Auction fraud alert: Peak body warns of false bids driving up prices
After witnessing dummy bidding in Brisbane, the Real Estate Buyers Agents Association of Australia (REBAA) has warned buyers about the illegal practice used to inflate property prices.
The Australian peak association for buyer’s agents, REBAA, has warned property buyers to be aware of false bidding at auctions.
REBAA president Melinda Jennison said a recent in-room auction in Brisbane saw a clear case of dummy bidding, with false bids submitted as a tactic to inflate the final sale price.
“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.”
Jennison said false auction bidding is illegal and can be subject to financial penalties.
“While there are laws to curb the practice, including strict bidder registration requirements and penalties for misconduct, the risk of manipulation still exists,” she said.
Additionally, she noted that sellers engaging in illegal dummy bidding risked misleading genuine buyers by creating artificial competition and pushing prices above fair market value.
“This can result in buyers overpaying for properties, leading to financial strain or even mortgage difficulties,” she said.
“The practice erodes trust in the auction system, making buyers hesitant to participate in future auctions.”
Jennison said that while authorities have actively tracked fraudulent practices to ensure fair and transparent property transactions, buyers must remain vigilant and do their due diligence, including having an understanding of auction rules, researching market prices, and watching for suspicious bidding patterns.
“Not only that, genuine bidders at auctions should be aware of who else is bidding to ensure they are also above board,” she said.
“If in doubt, bidders have the right to ask the auctioneer to indicate who else made a bid.”
If dummy bidding is suspected, Jennison urged buyers to report it to their respective state regulatory body to ensure that appropriate consequences are enforced.
“Dummy bidding is illegal and those who perpetrate this insidious practice should be prosecuted,” she concluded.