NSW Fair Trading investigators will today carry out a series of covert inspections at real estate auctions across inner Sydney on the lookout for under quoting and dummy bidding.

Fair Trading Minister Virginia Judge said the Government initiated the investigation – codenamed Operation Bidder - to ensure consumer confidence in the integrity of the property auction process.

“Buying a home is probably the single most important investment people make in their lives – financially and emotionally,” Ms Judge said.

“I am determined that prospective buyers and vendors enter the property market assured that auctioneers and agents are conducting their business in a fair and ethical manner.

“While there is little evidence of widespread under quoting and dummy bidding in NSW, there has been a spike in the number of property auctions.

“We will not wait for a jump in complaints to make sure the industry is doing the right thing.”

There have been 5,080 auctions in NSW in the first quarter of this year – a 58 per cent increase on the corresponding quarter in 2009.

“I’m pleased to say that since Fair Trading conducted a major blitz of the market in 2007 there has been a low level of complaints about auctions across the board,” Ms Judge said.

Between 1 January 2009 and 31 March 2010, Fair Trading received 41 complaints related to allegations of dummy bidding, underquoting, collusive practices, harassment or an agent's conduct.

“The sheer volume of activity means we must remain vigilant,” Ms Judge said.

“Misleading buyers and vendors, under quoting and dummy bidding aren’t just unfair and unethical practices – they are illegal.

“Operation Bidder puts the industry on notice that the NSW Government will not hesitate to enforce our tough laws.”

Apart from assessing for under quoting, Operation Bidder includes spot checks to determine:

• Notice of the principal’s reserve price has been given in writing to the auctioneer before the auction commences,
• A legitimate sales contract is in place for the property,
• Auctioneers and agents are properly licensed,
• All bidders are formally registered and
• There are sufficient notices of the conditions of the auction displayed throughout the auction venue to allow all persons attending to be able to read them.

Fair Trading investigators can issue on-the-spot penalty notices of up to $2,200 for breaches of the Property Stock and Business Agents Act 2002. Detection of serious breaches will be thoroughly investigated with a view to taking further disciplinary action.

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