How to Buy Property at Auction in Australia: A Complete Guide

Buying property at auction in Australia can be exciting, nerve-wracking, and fast-paced. Unlike private treaty sales, an auction creates a legally binding contract the moment the hammer falls — with no cooling-off period, no subject-to-finance clause, and no second chances. This guide walks you through every stage of the auction process, from preparation weeks before the event through to settlement, so you can bid with confidence and avoid costly mistakes.

How Auctions Work in Australia

A property auction is a public sale where registered bidders compete by making progressively higher offers. The auctioneer conducts the bidding on behalf of the vendor (seller), and the property is sold to the highest bidder at or above the reserve price — the minimum price the vendor has agreed to accept.

Auctions are governed by state and territory legislation and must follow specific rules around conduct, bid registration, vendor bids, and contract formation. While the basic process is similar nationwide, there are important differences between states which we cover below.

In most capital cities, auctions are a common method of sale, particularly in Sydney and Melbourne where auction clearance rates are closely watched as a barometer of market confidence.

Step-by-Step: Pre-Auction Preparation

The work you do before auction day is far more important than what happens during the bidding. Because there is no cooling-off period, you must complete all your due diligence in advance. Our pre-auction checklist provides a printable summary of everything to complete before bidding.

On Auction Day

Registration

To bid at an auction, you must register with the agent before bidding begins. You will need to provide:

• Photo identification (driver's licence or passport)
• Your name and contact details
• If bidding on behalf of someone else, a written authority from the buyer

You will receive a bidder number or card. Only registered bidders can participate in the auction.

Bidding Strategies

There is no single "right" way to bid, but experienced buyers often use these approaches:

1. Start with a strong opening bid: A confident opening bid near the expected range can deter less serious bidders and set a tone of seriousness. Some buyers prefer to let others open and enter later.
2. Bid in round numbers: Bidding in clean increments ($5,000, $10,000) keeps the pace moving. Near your limit, switching to smaller increments ($1,000 or $2,000) signals that the price is approaching the ceiling and can slow the auction.
3. Bid quickly and confidently: Hesitant bidding can encourage competitors. Quick, decisive bids signal that you have a high budget and may discourage others.
4. Know when to stop: This is the most important strategy. When the bidding reaches your pre-set maximum, stop. No property is worth financial distress.

The Reserve Price

The reserve price is the minimum amount the vendor will accept. It is set by the vendor before the auction and is not disclosed to bidders. During the auction:

• If bidding has not reached the reserve, the auctioneer may announce that the property is "on the market" once it does — this signals that it will be sold to the highest bidder
• Vendor bids (bids made by the auctioneer on behalf of the vendor to advance the auction) are permitted in most states but must be declared. Rules vary by state — in NSW, only one vendor bid is allowed; in Victoria, up to three vendor bids may be made below the reserve
• If the bidding does not reach the reserve, the property is "passed in"

What Happens If the Property Is Passed In

If the auction does not reach the reserve price, the property is passed in. The highest bidder typically gets the first right to negotiate with the vendor privately — for tips on this scenario, see our guide on how to make an offer on property in Australia. This is actually a common outcome — in many markets, 30-40% of auctions result in a pass-in.

Key points about post-auction negotiation:

• You are negotiating a private treaty sale, but the vendor may not offer a cooling-off period (in most states, cooling-off does not apply to post-auction sales on the same day)
• You may be able to negotiate a lower price than the reserve
• You can try to negotiate the inclusion of subject-to conditions (finance, inspection), though the vendor is under no obligation to accept them
• If you cannot agree on a price, the property will typically be listed for private sale

After the Hammer Falls: Post-Auction Process

If you are the successful bidder, the following happens immediately:

Auction Rules by State

While the core auction process is similar across Australia, there are key differences between states:

Common Mistakes at Auction

Avoid these pitfalls that catch many first-time auction buyers:

Should You Use a Buyer's Agent?

A buyer's agent (or buyer's advocate) is a licensed professional who can bid on your behalf. Benefits include:

• They remove the emotional element from bidding
• They are experienced in auction tactics and reading the room
• They can negotiate on your behalf if the property is passed in
• They can conduct pre-auction due diligence and research

Buyer's agents typically charge 1-3% of the purchase price or a flat fee. For high-value properties or buyers who find auctions stressful, this can be a worthwhile investment.

For more on preparing for a property purchase, see our property due diligence checklist, how to read a property contract, and our comparison of buying at auction vs private treaty.