Zaid bin Aslam says: I heard that a man asked Sayyiduna Abdullah bin Umar (may Allah be pleased with them both) about trade by auction (muzayadah). He said: The Messenger of Allah (peace and blessings be upon him) forbade that a man should make a deal over his brother’s deal, except in the case of spoils of war and inherited wealth.
Hadith Referenceالفتح الربانی / كتاب البيوع والكسب والمعاش وما يتعلق بالتجارة / 5907
Hadith Gradingمحدثین:ضعیف
Hadith Takhrij«اسناده ضعيف لضعف ابن لھيعة۔ أخرجه البيھقي: 5/ 344 ، (انظر مسند أحمد ترقيم الرسالة: 5398 ترقیم بيت الأفكار الدولية: 5398»
Brief Explanation
Benefits: … The meaning of "muzayadah" is that one person states a price for an item, then the owner asks other people who will give more than this, another person, upon hearing this, offers a higher price than the first, and the owner sells it to him. This process can continue to a third or fourth person as well. This is a permissible method; the Prophet (sallallahu alayhi wa sallam) also conducted transactions in this manner.