The "Private Auction" – A Haven For The Dummy Bid

Posted on May 1, 2007 by | 1 Comment

Peter Mericka B.A., LL.B OPINION
by Peter Mericka B.A., LL.B
Real Estate Lawyer
Qualified Practising Conveyancer Victoria
Director Lawyers Real Estate Pty Ltd

View Peter Mericka's profile on LinkedIn


The dreaded “dummy bid” never really went away; it simply mutated into a more insidious form through the concept of the “Private Auction”. Bell Real Estate - Private auction letter

Bell Real Estate, a prominent real estate agency operating in the Eastern Suburbs and Yarra Ranges areas of Melbourne, uses the “Private Auction” as a standard procedure, and even provides intending purchasers with a set of guidelines. (Click on the attached image for a full view of a set Bell Real Estate’s guidelines, recently handed to one of our clients.)

The indicators of the “Private Auction” include:

  • A vague or otherwise undisclosed sale price;

  • A call for the purchaser’s “highest”, “best” or “strongest” bid;

  • An assertion that other intending purchasers are competing;

  • Confirmation that there will be no negotiation (i.e. that there will no further opportunity for purchasers to increase their offer.)
The “Private Auction” has now attracted the attention of the authorities, and may well be banned in the future.

In this posting we will examine the “Private Auction” guidelines given by Bell Real Estate to intending purchasers, and demonstrate the potential of the “Private Auction” to disadvantage both the vendor and the purchaser, while delivering the to the estate agent the sought-after commission.

Continue reading “The “Private Auction” – A Haven For The Dummy Bid”

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1 Comment

  • http:// says:

    I received a very similar document to this recently almost word-for-word.. with the major difference being that ‘will’ was replaced with ‘may’. It’s causing a “very tense and stressful time” indeed, since as mentioned in the article it leaves the purchaser with NFI and a worry that they must offer the maximum highest amount for fear that they will lose the property. If the process was more transparent and these ‘threatening’ documents were not presented I’m sure it would be better for all parties involved. Of course agents are always going to say that there are other parties interested and that it’s expected to fetch a good price so make a high offer. Are we really expected to believe that the agent may say ‘actually no one at all is interested in it apart from you so I’m sure you’ll get it for a bargain’. Let buyers know the facts, even show them the other offers to back it up, and they may appreciate the honesty and make another higher offer that can’t be refused.

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