# fake bids in private treaty sales -- how prevalent and what is the law?



## amethyst (18 Oct 2013)

So,  you're trying to buy a property (by private treaty) and you say you're interested at 310K.  The auctioneer tells you another (third) party has bid 315K and you go up to 320K and so on.

How do you know the third party is real?  The auctioneer could be making up 'fake bids' to get a higher price out of you, couldn't he/she?

1. What is the legal status of a 'fake bid' in Ireland?  Leaving the difficulty of proof aside, (which is a substantial difficulty)  it would seem to me that this is legally FRAUD and therefore a crime.  The auctioneer is materially misrepresenting the market state of a property.  But, is it clearly established in Irish law that it is a crime?  Any case law?

2. Do reputable auctioneers always avoid it?  Does their professional body stand against it?

3.  How common do you think it is in practice?

Opinions much appreciated.


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## facetious (19 Oct 2013)

As regards the legalities, I don't know.

However, I absolutely refuse to get into a bidding war with anyone - fake or real and I advise the EA when viewing at if there is any other bids, I am not interested. A buyer's worst enemy is to fall in love with a property. If they do, a bidding war is likely.


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## Dr.Debt (19 Oct 2013)

The is no law against fake bids. The estate agent's job is to get the maximum amount of money possible for his client. Your job is to set your own maximum value on the property at a level that you can afford. In an ideal world you should not go beyond that point.

It's actually a very fair system. If the estate agent bluffs too much, he runs the risk of losing the buyer. If the buyer calls the estate agents bluff too early in the hope of a bargain, he runs the risk of losing the house.

In my experience of buying and selling a few houses over the years, the estate agents will only get into this type of situation where the seller has set a floor price for the property which is higher than the highest bid. In other words the seller is not willing to sell the house at your last bid so the estate agent has nothing at all to lose by introducing a fake bid to try and get you up to a price that the vendor will accept.

Another thing that people sometimes don't know is that an Auctioneer at a public auction can introduce a fake bid if there is only one serious buyer in the room. He will point his gavel at a blank spot on the back wall as if someone had made a bid.
In the trade they call this "taking bids from the wall". There is nothing at all illegal about this. Many frequent auction pros will often like to stand at the back wall for this very reason. They can see the whole room and see who is making the bids.
The buck stops with the buyer. You only bid because you believe the property to be worth more. You don't bid for the sole purpose of competing with someone else.


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## amethyst (19 Oct 2013)

Dr. Debt,

thanks for your response.

I believe you that there is no explicit law against fake bids in Ireland.

However, it does seem to follow the definition of *fraud*.

_>>The buck stops with the buyer. You only bid because you believe the  property to be worth more. You don't bid for the sole purpose of  competing with someone else. 	_

The hole I see in this is that it would seem to apply just as well (or badly) to *any* kind of misrepresentation by the seller, and therefore hold the seller immune in principle to the crime (or tort) of fraud.

Placing fake bids misrepresents the market -- it is a material misrepresentation.

I do know that people have been charged with placing fake bids (on eBay) in the UK.  I don't know if they have a special act covering it in the UK, or if they are just not soft on fraud, as we tend to be here in Ireland.


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## Luternau (19 Oct 2013)

Sounds like mis-representation to me.
In an auction you bid for an item against a floor price (reserve) and those that are also interested in buying. A 'strawman' cannot buy and therefore any bid from a 'strawman' if not a valid bid. 
At the end of the day, its up to the seller to set a floor and then agree to sell at a price from real bidders.  Anything else is gerrymandering in the extreme-put another way its an attempt to manipulate a price or a market for ones gain and is illegal.

And yes, I would say its very common in private treaty sale. Auctioneers (property/land) will try all the tricks to get the highest possible price-even questionable ones.  

One way round this would be if all bids had to be made in paper form (an official form with official ID required) and any buyer could ask to see and verify any bid made that is being purported to be higher than their bid. Total transparency!


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