Vendor bids at auction

A vendor bid is made on behalf of the seller during an auction. It is usually made by the auctioneer as a tactic to start the bidding or keep the bids moving or to persuade buyers to raise their bids so they are closer to the price the seller is prepared to accept (the reserve price). There are rules about the use of vendor bids.

When vendor bids are allowed

Vendor bids may be made when all three of the following conditions are met:

  • The property at auction has a reserve price

  • The reserve price has not been reached

  • The bid is clearly identified by the auctioneer as a vendor bid.

Bidding that is not allowed

  • Dummy or shill bids

    These are bids that are made by people who appear to be genuine bidders but are in fact being made on behalf of the seller to persuade genuine bidders to raise their bid. Dummy or shill bids are illegal. 

  • Vendor bidding at or over the reserve price

    The auctioneer (or anyone else acting for the seller) cannot make a vendor bid at or over the reserve price. 

  • Not identifying who is making the vendor bid

    If the seller, their agent, or anyone else makes a vendor bid, they must clearly identify themselves.

    As good practice and to avoid any confusion, the auctioneer should state “This is a vendor bid”, rather than using industry jargon such as “The bid is with me” or other language that may not be well understood.

  • Referring to a vendor bid as the amount at which the property was passed in

    If the property is unsold at the end of an auction, a vendor bid cannot later be referred to as the amount at which the property was passed in. The only amounts allowed to be quoted are bids from genuine prospective buyers. 

Fair Trading Act 1986

Read more about vendor bids in the Fair Trading Act 1986, section 14A(external link).

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