How to prepare for an auction
Auctions are fast, public, and final. That sounds intimidating. But if you prepare properly, you will walk in calm and walk out knowing you made a good decision, whether you win or not.
No cooling-off.
No added conditions.
No going back.
When the hammer falls, the contract is binding. You cannot add finance or building conditions after the auction. The contract terms are set beforehand, so review them in advance. That is what this guide helps you do.
Your first auction
Four things that will happen.
You're early. Good.
Thirty minutes before it starts. You register with the agent and show your ID. The process varies by auction. Some give you a number, some just note your name. While you wait, look around. See who else is there. Find a spot where the auctioneer can see your hand.
Most people arrive five minutes before. You are not most people.
Before you bid
Everything here must be done before auction day. No exceptions.
Finance pre-approval
A written pre-approval letter with a confirmed borrowing amount. Not just a chat. Pre-approval typically lasts about 90 days (check your letter for the expiry). It is not a guarantee of final approval. Your lender will still need to value the property after you win.
Building and pest inspection
Costs $400 to $700. You may lose this money if you do not buy, but it is essential. Some agents offer a shared report. Consider getting your own independent one.
Strata report (if applicable)
If buying a unit, townhouse, or anything with a body corporate, get a strata report ($200 to $350). It reveals the sinking fund balance, special levies, insurance, and any building disputes. Without it, you could be locked into tens of thousands in unexpected costs.
Conveyancer reviews the contract
The contract of sale (and vendor statement, such as the Section 32 in Victoria) must be available before auction. Aim to have your conveyancer review it at least two weeks before. They check title, easements, covenants, planning overlays, and anything unusual. Disclosure requirements vary by state.
Deposit ready
Typically 10% of the purchase price, as specified in the contract. This can sometimes be negotiated before the auction. Confirm the amount and accepted payment methods (bank cheque, direct transfer to trust account) with the agent beforehand.
Research comparable sales
Check what similar properties have sold for recently in the area. Your maximum bid should be the lower of what you can afford and what the property is worth. Your conveyancer, a buyer's agent, or free tools like sold price databases can help.
Arrange insurance
Risk in the property typically passes to the buyer when the contract is signed. That means auction day. Arrange building insurance to start from the date of purchase.
Register to bid
Bidder registration is legally required in all Australian states and territories. You will need photo ID (driver's licence or passport). Arrive at least 30 minutes early to register.
Your number
This is the part where auctions get people into trouble. The adrenaline is real. You have been searching for months. This place feels right. Someone else wants it too.
Your maximum bid is not the same as your pre-approval amount. Here is how to calculate it:
What can you bid?
Adjust the numbers to see your maximum purchase price
Which state are you buying in?
Adjust other costs
Your numbers
Estimates only. Stamp duty rates are simplified approximations of each state's published schedules. FHB concessions are general guides and may not cover all eligibility criteria. LMI is a rough estimate. Your actual costs depend on your lender, property type, and circumstances. Use our cost calculator for a detailed breakdown, and confirm all figures with your broker or conveyancer.
Decide this number before you walk in. Do not change it during the auction. Not by $5,000. Not by $1,000. The auction floor is not the place to rethink a number you set with a clear head. Your comfortable limit should be below the absolute maximum your lender will approve.
Let them have it. You are not here to win an auction. You are here to buy the right home.
Tips for auction day
Watch 2 to 3 auctions first
As an observer, not a bidder. The single best thing you can do for your nerves.
Bid confidently early
Open at a credible figure below your estimate of the reserve. Quick bids signal strength and discourage hesitant competitors.
Use odd increments
Instead of $10k jumps, try $7k or $3k. It breaks the auctioneer's rhythm. Note: the auctioneer can refuse bids they consider too small.
Slow down near your limit
Drop to $1k or $500 increments. Signals you are close to your ceiling.
Ask: "Is it on the market?"
In VIC, the auctioneer must announce when the reserve is reached. In other states, they should not mislead you. If it is not on the market, the vendor could still withdraw.
You can nominate someone to bid
A friend, family member, or buyer's agent can bid on your behalf. Useful if you are anxious or emotional. Let the auctioneer know during registration.
Agree on a plan with your partner
Who bids? When do you stop? Do not discuss this at the auction. Settle it before you leave the house.
Stay for the whole auction
Even if it passes in. The highest bidder gets first right to negotiate. The second-highest bidder can negotiate if the first walks away.
Vendor bids
A vendor bid is placed by the auctioneer on behalf of the seller to advance the price toward the reserve. It is not a real buyer bid. Vendor bids can only be made while the property is below reserve, and each one must be clearly announced.
| State | Vendor bids |
|---|---|
| VIC | Allowed below reserve, each must be announced |
| NSW | 1 only, must be announced |
| QLD | 1 only, below reserve |
| SA | Allowed, must be announced |
| WA | Allowed, must be announced |
| ACT | 1 only, must be announced |
| TAS | Allowed, must be announced |
| NT | Allowed, must be announced |
If you hear "vendor bid," no real buyer has bid at that level. You are not competing against anyone yet. That is useful information.
