The Block auction sparks scrutiny as selling agency bids for buyer - realestate.com.au

The recent auction results from the reality show The Block have raised questions about potential conflicts of interest in real estate transactions. Winners Courtney and Sev achieved a remarkable auction total of $1.27 million for their property, but scrutiny intensified when it was revealed that the underbidder employed an auctioneer from the same agency handling the sale.

On top of this, it has come to light that the buyer had two representatives in the auction room, each authorized to bid on their behalf for different properties. Courtney and Sev made history on The Block, bringing in a total of $1.87 million, which includes both the auction sale and various prizes won during filming, along with a $100,000 bonus for securing the highest sale price.

The auction, led by Paul Tzamalis from The Auction Company on behalf of OBrien Real Estate, concluded at an impressive $4.72 million, significantly surpassing the reserve price of $3.45 million. However, the Real Estate Buyers Agents Association of Australia has cautioned potential homebuyers to be cautious when hiring real estate agents to represent them, especially if those agents are affiliated with the firm selling the property, as this could lead to conflicts of interest.

OBrien's Strategic Growth Advisor and Head of Auctions, who represented buyers located in Japan during the auction, confirmed that he had the necessary authorization to bid on their behalf through his separate business, BID360. He clarified that he was not involved in the sale of House 4, which was managed by his OBrien colleagues Stavros Ambatzidis and Kayn Luff.

"I was acting as a buyer’s advocate for my own business, BID360," he explained. "As long as you are not the listing agent, I believe this can still function effectively. I don't think there is a conflict of interest; I was there as an independent party." He compared his role to that of an agent supporting a buyer present at the auction, noting that protocols were followed, including signing documents to act on his clients’ behalf.

Legal guidelines prevent real estate agents from simultaneously representing both the buyer and seller of a property when they receive fees from both, as this creates conflicting fiduciary duties. In this instance, Mr. Martin asserted that he did not charge the buyers he was representing and expressed relief that they withdrew from bidding on House 4, recognizing that the eventual buyers were determined to secure it.

Interestingly, the buyers he represented went on to purchase House 5 later in the day, but not through Mr. Martin. They had independently engaged buyer’s agent Andrew Date for that auction. Mr. Date confirmed this unusual arrangement, explaining that it was initiated by his clients, which took him by surprise.

"I was present and observing all the auctions, and had House 4 been purchased, I wouldn't have bid for House 5," he stated. "When I first learned that he was bidding for them, I found it hard to comprehend. There are clear distinctions between being a professional bidder and an auctioneer." Mr. Date added that his clients were pleased with their acquisition and praised the auctioneer for House 4 for conducting an excellent auction.

Zoran Solano, president of the Real Estate Buyers Agents Association of Australia, echoed concerns about buyers engaging agents tied to the selling firm, noting that while this practice is not illegal, it poses risks for both buyers and agents. "We advise buyers against this practice," he stated. "While it is common across the country, it can lead to complications." He emphasized that buyers may not always receive complete information about the auction, potentially resulting in miscommunication and misrepresentation.

In Queensland, and certain other states, proxy bidders may also face liability risks if the buyer opts out of the purchase—a risk that buyers’ agents are typically insured against. Solano highlighted that buyers’ agents employ specific strategies rather than merely relaying instructions for each bid. "There is a significant difference between having someone in the room and having a professional advocate supporting you," he noted.

Most buyers’ agents charge a commission based on a percentage of the property's purchase price, while those who are solely engaged to bid or negotiate typically charge a one-time fee ranging from $800 to $1,200, although fees can vary widely.

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