It’s hard enough to get a foot on the property ladder in Australia right now as it is, but the national peak association for buyers’ agents has issued a new warning against an ongoing illegal auction tactic that can drive prices beyond market value.
Real Estate Buyers Agents Association of Australia (REBAA) president Melinda Jennison said consumers needed to be aware of any potential “dummy buying” during auctions.
“A dummy bid is a false bid by a non-genuine bidder in the crowd, usually to influence the sale price, at either an on-site or in-rooms auction,” Jennison said.
“Sometimes these dummy bids are made by friends or family of the vendor or they may come from people associated with the sales agent.”
The practice is against the law and can attract strict penalties.
Auctions have strict bidder registration requirements, but the risk of manipulation still exists, Jennison said.
She said the primary danger of dummy bidding was that it misled genuine buyers, creating a false sense of competition and driving prices beyond fair market value.
“This can result in buyers overpaying for properties, leading to financial strain or even mortgage difficulties,” she said.
“Additionally, the practice erodes trust in the auction system, making buyers hesitant to participate in future auctions.”
She said a blatant example of dummy bidding had taken place at a recent in-room auction in Brisbane where “clear” dummy bids had been submitted to drive up prices.
How to protect against dummy bids
Jennison said the best defense for buyers is vigilance by understanding auction rules, researching market prices, and watching for suspicious bidding patterns.
“As authorities continue to crack down on fraudulent practices, awareness remains key to ensuring fair and transparent property transactions,” she said.
“Consumers must be aware that it is an offence for any person to arrange for another person to make a false bid at an auction.”
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Genuine bidders also had the right to ask the auctioneer to indicate who else made a bid.
Jennison said consumers should notify the relevant statutory authority in their state or territory if they believe they had witnessed dummy bidding during an auction.
“Dummy bidding is illegal and those who perpetrate this insidious practice should be prosecuted,” she said.
