Making bids for friends (vendors) in auctions

Discussion in 'The Buying & Selling Process' started by Kai41314, 25th Nov, 2015.

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  1. Kai41314

    Kai41314 Well-Known Member

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    Hi,

    My friend has a house for sale in an auction on this Saturday and she asked me to pretend a buyer and make bids against other buyers. Is that a good idea? Is it legal? Do I need to sign an agreement form?
     
    Kai41314, 25th Nov, 2015
    #1
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    The vendor is permitted ONE bid only - either to save face, push things along or to preclude negotiations with solely the highest bidder.

    There are severe penalties for a breach of the NSW PSBAA as you could be causing someone to pay more than they otherwise would've paid (think fraud or theft but more discreet).
     
    Last edited: 25th Nov, 2015
    Scott No Mates, 25th Nov, 2015
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  3. Kai41314

    Kai41314 Well-Known Member

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    Thanks for the info. That proves my concern.
     
    Kai41314, 25th Nov, 2015
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  4. Big Will

    Big Will Well-Known Member

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    This isn't 100% true.

    Since the person is posting from Melbourne I would assume the friend is also in Melbourne so the vendor is allowed as many vendor bids as they like this could be 0, 1 to 50+. The most I've seen though was about 5-7 vendor bids, usually it is 0-3.

    RE: Bidding at an auction, I wouldn't do it. If the property falls down to you it is yours and there are penalties involved plus it how would you feel if you were the other buyer if the property got sold to the fake buyer and then they come back to you, I would be like see you later.
     
    Big Will, 25th Nov, 2015
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  5. D.T.

    D.T. Specialist Property Manager Business Member

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    D.T., 25th Nov, 2015
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  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    As a lawyer I would advise you not to do this.
     
    Terry_w, 25th Nov, 2015
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  7. Kai41314

    Kai41314 Well-Known Member

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    Thank you for all the responses and info. I can now tell my friend the reason why I cannot help with it. :)
     
    Kai41314, 25th Nov, 2015
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  8. Azazel

    Azazel Well-Known Member

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    I can't remember the wording and different state laws, something related to attempting to gain financial advantage via deception.
     
    Azazel, 25th Nov, 2015
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  9. Jacque

    Jacque Jacque Parker Premium Member

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    Besides the fact that it's illegal you do run the risk of being the highest bidder or the property getting passed in to you.... might want to think about how you'd handle that scenario.

    If the property has been marketed well, the owners are realistic on price and they have a good agent then they will be taking advice accordingly. If the agent doesn't believe the auction has enough strong interest, he/she may well withdraw and sell via private treaty.
     
    Jacque, 25th Nov, 2015
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  10. Ed Barton

    Ed Barton Well-Known Member

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    Same in Brisbane. Could be any amount of vendor bids, but is typically three. One to get it going, one to bump a stall in price and one to get it to reserve to be 'passed in' at a value way higher than the real passed in value.
     
    Ed Barton, 25th Nov, 2015
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  11. Truly Exotic

    Truly Exotic Well-Known Member

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    that is terrible!

    vendor bids and dummy bids are totally different,

    one is legal and ok, the other is illegal and morally not good,

    what are you going to do if your bid is above the reserve that the agent knows what the reserve is as they should and the owner says , nope not selling!!
     
    Truly Exotic, 25th Nov, 2015
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  12. Steven Ryan

    Steven Ryan Well-Known Member

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    No. Just no.
     
    Steven Ryan, 25th Nov, 2015
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  13. Propertunity

    Propertunity Well-Known Member

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    Vendor bids are made only by the auctioneer. Bids made by a "friend" to help the vendor secure a higher price is called dummy bidding and is illegal as others have pointed out.
     
    Propertunity, 25th Nov, 2015
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  14. Ed Barton

    Ed Barton Well-Known Member

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    Do people remember the days before vendor bids and closer regulation where dummy bids were common?
     
    Ed Barton, 25th Nov, 2015
    #14