Frequently Asked Questions on Auctions

1. What is the difference between vendor and dummy bids?

Vendor bidding is a counter bid from the auctioneer to ensure a property reaches a price at which it can be sold.
Dummy bidding is fictitious or false bidding at an auction by non-genuine bidders in the crowd, with no real intention to buy the property and without adequate disclosure of their interest.

2. Should dummy bids be allowed?

No. The REIA supports legislation being put into place by most States and Territories that prohibits misleading and deceptive practices such as dummy bidding.

3. Should vendor bids be allowed?

Vendor bidding is a legal and ethical process. In most States and Territories, vendor bids and the identity of the bidder must be declared before the auction commences, or each time such a bid is made. Only auctioneers or other identified and legally permitted persons should make vendor bids at auction on behalf of the vendor. All governments should introduce legislative provisions for the inclusion of standardised bidding clauses that detail vendor bidding provisions in conditions of sale.

4. Is there a national code of practice on auctions?

Auctions are a well-established and proven practice for selling real estate. Auctions are not confined to this industry, being used to sell live stock and antiques, for example.
There is no national code of practice, because laws relating to the real estate industry are State-based, and as such vary from one State to another. State real estate institutes have a code of practice to which their members are obliged to adhere. Additionally some State institutes have provided specific guidelines for auctions.

5. What confidence can consumers have that auctions are being conducted fairly?

Auctions are a well-established and proven practice for selling real estate, live stock, antiques and other valuable commodities, and are governed by comprehensive State and Territory legislation. State real estate institutes will continue to promote best practice on behalf of consumers and comply with legislated requirements.
Those agents who are members of the real estate institutes clearly distinguish themselves as part of a professional organization that aspires to the highest standards of practice and regulatory compliance in order to safeguard the interests of consumers and member agents.

6. Are many complaints received from consumers about auctions?

The State real estate institutes receive very few consumer complaints about auctions, but those that are received will be referred to the appropriate authority depending on the nature of the complaint.

Prepared by:

Secretariat REIA

22 October 2003

For further information on selling at Auction see our selling at Auction page.

In consultation with the ACCC, the REIA has developed guidelines which address issues identified by the ACCC and provide a consistent nation-wide approach for real estate agents to comply with the Trade Practices Act. Click here for an information sheet on: Auctions