Review of dummy bidding rules

A REVIEW of the Auctions Sales Act is threatening the practice of dummy bidding at auctions in WA.

The move to review the inclusion of dummy bids, by the Department of Consumer and Employment Protection, is the result of serious concerns about any notion of any non-genuine bid at auctions.

A proposal to review the Estate Agents Act and the Sale of Land Act in Victoria has provoked concern regarding a loss of agents’ income.

“We’ve had concerns for some time about the notion of dummy bidding,” Consumer Protection commissioner Pat Walker said.

Auction sales represent only about 2 per cent of the market in WA compared with 70 per cent in Victoria.

“We think the notion of dummy bidding is wrong,” Mr Walker said.

The Real Estate Institute of Western Australia’s conditions for auction sales entitle the vendor, agent or auctioneer to make up to 10 bids up to the reserve price.

Mr Walker claims greater transparency is needed in auctions to ensure bidders are aware which bids are vendor, or dummy, bids.

“In anecdotal evidence from the east coast there are stories of auctioneers looking at trees and downpipes for bids,” he said.

“We’ll be putting forward any findings or proposed amendments to the Minister for Consumer and Employment Protection John Kobelke.”

The major concern with dummy bidding relates to bids that exceed the reserve price of the property.

ACCC regional director for Western Australia Sam Di Scerni said it was an issue that was currently allowable under State legislation.

“The concern is that it’s a bit anomalous, a bit of a quirk of the real estate industry,” Mr Di Scerni said.

“The State Government is coming around to the view that dummy bids shouldn’t be allowed.

“It’s just waiting for a report from the Department of Consumer and Employment Protection.”

REIWA president Jim Henneberry said all conditions to do with auctions in WA were clearly spelt out.

“In WA we have a thing called vendor bidding,” he said.

“Before the start of the auction it’s clearly stated that the vendor has the right to bid up to the reserve price.

“A vendor bid is really a counter offer, unless there are people to bid in an auction there can’t be an auction.”

Mr Henneberry said a dummy bid was defined in WA as a bid that was taken from someone who never intended to buy the property.

One local industry analyst said he thought the removal of vendor bids would make auctions very difficult.

“Quite often no-one will make the first bid,” he said.

“The whole idea is to motivate someone to do something; that’s the whole purpose of an auction.

“I just can’t see how you could get rid of dummy bidding.”

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