This is common practice here in Sydney.
To give you an example, I saw one of the most rediculous things in my life for a pair of side to side terrace houses near Central station (Sydney). Trying to dig up the ad.
Basically these pair of houses were tenanted at the moment renting for around $450 pw. They are rundown, the kitchen and bathrooms need alot of work. 2 bedroom plus 1 spiral stairs to the attic. The agents bresic whitney were quoting between 600-650k. They had enough yard space to park 4 cars (2 in tandem side by side) with dual rear lane access.
Come auction day this is what I saw, I registered well I don't think he even took my license number down except give me a bidding sign. Anyway the auction starts off, a woman with a young child sits on the opposite side of the street on the kerb and sticks her hand up for 600k. A few more bidders behind finally coming back to her putting in a bid for 650k. Next I know it the auctioneer announces some bull**** about this is your chance, the second one may go for more then the first. Slience for a few minutes.
Next thing you know, well this auctioneer goes we will suspend bidding and auction off the second terrace house before coming back to this one. WTF so you can suspend an auction? Well heres the funny thing. Anyway we keep going this same woman with this child on sitting on the kerb starts bidding again up to 660k.
Then the woman announces to the agent, oh I only want to buy 1 house. I mean WTF??? then why do you bid on both? What if the vendor decides to sell you both, you are up for 10% on each one that you probably cant even afford in the first place. The bidding stops at 660k.
Both of them were passed in, the reserve was 685k. Seriously what a waste of time. The vendor clearly didn't want to give these houses away, they are on 1 title as the lands have been merged. They need to be sub-divided again. Now the funny thing is, one of my friends went in to negotiate as he wanted to buy them both or none. He offered 1.3 million for both houses this was rejected.
I believe the woman was staged there to dummy bid with no intention to buy. Might have been related to the vendor, judging by the way she sat on the kerb and what she was wearing. I mean if you were serious about buying wouldn't you stand up and do the bidding.
Come 3 weeks later, the agent announces both houses have been sold 675k and 685k. Well imo they won't sold at all, I go past there regularly and I see the same tenants in there. The signs were removed 1 week after the sale, Im sure you can have an instant settlement. I will be getting my friend to RPData the 2 houses in a few months time to see if it did really sell.
IMO this was all staged, I could have reported the whole thing to ACCC. But its not worth my effort.
http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007848130
This is the house Im talking about and the one next to it. Anyone got RPData access? Can you see if this was sold at all =D.
Cheers,
Slam