Attending your first property auction can feel exciting, nerve-racking and a little unfamiliar all at once. The pace is quick, the bidding is public, and if the hammer falls in your favour, the sale is usually unconditional. The good news is that once you understand how the process works, an auction can be a clear and transparent way to buy property.

Before auction day: preparation is everything

Unlike some other methods of sale, buying at auction generally means buying unconditionally. That means you need to complete your homework before you bid, not afterwards. This includes understanding the property, confirming your finances, reviewing the legal documents and knowing exactly how much you are prepared to spend.

Before the auction, speak with your bank or mortgage adviser, arrange any building or specialist inspections, review the LIM and title, and ask your lawyer or conveyancer to check the auction documents. You should also confirm how the deposit will be paid if you are successful, as this is usually required on auction day.

When you arrive: expect a fast-paced environment

On auction day, there may be a mix of bidders, agents, spectators and support people in the room or online. The auctioneer will outline the terms and conditions of the auction before bidding begins. These details are important, so listen carefully and ask the agent beforehand if there is anything you do not understand.

The auctioneer may invite an opening bid or start the bidding at a suggested level. From there, bids are called publicly and usually increase in set increments. You will be able to hear where the bidding sits and decide whether you want to continue, pause or step away.

Common auction terms you may hear

·        Reserve price: The minimum price the seller is prepared to accept. This is not disclosed to bidders.

·        On the market: This phrase generally means the reserve has been met and the property will sell to the highest bidder from this point.

·        Vendor bid: A bid made on behalf of the seller, where allowed and declared by the auctioneer.

·        Passed in: If bidding does not reach the reserve, the property may not sell under the hammer. The highest bidder may then be invited to negotiate.

·        Unless sold prior: The property may be sold before the advertised auction date if the seller accepts an earlier offer.

Bidding: stay clear on your limit

Auctions can move quickly, so decide your maximum price before the day and stick to it. It can help to write your limit down, bring a trusted support person, and avoid letting the energy of the room push you beyond your comfort zone.

If you plan to bid, make your bids clearly so the auctioneer can see or hear you. Some buyers prefer to bid early to show confidence, while others wait to see how the auction unfolds. There is no single right approach, but there is one golden rule: do not bid beyond what you are ready and able to pay.

If you are the successful bidder

If the property is declared sold and you are the highest bidder, you will usually sign the sale and purchase agreement straight away and pay the agreed deposit. From that point, you are committed to completing the purchase, so it is important that your finance, insurance, legal checks and due diligence are all sorted before you bid.

After the auction, your lawyer or conveyancer will guide you through the next steps leading up to settlement. This is when the remaining balance is paid and the property officially changes hands.

If the property does not sell under the hammer

Not every property sells on auction day. If the bidding does not reach the seller’s reserve, the property may be passed in. In many cases, the highest bidder is given the first opportunity to negotiate with the seller, although this can vary depending on the circumstances.

If you are not the highest bidder, there may still be an opportunity to make an offer later. Stay in touch with the agent so you understand what is happening next.

Quick checklist before your first auction

  • Confirm your finance and know your absolute maximum bid
  • Have your lawyer or conveyancer review the auction documents
  • Complete any building, LIM, title or specialist checks before auction day
  • Understand the deposit amount and how it will be paid
  • Register your interest with the agent and ask to be updated if the property may sell prior
  • Attend another auction as a spectator if you want to get comfortable with the process

Final thoughts

Your first property auction does not need to feel overwhelming. With the right preparation, clear advice and a firm budget, you can walk in knowing what to expect and make confident decisions on the day. If you are thinking about buying at auction, speak with your EVES real estate salesperson, lawyer and mortgage broker early so you are ready before bidding begins.