Australia's peak buyers' advocacy group warns of illegal auction practices that could cost you thousands
In a concerning development for property buyers across Australia, the Real Estate Buyers Agents Association of Australia (REBAA) has issued an urgent warning about the persistence of dummy bidding at property auctions despite its illegality.
What is Dummy Bidding?
Dummy bidding occurs when non-genuine bidders—often friends or family of the vendor or associates of the sales agent—submit false bids during an auction. This deceptive practice artificially inflates property prices by creating the illusion of greater competition.
"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," explains REBAA President Melinda Jennison. "While there are laws to curb the practice, including strict bidder registration requirements and penalties for misconduct, the risk of manipulation still exists."
Real-World Consequences
The impact of dummy bidding extends far beyond the auction day. When buyers fall victim to this practice, they often end up paying significantly more than a property's fair market value. This can lead to:
- Financial strain on household budgets
- Potential mortgage difficulties
- Erosion of trust in the auction system
- Reluctance to participate in future auctions
REBAA recently observed suspicious bidding activity at an in-room auction in Brisbane, raising concerns that the practice continues despite regulations designed to prevent it.
How to Protect Yourself
Buyers can take several precautions to avoid becoming victims of dummy bidding:
- Be informed: Familiarize yourself with auction rules and regulations
- Do your research: Know the fair market value of properties you're interested in
- Stay vigilant: Watch for suspicious bidding patterns during auctions
- Monitor other bidders: Pay attention to who else is bidding and whether they appear genuine
- Ask questions: You have the right to ask the auctioneer to indicate who else made a bid if you're suspicious
"The best defence for buyers is vigilance by understanding auction rules, researching market prices, and watching for suspicious bidding patterns," Ms. Jennison advises.
Reporting Suspicious Activity
If you suspect dummy bidding at an auction, report it immediately to the relevant statutory authority in your state or territory.
"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," emphasizes Ms. Jennison. "Dummy bidding is illegal and those who perpetrate this insidious practice should be prosecuted."
By staying alert and informed, property buyers can help ensure fair and transparent transactions in Australia's competitive real estate market.
At First National Real Estate Bundaberg, we believe in transparency, integrity, and helping you make informed property decisions. Auctions can be exciting—but they should always be fair. With a little prep and a lot of awareness, you can bid with confidence and protect your budget!
Got questions about buying at auction or want expert advice before bidding? Reach out to our friendly team today—we're here to help!