Property buyers’ peak body warns consumers about illegal dummy bidding at auctions
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Australia’s leading association for buyers’ agents has issued a warning to consumers about the risks of dummy bidding at property auctions.
The Real Estate Buyers Agents Association of Australia (REBAA) is urging buyers to be vigilant about this illegal practice that can lead to significant financial harm.
REBAA President Melinda Jennison said consumers must understand that dummy bidding is illegal and attracts significant penalties.
“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,” Ms 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.
“While there are laws to curb the practice, including strict bidder registration requirements and penalties for misconduct, the risk of manipulation still exists.”
The warning comes amid concerns that some property auctions continue to be manipulated despite regulations designed to prevent such practices.
Ms Jennison explained that dummy bidding creates artificial competition that can push 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.”
The organisation cited a recent incident at an in-room auction in Brisbane where suspicious bidding activity was observed.
“It was clear that there were dummy bids being submitted during the auction in an attempt to increase the final sales price,” Ms Jennison said.
REBAA recommends that buyers protect themselves by being informed and observant during auctions.
“The best defence for buyers is vigilance by understanding auction rules, researching market prices, and watching for suspicious bidding patterns,” Ms Jennison said.
“As authorities continue to crack down on fraudulent practices, awareness remains key to ensuring fair and transparent property transactions.”
Consumers are advised to be proactive in monitoring auction proceedings, including paying attention to who else is bidding.
“Not only that, genuine bidders at auctions should be aware of who else is bidding to ensure they are also above board. If in doubt, bidders have the right to ask the auctioneer to indicate who else made a bid,” she said.
The association is encouraging those who suspect dummy bidding at an auction to report it to the relevant statutory authority in their 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,” Ms Jennison said.
“Dummy bidding is illegal and those who perpetrate this insidious practice should be prosecuted.”