6 things every first-home buyer should know before auction day

If you’re gearing up to attend your very first auction, you’re probably experiencing all kinds of emotions: excitement, curiosity, nerves and maybe even a little bit of fear.

Those mixed feelings are completely normal.

Auctions can be thrilling, but they’re also high-stakes environments in which the decision you make in just a few minutes can be legally binding.

To help you navigate auction day with clarity and confidence, here are six essential things to keep in mind.

1. You need to do your homework before you bid

Unlike private treaty sales, auctions are unconditional. There’s no cooling-off period and no clauses allowing you to make your offer subject to finance, contract review, or building and pest reports.

Jarrad Sapsford, director and lead buyer’s agent at OwnHome and Peach Property, says a rock-solid pre-approval should be in place before you start attending auctions.

This helps you understand your spending limit and avoid buying a home you can’t afford.

“It doesn’t mean your broker’s just plugged the numbers into a servicing calculator,” he says. “It means a human or a credit assessor at the lender has looked over your file and given a really strong indication that at this purchase price, you’ll be fine.”

He also recommends ordering a building and pest report, a strata report (if you’re buying an attached dwelling), and a contract review at least two to three business days before the auction.

2. The seller has a reserve price, and it can be different from the advertised price

You might go into the auction with the advertised price in mind – but homes don’t always sell within that range.

A property is only guaranteed to sell when the auctioneer announces that it’s “on the market”.

This is when bidding has reached or exceeded the seller’s reserve price.

“The reserve is the minimum the bidding has to hit on the auction floor for the property to sell on the auction floor,” says Sapsford.

For many first-home buyers, this can come as a surprise. The indicative range and reserve price can differ, sometimes significantly.

“It’s a tool for selling agents,” Sapsford says. “If they want to sell a property for a million dollars, they might guide it for 900K. That brings in buyers who have a million to spend and buyers who have 900K to spend, which generates more interest.”

However, Victorian law is set to change in 2026, requiring real estate agents to publish a property’s reserve price at least seven days before the auction.

3. You’re required to pay the deposit on the day

If you win the auction, you’ll need to hand over your deposit straight away – so make sure you’ve got adequate funds to cover it.

There are no legal requirements for the deposit size, but it’s usually 5 to 10 per cent of the purchase price. This can usually be paid by bank transfer, bank cheque, or personal cheque, but it’s best to confirm the seller’s preferred payment method well before auction day.

Sapsford also recommends updating your daily transfer limit with your bank to ensure you can make the full payment.

4. You’re legally locked in once the hammer falls

There’s a reason buyers do all their checks before auction day rolls around: the moment the hammer falls, the sale becomes a legally binding, unconditional contract with no cooling-off period.

You’ll be asked to sign the contract as soon as the auction ends and settle on the date listed in the contract – usually 30 to 90 days later.

“If you flat out cannot complete on the purchase, you are on the hook for the full deposit,” says Sapsford.

“If you can’t settle on the specific day or there are delays, you might pay daily interest based on a percentage of the purchase price – anywhere from 5 to 15 per cent, depending on the contract.”

5. You can ask someone to bid on your behalf, but you’ll have to register them

If you’re not feeling confident about bidding, or you’d prefer to keep emotion out of it, you can appoint someone to do it on your behalf – like a friend, family member or buyer’s agent.

But they can’t just step in on the day. You’ll need to provide a letter of authority to the auctioneer before the auction starts.

Sapsford suggests giving yourself time to prepare:

• Friend or family member: One day in advance 
• Buyer’s agent: At least two business days in advance so they can handle all the paperwork and make sure you’re registered correctly

6. Auction rules are strict, and you’re expected to know them

The auctioneer will typically read out the rules of the auction before it starts, but it helps to know the basics, so you’re not caught off guard on the day:

• You can’t withdraw a bid once it’s made
• The vendor can make bids to stimulate momentum, but these must be declared by the auctioneer
• Dummy bids (where someone pretends to be a genuine buyer) are illegal

With all the rules and procedures, auctions may seem intimidating – but they don’t have to be.

If you’re still nervous about your first auction, Sapsford says attending other auctions in your area can give you a feel for the process, without the emotional attachment.

You’ll have a better understanding of the pace and pressure, and be able to bid more confidently.