Skip to content

Vendor bids at auction: how to spot them

A vendor bid is a bid placed by the auctioneer on behalf of the seller, not by a real buyer. Legal in most Australian states if disclosed, vendor bids exist to help the auctioneer probe the market and try to push the price toward reserve. Understanding when a bid is genuine versus vendor-placed changes whether you should keep bidding.

The legal framework

  • NSW: vendor bids are legal but must be clearly announced before the auction and each vendor bid must be called out as such during bidding
  • VIC: legal, auctioneer must announce that vendor bids may be made, and each one identified
  • QLD: legal with disclosure
  • WA, SA, TAS, ACT, NT: legal with varying disclosure requirements

The penalty for undisclosed vendor bidding is significant, and in practice, reputable auctioneers disclose. The question is not whether vendor bids happen - they do routinely - but whether you can identify them in time.

The signals of a vendor bid

1. Early in the auction - the first bid or two, before real buyers engage, is often a vendor bid at the auctioneer’s opening level.

2. Tight increments at the auctioneer’s call - when the auctioneer calls a bid without the crowd visibly bidding or without a raised paddle, and moves to the next bid quickly, it’s often a vendor bid.

3. Bidding without a paddle or gesture - real bidders have paddles, raise hands, or call bids. Bids that appear without a visible source, especially early, are suspicious.

4. After “going once” or “second call” - a vendor bid is often inserted late to nudge the price above reserve, just before the hammer falls. Listen carefully; the auctioneer should announce it.

5. The announced list: the auctioneer may pre-announce that the vendor has authorised up to 2 or 3 vendor bids. That count is the limit.

Why vendor bids matter to you

If the only other “bidder” against you is the vendor, the auction is not a competitive auction. The property has not reached the vendor’s reserve, and no other real buyer is at your price point. In that situation:

  • Stop bidding. Let the auctioneer pass the property in.
  • You become the highest registered bidder. You have first right to negotiate post-auction.
  • Almost always, you can buy the property at a lower price than your final bid, because the vendor will negotiate rather than re-list.

When the auctioneer doesn’t announce

Some auctioneers are less diligent about calling out each vendor bid. If you are unsure who just bid, ask the auctioneer clearly: “Was that a genuine bid or a vendor bid?” You are entitled to ask, and the auctioneer is legally required to answer honestly. Any hesitation or non-answer tells you what you need to know.

The post-auction strategy

If the property passes in and you are the highest bidder, you have roughly 30-60 minutes to negotiate. Start 3-5% below your highest bid, not at your highest bid. The vendor’s alternative is re-listing, which involves more marketing cost and uncertainty. A credible offer close to (but below) your final auction bid usually closes the deal.