. Is there a trend in the auction industry that we should be concerned about?
Dr. Park: Absolutely. There’s been a noticeable increase in high-stakes bidding contests that verge on the absurd. In many cases, the allure of a property combined with competitive bidders can lead to irrational bidding. Unfortunately, as this recent Eunpyeong incident indicates, it can result in significant financial losses—such as the KRW 64 million bid deposit that participants now face losing.
Editor: That brings us to the financial implications for bidders. Losing a KRW 64 million deposit sounds devastating. Can you explain the industry rules regarding these deposits?
Dr. Park: Sure. Typically, the bid deposit is set at about 10% of the minimum bid price. If a bidder fails to pay the remaining balance after winning, they forfeit this deposit. Unfortunately, few provisions exist to protect bidders from entering incorrect amounts, which places a heavy burden on them, particularly when astronomical figures are involved.
Editor: If a bidder realizes their mistake after the fact and requests to disallow the sale, what are their chances of success?
Dr. Park: The legal situation surrounding such requests is precarious. Courts tend to view bids as binding once submitted, even if they stem from an error. Unless there are extreme extenuating circumstances, it’s unlikely a bidder can successfully overturn a sale that was completed as per the auction rules.
Editor: Given these circumstances, what advice would you give to prospective bidders in future auctions?
Dr. Park: My primary recommendation is to be thorough and deliberate. Always verify your calculations, consult with real estate professionals, and ensure you understand the auction process fully before placing a bid. Additionally, consider the financial implications and do not get swept away in the competitive atmosphere—it can lead to significant losses.
Editor: Wise words, Dr. Park. Lastly, as the auction industry continues to evolve, what changes would you like to see to protect bidders from such errors and losses?
Dr. Park: There’s a clear need for more safeguards. Implementing a review mechanism for significant bids or allowing bidders a cooling-off period to reconsider their bids before finalization could help. Furthermore, better education on the auction process could prevent misunderstandings that lead to financial fallout.
Editor: Thank you, Dr. Park, for your insight into this complex and concerning auction situation. It’s essential for bidders to be aware and prepared in such high-stakes environments.
Dr. Park: Thank you for the opportunity to discuss this issue. I hope it brings awareness to both bidders and the industry alike.
Editor: And thank you to our viewers for tuning into Time.news! Stay informed, and make sure to join us next time for more discussions on pressing issues.