Three days before the auction for a house in Sydney’s eastern suburbs that IT worker Tony had set his heart on, he was startled to receive a call from the agent.

In a booming market, some agents are asking for blind bids. Photo: iStock

“We’ve received an offer for the property,” the agent told him. “So if you’re interested, please make your best and highest offer.”

Tony, 32, who’s asked that his full name not be used as he’s still trying to buy, was surprised, as he’d tried to make an offer before but had been told he couldn’t as the house was definitely going to auction.

“But the agent told me things had changed, and if I wanted the house, I’d have to make a better offer,” he said. “I asked him what the offer was that I’d have to beat, and he said he couldn’t tell me. I’d just have to make the very best offer I could.

“That seemed to me absolutely crazy. I was going in blind, bidding against, effectively, myself. I had no idea if I’d be offering far more than I needed to. It was just greed; there was no transparency to the process at all.”

It’s the latest case in a growing trend of agents asking for “blind” bids before an auction, while refusing to divulge the size of other bids, in a practice that’s not illegal but which has been likened to being forced to “throw a dart at a dartboard”.

With house prices booming, some agents are asking for best offers before auction. Photo: vale_t

It also happened to landscape gardener Cameron, 45, who was trying to buy a house in a popular spot on NSW’s south coast, and also doesn’t want his surname used due to a fear of agents not being cooperative with him in future.

“I was told there was an offer in, and I’d have to offer as much as I could if I wanted the house, but not knowing the size of the other offer,” he said. “That felt sickening, as then the agent would then know exactly how much we were willing to spend if an auction took place later.

“It just feels like they’re taking advantage of people when they’re at their most vulnerable and milking them for more money. How did I know if the agent was being truthful? In a proper auction, you can see who you’re bidding against, and how much they’re paying. With this, you have absolutely no idea.”

Real Estate Buyers Agents Association of Australia president Cate Bakos said this was an agent strategy that was now happening all the time in an overheated market with a lack of stock and a surplus of FOMO. She had noticed it growing particularly fast in Melbourne during lockdown, where buyers are at even more of a disadvantage.

“With this, the agent determines all the rules by which the negotiation and sale pan out,” she said. “If there’s a number of buyers, then this is likely to have an explosive result for a vendor, with no free and flowing dialogue. It’s a nightmare for a buyer and it’s happening heaps during COVID.

“For a buyer, it’s like having to throw a dart at the dartboard. But agents are playing on buyers’ desperation and emotion because they don’t know what offer to make. And if they put every bit of their money up to get the property, they don’t know if they’ve paid too much, and if they miss out, and find out eventually what the winning offer is, they might think they could have paid that.”

Making an offer on a house without knowing the competing offers can be like throwing a dart at a dartboard. Photo: iStock

Fellow buyer’s agent Rich Harvey, CEO of Propertybuyer, said he advised buyers in this situation to physically turn up at the agent’s office and demand to be shown evidence of the other offers.

“This kind of coercion tactic, where an agent forces a bidder to bring forward their bid, is what gives buyers their distrust of agents, and makes them say they’re dodgy,” Harvey said.

“You’re bidding against yourself; you’re bidding blind in a non-transparent process. And I’d avoid this at all costs.”

Data from SEO and content marketing company SEMRUSH suggested increasing interest in this tactic across the nation. It showed there had been a 136 per cent increase year-on-year of Australians searching for “unconditional offers” on Google, and the number of searches on “Can real estate agents lie about offers?” has increased by 350 per cent.

NSW Fair Trading said there was no legislative requirement that stopped an agent from informing potential buyers to raise their offers in the lead-up to an auction, and a vendor could decide to sell their property at any stage of the sale process.

“There is no legislation on advising of offers,” a spokesperson said.

Real Estate Institute of NSW CEO Tim McKibbin said such a process today “is not uncommon”.

“In a private treaty negotiation, the agent is saying there’s an offer that the vendor is looking upon favourably, and if you’re interested in making an offer for the property, then give us your best offer,” he said.

“The purchaser doesn’t know what they’ve got to beat but, if you look from the vendor’s point of view, the agent is trying to achieve the best price for the vendor, and the buyer has an opportunity to put their best foot forward.”

By SUE WILLIAMS