Auction rules apply as soon as the contract has been delivered to the seller of the property. Auctions require you to have finance prior to bidding, as a bid is an offer to buy.

However all offers must be put to the client, it is illegal not to, but they cannot hold the property on an offer without a contract. The agent is not talking rubbish. After all, he/she doesn’t get paid til he/she sells the property, and well, we all need money, so they will be trying their hardest to sell the property.

My advice is to suggest to your friend to find pre-approval and if they are truly interested in the property, get the building inspection completed before you place an offer

Hope this helps!
Geoffrey