A vendor bid is a bid placed during an auction by the seller or on the seller’s behalf (often by the auctioneer) to kickstart or sustain bidding, with the aim of nudging offers closer to the seller’s reserve price. It is not a genuine bid from a buyer and must be clearly identified as such to all participants. Key points to know:

• Purpose: To encourage bidding, move the sale toward the reserve price, or to test interest without committing to a sale at that moment.
• Identification: The auctioneer must reveal when a bid is a vendor bid and who is making it.
• Limits: Vendor bids are generally allowed only up to the reserve price and must be clearly identified; they cannot be used to mislead buyers by bidding at or above the reserve on behalf of the vendor.
• Rules vary by jurisdiction: Some regions prohibit dummy or shill bids and require explicit disclosure of vendor bids, while others outline specific conditions under which they can be used.

If you’re involved in an auction, here are practical tips:

• Listen for disclosures: If a bid is a vendor bid, the auctioneer should state it clearly (e.g., “This is a vendor bid”).
• Watch the reserve: Understand the property’s reserve price and how vendor bids relate to it.
• Evaluate strategy: Decide whether you want to bid aggressively to reach the reserve or wait for genuine competition.
• Verify local rules: Procedures around vendor bids can differ by country or state; confirm applicable regulations with the auctioneer or a real estate professional in your area.

If you’d like, specify your jurisdiction (country or region) and I can tailor the explanation to the local rules and common practices.