What You Should Know Before Attending Your First Auction

Buying your first home or investment property is a massive milestone, but if that property is going under the hammer, the excitement can quickly turn into nerves. Auctions are fast-paced, high-pressure environments where decisions are made in seconds.

If you’ve never stood in a crowd of bidders before, the theatre of it all can be overwhelming. But here’s the truth: auctions aren’t just about who has the deepest pockets. They are about preparation, strategy, and keeping a cool head when the pressure mounts.

Before you raise your hand, you need to understand exactly what you’re signing up for.

Your finances must be rock solid

You might have a verbal "okay" from your lender or an online certificate, but at an auction, that’s not enough. When the hammer falls, the sale is unconditional. There is no "subject to finance" clause to save you if your loan isn’t approved later.

You need full, written pre-approval that has been vetted by a credit assessor. This gives you a hard limit on what you can spend. If you bid $950,000 but the bank only values the property at $920,000, you are responsible for finding that $30,000 gap.

Due diligence can’t wait until Monday

In a private treaty sale (a standard for-sale listing), you often have a cooling-off period to organize building and pest inspections. At an auction, you don’t have that luxury.

You must complete all your checks before auction day. This means:

• Organizing a building and pest inspection

• Having your solicitor or conveyancer review the contract of sale

• Checking strata reports if it’s an apartment or townhouse

• Confirming zoning or planning restrictions

Yes, this costs money upfront for a property you might not win. However, spending a few hundred dollars now is far better than losing a 10% deposit later because you bought a property with major structural issues.

Understand the rules of engagement

Auctions operate under strict state laws, and while they vary slightly between VIC, NSW, and QLD, the core principles remain the same. The auctioneer is in charge, and they will set the pace.

One key term you will hear is "vendor bid." This is a bid made by the auctioneer on behalf of the seller to keep the momentum going. It is perfectly legal, but the auctioneer must announce it.

You also need to know when the property is "on the market." This is the moment the bidding reaches the seller’s reserve price. Once those words are spoken, the property will be sold to the highest bidder, no matter what. If it doesn’t reach the reserve, the property is "passed in," and the highest bidder usually gets the first right to negotiate.

Have a strategy for the day

Walking in with a "let’s see how it goes" attitude is a recipe for disaster. You need a clear game plan. Decide on your absolute walk-away price the night before, and stick to it. It’s easy to get swept up in the emotion and throw in "just one more bid" of $5,000, but those increments add up.

Consider your body language. Stand where the auctioneer can see you clearly. Bid confidently and say the full number (e.g., "$950,000" rather than just "$5,000"). This shows other bidders that you are serious and in control, which can sometimes discourage tentative buyers.

The deposit is due immediately

If you win, you will need to sign the contract and pay the deposit right then and there. This is typically 10% of the purchase price.

Make sure you have your payment method sorted. A personal cheque is often accepted, but many agencies now use digital payment apps. Check with the selling agent a few days prior to ensure you have the correct daily transfer limits set up on your bank account.

Don’t be afraid to watch from the sidelines first

If you’re nervous, don’t let your dream home be the first auction you attend. Go to two or three auctions in the local area as a spectator. Watch the auctioneer’s rhythm, observe how bidders behave, and see what happens when a property hits the market.

It demystifies the process and makes the real day feel much more familiar. You’ll realize that while the auctioneer talks fast, the actual process is structured and predictable.

Winning is just the beginning

The moment you sign that contract, the property is yours. There is no cooling-off period. This finality is why preparation is everything. If you have done your homework, reviewed the legal packs, and sorted your finances, you can bid with confidence knowing you aren’t just guessing, you’re executing a plan.

Keen to understand how this applies to your situation? We’ll help you break it down and plan the next step.

Disclaimer:

The information in this article is general in nature and does not take into account your personal financial, legal, or tax circumstances. Property structures, tax regulations, and superannuation rules may change over time. You should seek advice from a qualified professional and refer to the latest ATO and government guidelines before making any investment or structuring decisions.