After you win: settlement
Settlement typically takes 30 to 90 days (as specified in the contract). During this time, your pre-approval must convert to formal (unconditional) loan approval.
What if the valuation comes in low?
Your lender will send a valuer to assess the property. If the valuation comes in below the purchase price, a few things can happen depending on your situation:
- Your LVR changes. If you were at 79% LVR and the lower valuation pushes you to 81%, you may now need Lenders Mortgage Insurance that was not in your budget. Or if you already had LMI, the premium may increase.
- You cover the gap. Your lender will only lend against the valuation, not the purchase price. The difference comes from your savings. On a $30k shortfall, that is $30k you need to find.
- At the extreme. If the shortfall pushes you past your lender's maximum LVR (usually 95%), the loan may not be approved at all. This is most likely for buyers who are already at the limit of their borrowing capacity.
This is uncommon, but it does happen, especially in a cooling market or when competition pushes the price above comparable sales. Ask your broker before the auction how confident they are in the valuation range for the property, and factor a buffer into your maximum bid.
If it passes in, that is good news.
The highest bidder gets first right to negotiate privately with the vendor and agent. You typically have 15 to 30 minutes before the agent opens it up to other interested parties. The second-highest bidder can also negotiate if the first walks away.
You can negotiate conditions
Subject to finance, subject to building inspection. But the vendor does not have to accept them. It is a negotiation.
Cooling-off may apply
If the sale becomes a private treaty, cooling-off rights generally apply. Exceptions: in QLD, no cooling-off if the contract is signed within 2 business days. In NSW, no cooling-off within 3 business days of the auction.
Pre-auction offers
You can submit a written offer before auction day. If the vendor accepts, the auction is cancelled and you sign a contract. The agent is legally obligated to present all offers to the vendor.
The upside
- Skip auction-day stress
- May include conditions
- Can secure the property early
The risk
- Agent will share your offer with the vendor (and may tell other buyers)
- Reveals your budget
- May trigger a "best and final" process with all interested buyers
Auction vs private sale
| Auction | Private sale | |
|---|---|---|
| Cooling-off | None | Yes (by state) |
| Buyer conditions | Cannot be added | Finance, building, other |
| Deposit | Typically 10% | Negotiable |
| Competition | Visible | Hidden |
| Time pressure | Immediate | More time |
| Due diligence | Before only | After (within conditions) |
Cooling-off periods
Private sales only. Auctions have no cooling-off period in any state. Some states also exclude sales made shortly before or after an auction.
| State | Period | Penalty |
|---|---|---|
| NSW | 5 business days | 0.25% of purchase price |
| VIC | 3 business days | The greater of $100 or 0.2% |
| QLD | 5 business days | Up to 0.25% |
| SA | 2 clear business days | Prescribed amount (check current regulations) |
| ACT | 5 business days | 0.25% |
| NT | 4 business days | May be liable for reasonable costs |
| WA | No statutory right | N/A |
| TAS | No statutory right (can be negotiated into contract) | N/A |
In QLD, cooling-off can be waived by signing a Form 32a. In NSW, a solicitor's certificate (s 66W) can waive cooling-off. These periods and penalties may change. Confirm the current rules with your conveyancer.
Dummy bidding
Dummy bidding is when someone bids with no intention of buying, just to push the price up. It is illegal in every Australian state and territory. Significant penalties apply, varying by state and regularly updated.
Mandatory bidder registration (photo ID required) is the main safeguard. If you suspect dummy bidding, report it to your state's fair trading or consumer affairs body.
Mistakes that cost real money
Bidding without formal finance pre-approval. If you win and your loan falls through, you may lose your deposit and the vendor can sue for further damages.
Skipping the building or pest inspection because "it looked fine."
Not having your conveyancer review the contract at least two weeks before auction day.
Not getting a strata report for a unit or townhouse. Special levies of $20k to $50k can be buried in the minutes.
Going above your limit because "it was only another $5,000." That $5,000 becomes $15,000+ with interest over 30 years.
Not attending any auctions as practice first.
Confusing pre-approval with formal approval. Your lender can still decline after their valuation.
Forgetting to include stamp duty, LMI, and other costs when calculating your maximum bid.
Not arranging insurance from auction day. Risk in the property passes when the contract is signed.
Not researching comparable sales. You might be bidding more than the property is worth.
Important: This guide is general information only. It does not constitute legal advice, financial advice, or credit assistance. It does not take into account your individual objectives, financial situation, or needs. Auction rules, cooling-off periods, vendor bid limits, and penalty amounts vary by state and territory and are subject to change.
Before bidding at an auction, obtain independent legal advice from a solicitor or conveyancer in your state who can confirm the current rules and review your contract. Information on this page may not reflect the most recent legislative changes.
housematch.com.au does not hold an Australian Credit Licence and is not authorised to provide credit assistance or legal advice under the National Consumer Credit Protection Act 2009 or any state legislation. We do not receive referral fees or commissions from any real estate agent, auctioneer, lender, or other party.
To the maximum extent permitted by law, housematch.com.au accepts no liability for any loss or damage arising from reliance on the information in this guide.
Last reviewed: March 2026.
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