The Risk of Proxy Bidding at Auctions

25 Apr 2019

People who can’t handle the stress of a property auction or aren’t available to attend the auction itself, often enlist a proxy bidder to bid on their behalf. While there are numerous benefits to appoint a proxy bidder for a property auction, there are risks for both the buyer and the proxy bidders that you should be aware of.

In this blog post, we provide an overview of this increasingly popular strategy and detail what could go wrong in the process.

However, if you would prefer to have a quick chat to our friendly team, feel free to call us on 07 3170 3760 today!

What is proxy bidding at auction and who uses it?

Using a proxy bidder means that you appoint a representative to bid on your behalf as a buyer when either you can’t physically attend a property auction, don’t feel comfortable with the highly stressful process, or have little to no experience with the bidding process.

How is proxy bidding done?

As a property buyer, you will need to complete paperwork to appoint a bidder on your behalf. This is usually a straightforward process, however we recommend having independent legal guidance as the legislation varies from state to state. The document is known as a bidding authority.

What are the benefits of using a buyer’s agent to bid at auction?

There are a few major benefits for using a buyer’s agency as your proxy bidder, this includes:

1) You can bid on a property you adore that you might not have been able to purchase because you couldn’t attend the auction.

2) A buyer’s agent attends and bids at auctions regularly so they will be able to interpret and manage the auction atmosphere. As a buyer, you can leverage this rich bidding experience to read the room and bid accordingly, potentially saving you thousands of dollars in return.

3) Using a professional with extensive experience in this area means that you are less likely to make a mistake, such as overpaying or missing out on certain crucial details.


What could go wrong when proxy bidding or bidding by representative?

While it is a straightforward process, there are a few things that can potentially go wrong including:

1) Not completing the correct forms and showing up on the auction day not being in a position to complete the contract of sale or even bid at all.

This means the proxy bidder is liable for the contract as according to Queensland legislation, the bidder warrants the buyer’s ability to complete the contract. In the event the buyer doesn’t complete the contract, a proxy bidder might be held liable to complete the contract and buy the property.   

2) The person representing you might not have the experience, nor have your best interest in mind.

As a buyer, you need to fully understand the qualifications and credentials of your proxy bidder.  Perhaps a “family friend” owns a few properties or they’re the most senior person in your family, but this doesn’t mean they have the formal experience or training to bid at an auction. This is a big risk because they may potentially crumble under the pressure and overpay.

Bidding via a selling agent is another great risk because selling agents don’t always have your best interest in mind as they serve the seller. Do not take their advice at face value.


3) The person bidding on your behalf could misinterpret your instructions in relation to maximum price and accidentally go over your maximum.

What are the rules around proxy bidding in Australia?

The Rules are state by state, so we recommend having legal advice from a solicitor within the state you are looking to purchase.

Here in Queensland there is a Standard REIQ Form that you can use to appoint a bidder on your behalf. But be warned, as a representative you warrant the buyers ability to complete the contract. In the event the buyer doesn’t complete the contract, you as a proxy bidder might be held liable to complete the contract and buy the property.

What are the top tips when bidding at auction without buying a buyer’s agent?

As a qualified buyer’s agent with more than a decade of experience bidding and buying properties, here are a few top tips we recommend for all buyers:

1) Do your homework. Make sure the property is likely to be within a price range that you can afford and is in good condition.

2) Set your price point. We always set 3 prices when bidding at auction:

Bargain Price,

Fair and Reasonable, and

Absolute Maximum

Depending on the property style and the number of registered bidders at the auctions,you should develop a strategy of when to start bidding, or even if I start the bidding, I might stay quiet until the property is on the market.

3) Develop a strategy. You will need to scope out the competition, and understand what the demographics are in this market as they are your competition.

4) It’s you against the seller until the property is on the market, not you against other buyers. Don’t get caught up in a bidding war with other buyers before the property is declared on the market, the only person you should be up against is the seller.

5) Breathe and keep calm. Auctions can be very intensive and highly stressful so keep your cool.

If you do not think you can come up with a strategy, scope out your real competitors or handle the stress well, appoint a buyer’s agent who can do this on your behalf.  

What are the fees for proxy bidders or appointing someone to bid on your behalf?

Auction representation is very affordable when compared to the potential savings. Buyers agents will usually charge a small upfront fee of a few hundred dollars for auction attendance, followed by a fee payable on successful purchase.

If you have any more questions about proxy bidding, feel free to contact us online or give us a quick call on 07 3170 3760 today!

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