The course of affairs at the auction
The setup of an auction consists of two parts: the sale to the highest bidder and the Dutch auction. They take place on one and the same day.
Step 1: The sale to the highest bidder
At the start of the sale to the highest bidder, the notary will give a brief description of the object to be auctioned and the process of the auction. He will also read part of the record to be drawn up by him, in instrument in which the notary records what happens at the auction and especially what bids are made. The notary acts as an auctioneer: he says what bid has been made and tries to create a better atmosphere at the auction to achieve the highest possible result.
The notary will ask the public to make the first bid base on the reserve price determined by the mortgagee. One can never bid lower than the reserve price. If the bid has been made, the notary will ask the public to make a higher bid. Successively, higher bids can be made in that way by raising a hand and/or mentioning an amount (the so-called making of a higher bid). The one making the highest bid is also named the one making the opening bid. His bid is called the opening bid. After the highest bid has been made (determined after the customary "going once, going twice" and a knock of the notary's hammer) the notary will supplement the record with the information regarding the bidder and the opening bid.
Step 2: The Dutch auction
In the second auction, the notary will name an amount that is (far) above the reserve price. For instance, if the reserve price was Afl. 500,000, the price at which the object to be auctioned will be offered could be Afl. 700,000. This price is determined by the notary in consultation with the one who gave instructions for the auction. Subsequently, the notary will count down by a fixed amount of for instance Afl. 1,000 or a multiple of this amount, until someone in the public calls "mine". This procedure is called Dutch auction. Of course, it requires precision when you bid at a Dutch auction. You can have a certain amount in mind for which you want to buy the object to be auctioned, but if someone else beats you to it, he is the buyer. Especially for inexperienced buyers at an auction, bidding at a Dutch auction can be nerve-wrecking. Calling "mine" too early makes you pay more than you actually wanted. And if you call "mine" too late, you proverbially miss out. Moreover, you have to call "mine" loud and clear. Simply raising a hand or calling "yes" only results in another interested party being alerted early and calling "mine" as yet. The nervous type would perhaps be wise to call in the assistance of a third party (for instance a realtor). This person can then bid at the Dutch auction as per instructions. If no-one calls "mine" for an amount above the reserve price (in the example: no-one is willing to buy at a price of over Afl. 500,000), the notary will indicate by a knock of the hammer and calling "slag" that no bid has been made. In that case, the one who made the opening bid in step 1 will be the buyer, provided that the seller assigns to him (see under: assignment / instrument of mandate).