Bidding on behalf of another - what are the rules?

19 April 2022


Personalities, pressure and paperwork - there’s a lot going on in the moments before an auction. In today’s fast-paced market it takes well-versed selling agents and auctioneers to tick all the necessary compliance boxes before bidding begins. However, there are some simple misunderstandings around providing proof of identity prior to the hammer falling.

Registering on behalf of another

Oliver Stier, buyers’ agent with OH Property Group and REINSW Buyers’ Agents Chapter Committee Member, said there needs to be more awareness on the various ways to register.

“What we’re encountering a lot are auctioneers and selling agents who aren’t fully aware of the rules around what is needed to register. Obviously, for a person who walks in and wants to register as themselves it’s quite straightforward, they present an ID which goes down in the bidders record. But when it comes to a buyers’ agent, or when someone is bidding under authority for someone else, there tends to be confusion,” he said.

“The authority to bid form is probably the most understood method. That could be a buyers’ agent, or simply a friend or relative bidding on behalf of someone. That person then goes up to the selling agent or auctioneer to register and presents the signed form. The authority to bid form shows the name of the actual party who's going to purchase the property - if successful - so this includes their identification, whether that be a driver's licence or passport.” In this case, you register and identify the party authorised to bid, along with the details of the party they are bidding for (the purchaser).

Problems presented with powers of attorney

Mr Stier said he frequently hit hurdles prior to auction when, as a buyers’ agent, he registers a bidder using a power of attorney. This method is becoming increasingly popular for potential purchasers who choose to remain anonymous until a sale has been made.

“This is much less understood and it’s where we encounter problems. In the Property and Stock Agents Act and regulations, it specifies clearly that when you bid under a power of attorney, the actual purchaser’s details don't have to be entered into the bidders record. We have the power of attorney and if we're successful at auction, only then would the property go into the name of the party we have the power of attorney for,” he explained.

In NSW, while it is required for all bidders to register before taking part in an auction, there is no requirement for the eventual purchaser’s identity to be revealed if a power of attorney is in place.

“It's completely according to the law; that we’re able to bid for them without disclosing who they are prior to the hammer going down. But we often experience problems because the selling agent or auctioneer might not understand the rules and they insist we tell them who the purchaser is by showing them the details of the power of attorney,” Mr Stier said.

“Some legitimately believe they have to sight the power of attorney and record the names of the actual buyer beforehand.”

Buying property at auction through a power of attorney to preserve confidentiality has long been common practice in some areas, particularly in Sydney’s most affluent suburbs, but Mr Stier said the practice is becoming more widespread.

“It’s still not common in many parts of Sydney, and definitely not in all parts of NSW, so there are many selling agents and auctioneers out there who are unfamiliar with the exact rules. I frequently see confusion among new agents or auctioneers, which results in me having to have a complicated conversation before auction.”

The auctioneer’s role at registration

Jesse Davidson, auctioneer With AuctionWorks and Chairperson of the REINSW Auctioneer Chapter said he often saw buyers’ agents hitting roadblocks right before an auction.

“I’d say the frustration for buyers’ agents in particular is when they've done everything by the letter of the law, and people contest them. They turn up to an auction and purely want to be a third party so that their client can be kept completely anonymous, they've got a power of attorney but are then made to feel uncomfortable when an agent, auctioneer or even owner is insisting on knowing who the buyer is,” he said.

While selling or buyers’ agents and auctioneers can become increasingly concerned about where their liability sits, Mr Davidson said if they are well-schooled then they won’t experience problems.

“People are genuinely honest. Stories of people signing contracts and running away, it doesn't really happen. Of a company that did 3000 Auctions last year, we probably had four or five sales that came into question whether or not the purchaser was going to sign and they ended up signing. So, we didn't have a single auction in our company where we had to force the signing of a contract because they were going to pull out of it.”

Mr Davidson added that selling agents and auctioneers can help streamline the pre-auction process for all parties, including their own clients, by informing their teams of the rules around registration.

“We talk about this topic all the time. I tell them ‘If you ever hear an agent insisting on viewing a power of attorney, step in and make it very clear, that it’s not required’. To be honest, it’s not a good look for anyone to be having these sorts of conversations on the day.”

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