Property auctions in Australia: how to bid and how to sell (2026)

How auctions work

An auction is a public sale where registered bidders compete in real time to purchase a property. The auctioneer runs the process, calling for bids and announcing when the highest bid reaches the vendor’s reserve price, the minimum price the vendor is willing to accept.

When the reserve price is met or exceeded, the property is “on the market”, meaning the auctioneer will sell to the highest bidder. The winning bidder exchanges contracts unconditionally and pays the deposit (usually 10%) on the spot.

Auctions are most common in Sydney and Melbourne, where they account for a significant portion of sales. They are less common in Queensland, WA, and SA, where private treaty is more prevalent.

Auction day step by step

1. Arrive early. Registration usually opens 30 minutes before the auction. Bring photo ID and any documents required by the agent for bidder registration.
2. Register as a bidder.You must register to bid. In some states this is mandatory by law; in others it’s standard practice. You will receive a bidder number.
3. The auctioneer opens the auction. They will announce the property, confirm it is for sale, and call for opening bids.
4. Bidding commences. Bids are made verbally or by raising your number. The auctioneer will announce each bid and call for higher offers.
5. The auctioneer may consult with the vendor. If bidding stalls below the reserve, the auctioneer may pause to speak with the vendor (who may lower their reserve or elect to pass in).
6. Property goes “on the market”. Once the reserve is met, the auctioneer declares the property is on the market. The next successful bid wins.
7. Hammer falls.The auctioneer calls “going once, going twice, sold” (or similar), and the property is sold unconditionally to the highest bidder.
8. Sign contracts and pay the deposit. The successful bidder signs the contract of sale immediately and pays the deposit (typically 10% by cheque or bank transfer). The sale is binding from this point.

The reserve price

The reserve price is the minimum price the vendor is willing to accept for the property. It is set confidentially before the auction and is not disclosed to buyers.

The agent’s pre-auction price guideis not the reserve, it is an indication of expected bidding range. Price guides must be genuinely representative of the vendor’s expectations under Australian consumer law and cannot be set artificially low to attract more bidders.

A property cannot be sold at auction for less than the reserve price. If bidding does not reach the reserve, the property is “passed in”.

What “passed in” means

A property is “passed in” when bidding does not reach the vendor’s reserve price by the end of the auction. This is not a failed sale, it is the start of post-auction negotiations.

When a property is passed in:

• The highest bidder at auction is typically given the first right to negotiate with the vendor privately after the auction.
• There is often more room to negotiate a lower price post-auction, as the vendor has not been able to achieve their reserve.
• If the highest bidder cannot reach a deal, the agent can negotiate with other interested parties.

Finance before auction (critical)

This cannot be overstated: you must have your finance arranged before bidding at auction. There is no “subject to finance” clause at auction.

Steps to take before bidding:

1. Get unconditional pre-approval (not just conditional pre-approval). This means the lender has assessed your full financial position and is ready to lend, subject only to a satisfactory valuation of the specific property.
2. Request a valuation. Ask your lender to value the specific property before auction. If the bank values it lower than you bid, you may need to fund the gap with your own cash.
3. Know your limit. Set a firm maximum bid based on your pre-approval and stick to it. Auction rooms can create emotional pressure, decide your limit in advance.

Use our borrowing power calculator to estimate your capacity, and speak to a mortgage broker before attending any auction.

Due diligence before auction

All due diligence must be completed before auction day:

• Building and pest inspection. Commission an inspection before auction. Do not wait until after, you have no recourse if issues are discovered post-sale.
• Review the contract of sale.Have your conveyancer or solicitor review the vendor’s contract and Section 32 (VIC) or equivalent before auction day. Clarify any unusual clauses.
• Title search. Your conveyancer will search the title for any encumbrances, easements, or caveats.
• Strata report (if applicable). For strata properties, obtain the strata inspection report to understand the financial health of the body corporate, upcoming levies, and any major works planned.
• Research comparable sales. Look at recent sales in the suburb to understand what a fair price looks like. Browse suburb data for medians and growth.

Registration requirements by state

Always check with the agent for specific requirements before auction day.

Bidding strategies

How you bid can influence the outcome. Some approaches used by experienced buyers:

• Open with a strong bid. Opening with a confident, specific bid (e.g. $851,000 rather than $850,000) signals seriousness and can unsettle nervous competitors. It may discourage first-time bidders who were only willing to bid up incrementally.
• Bid in non-round numbers. Bidding $932,500 instead of $930,000 can confuse the rhythm of the auction and suggests you have thought carefully about your maximum, often making opponents wonder whether you have more headroom.
• Bid quickly and confidently. Hesitation signals uncertainty. Responding quickly to counter-bids puts psychological pressure on other bidders.
• Know your absolute maximum and stick to it. The auctioneer will encourage higher bids, it is their job. Set your limit with your head, not in the emotion of the room.
• Watch, don’t just bid. Before joining in, observe other bidders for body language cues. Hesitation from a competitor may mean they are near their limit.

Vendor bids explained

A vendor bid is a bid made by the auctioneer on behalf of the vendor to help progress the auction toward the reserve price. It is legal and must be announced clearly by the auctioneer (e.g. “I have a vendor bid at $720,000”).

Key things to know about vendor bids:

• The auctioneer is bidding on behalf of the vendor, not a genuine buyer
• A vendor bid cannot be the winning bid, the property cannot be “sold” to the vendor
• Vendor bids are capped at one per property in some states
• The property is only “on the market” when a genuine bidder exceeds the reserve

Buying after a passed-in auction

If a property is passed in and negotiations on auction day are unsuccessful, the property moves to private sale. At this point:

• A cooling-off period may apply (depending on the state and the timing of signing). In NSW, contracts signed after midnight of auction day typically attract a cooling-off period.
• You may be able to include conditions (subject to finance or building inspection) in the contract, ask your conveyancer.
• The vendor may be more flexible on price, given the auction did not meet their reserve.

Using a buyer’s agent at auction

A licensed buyer’s agent can attend and bid at auction on your behalf. Benefits include:

• Removes the emotional component of bidding
• Experienced in auction dynamics and strategy
• Can help you set a realistic reserve and market price range beforehand
• Useful if you cannot attend in person (e.g. interstate buyer)

If using a buyer’s agent, ensure they are licensed in the relevant state and provide written authority before auction day.

Don’t forget the second-largest line item after the deposit: