Buying at auction in Melbourne: an auctioneer’s guide for buyers

I have stood in front of a lot of crowds with a gavel in my hand. The buyers who do well at auction are rarely the ones with the biggest budget. They are the ones who did their homework before Saturday and stuck to it during the auction.

Before auction day

1. Read the Statement of Information. Victorian agents must provide an indicative selling price and three comparable sales. Use it as a starting point and check the comparables yourself.
2. Get the contract reviewed by your conveyancer or lawyer, including the vendor statement (section 32). Once the hammer falls, you are bound by it.
3. Get finance pre-approval and confirm the lender will accept the property type and location. Pre-approval is not unconditional approval — the lender will still value the property.
4. Arrange building and pest inspections before the day. You cannot make an auction purchase subject to an inspection.
5. Have the deposit ready. Usually 10% on the day, unless the vendor agrees otherwise before the auction.

The rules that protect you

• Underquoting is illegal. Agents cannot advertise or quote a price below the seller’s asking price, a written offer they have rejected, or their own estimate of the selling price.
• Vendor bids must be announced. Only the auctioneer can make a bid on the vendor’s behalf, and it must be clearly identified as a vendor bid.
• Bidders must register with the agent before bidding, with identification.
• No cooling-off. The usual three business day cooling-off period does not apply to auctions, or to purchases within three clear business days either side of a publicly advertised auction.

How to bid

There is no single right strategy, but there are wrong ones. Bidding without a limit is the most expensive. A few things that work:

• Bid clearly and confidently. Hesitation signals your limit is near.
• Control the increments when you can. If the auctioneer asks for $10,000, a firm $5,000 is usually accepted later in the auction.
• Understand “on the market”. Once the auctioneer announces the property is on the market, it will sell to the highest bidder. Before that, the highest bidder usually gets the first chance to negotiate if it passes in.
• Passed in is not the end. If the property passes in, the highest bidder normally has first right to negotiate with the vendor.

After the hammer falls

You sign the contract on the spot and pay the deposit. From there your lender completes its valuation and formal approval, your conveyancer manages settlement, and the stamp duty clock starts. Our stamp duty calculator shows what to budget for.

Common questions