Phantom bidding slammed

Phantom bidding at house auctions hit the headlines across the ditch last week when a Melbourne magistrate slammed the practice as "evil, deceitful and misleading."

Prominent Melbourne real estate agent Tim Fletcher was suing buyer’s advocate Justin Dunne for defamation, alleging Dunne called him an idiot and threatened to report him to the fraud squad after an auction in May last year.

Fletcher had been bidding on behalf of the vendor at that auction and Dunne failed to secure the property for his client.

The practice of agents bidding up to the vendor’s reserve price is common on both sides of the Tasman and made the headlines here last year after high profile Auckland real estate agent Michael Boulgaris conducted an auction on television show Location Location Location.

Last week, Melbourne magistrate Colin Maclead, who dismissed the defamation claim, said that ``pulling bids out of the air ... in my view, amounts to a fraud," The Age newspaper reported.

"I find that Mr Fletcher, in using what on evidence, sadly, is a common practice, was indulging in a deceitful, misleading and fraudulent stratagem to boost bids.’’

Macleod found Dunne had been "duped’’ and "put off and misled’’ by Fletcher’s "clever use’’ of fictitious bids at the auction.

Dunne "could not keep track of where and when honest bids were made,’’ Macleod said.

Outside the court, Fletcher said it was "a sad day for the vendors of Australia,’’ that the practice was not deceptive and that he would appeal against the decision.

"It's a vendor's right to bid at a figure they're not prepared to sell at ... and it's made often through the auctioneer,’’Fletcher said.

New Zealand’s Real Estate Institute shares Fletcher’s view.

Real estate agents "are entitled’’ to made vendor bids, says REINZ president Rex Hadley. "A judge is entitled to his opinion, but it’s not dishonest. The conditions of an auction are read out to the public prior to a public auction,’’ he says. "I can’t have it at all that it’s underhand.’’

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