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Understanding the Auction Process in Australia

Auction process

No matter if you are selling or buying a property, understanding how the Auction process works can be critical to achieving your goals. 

With a myriad of stages involved for parties on both sides, an auction can seem complex or confusing, with some buyers preferring to avoid them altogether. 

To ensure you are best placed to sell by an auction or bid at one, we’ve prepared this in-depth guide of what to expect and prepare for in the lead-up to an auction and for the auction day itself. 

Let’s dive right in. 


The Auction Process As A Vendor

As the seller or vendor of the property opting to sell at auction typically follows many of the same initial steps as if you were to sell via private treaty. 

Where they differ, of course, is that with an auction you have a firm campaign period and a set day on which interested parties must publicly bid against one another to purchase the home. 

These steps include:

Choosing Representation

Once your home is ready for sale, it is time to engage a real estate agent to manage the auction process. 

Be sure to do your research into which agents have had good results with auctions in your area recently and that they have experience with your type of property too. 

Check what their commission percentage is and ensure you feel a good rapport with them before making a decision.

Instigating The Auction Campaign

Your agent will walk you through the necessities of the auction campaign such as the setting of the reserve price. 

This price is negotiated by you with the agent based on advice around market value and your hoped-for sale price. This figure is confidential and not publicly disclosed to interested buyers. 

Your campaign will also involve intensive marketing and promotion of your property. An agency will do this by using several channels and tools such as professional photography, online real estate websites, social media, print advertising and more.

Multiple open houses will be held and private viewings may also be arranged as needed. 

The goal is to drum up as much interest as possible in advance of the auction day and many interested parties.  

Auction Day

An auction may be held on-site at your home or at another agreed location, an open house is often held before the auction so the property should be spotless. 

You should be present at the auction and your agent will remain in constant contact with you throughout. You are not expected to engage with buyers and it is recommended to stay out of sight of bidders until the auction is complete so as to give nothing away. 

They will be engaging with all auction attendees and ensuring interested parties are properly registered and that documentation regarding the sale is properly displayed as per relevant legislation. 

Auction day


A professional auctioneer is most often engaged in managing the bidding. In some states, specialist accreditation is required to be an auctioneer and uphold the legalities of the sale. 

The auctioneer will announce the terms and conditions before beginning the bidding in accordance with your state or territory laws or which you have set as the seller. 

We’ll look more closely at the bidding process itself in our following section for buyers, but essentially, your auctioneer will work the crowd, introducing a starting price and consistently pushing for higher bids. 

Once the reserve price has been hit or bidding is close to it, your agent may pause the bidding and discuss whether you wish to adjust the reserve and continue, selling to the highest bidder. 

If your reserve is not met, you have the option to pass the property in, meaning it remains unsold. This may be followed by negotiations with the highest bidder, but not always. 

Post-Auction Procedures

If the property is sold, contracts are signed on the day with no cooling-off period and a 10% deposit to be paid and held in trust by the agent. 

As a seller, you should have a conveyancer or solicitor lined up to begin the transfer process and manage settlement


The Auction Process For Buyers 

As a buyer, an auction can be incredibly daunting, competing publicly against other buyers in a fast-paced bidding war is not what most people consider enjoyable. 

It is helpful to be well-prepared in advance of an auction and understand what to expect as this can reduce the intensity of the day and make it easier to keep a level head. 

You should: 

Do Your Research 

Be sure to have spent time investigating the current market in your chosen location and what properties have recently sold for. 

Make sure you have done a thorough inspection of the property before auction day whether at an open house or private viewing. Weigh up all its pros and cons and determine what you think is a fair value or what you are willing to pay. 

It is wise to arrange a pest and building inspection too as if you are a successful bidder, no matter what you discover, contracts are signed on the day and there is no room to back out without significant penalties. 

Additionally, a contract of sale can be acquired in advance of the auction and shared with your solicitor or conveyancer, we recommend having them look through this before auction day. 

Auction preparation

Be Financially Prepared

Alongside pre-approval for finance, you will need to have the means to pay a 10% deposit on the day if you are successful. 

Ensure your bank allows a high enough daily transfer limit or come prepared with a personal or bank cheque. The latter is unable to have the amount altered which can lead to complications, but just as equally, could stop you from overspending. 

Cash may be accepted by some agents on the day, but is less safe than other alternatives. The selling agent is best placed to advise on what they will accept. 

Arrive Early & Register 

On the day of the auction, give yourself plenty of time to get to the property and register for the auction. The last thing you want is to be in a rush! 

You’ll need proper identification and be asked to sign a bidder registration form. Your details are confidential and not shared with any other bidders in attendance. 


Before bidding starts, the auctioneer will give a final run-down of the property being auctioned such as its features, inclusions and the terms and conditions associated with bidding. 

They will either introduce an opening amount from which bidding can begin, or they will request registered parties to give the opening bid. 

Rises & Advances

The bidding will then typically go up in increments, with the auctioneer encouraging continued bidding. You will need to raise your hand or call out amounts as directed by the auctioneer. 

These increments may be sums of $500 to $5000 or higher or anything in between. The auctioneer will decide whether your increase is enough to advance bidding but have the right to reject if they feel it is too small an amount. 

Vendor Bidding

An auctioneer or agent may put in a vendor bid on behalf of the seller to drive the price towards the reserve price. This is accepted practice and legal, but the intention to do this must be announced before bidding begins. 

Dummy Bids

Any bids made by a non-genuine buyer, this is someone not registered or legally permitted to bid on behalf of the vendor, are known as dummy bids. 

Dummy bidding is illegal and this behaviour can attract significant fines and penalties.

On The Market Or Passed In

Once bidding hits the reserve price, a property is considered to be ‘on the market’ and the winning bid becomes binding. The auctioneer will let you know when the house is on the market so there can be no confusion. 

If the reserve is not met, the vendor may decide to withdraw the property from the auction, this is known as being ‘passed in’. They may then either negotiate with the highest bidder or continue trying to sell it via private treaty. 

Once the hammer falls on the highest bid at or over the reserve price, the auction is complete and the house is considered sold. No further bids can be accepted. 

Post-Auction Expectations

If you are the successful bidder at an auction, you must be prepared to immediately sign the contract of sale and pay a minimum deposit of 10%. 

In all states and territories of Australia, this deposit is held in trust by the agent until settlement day. 

No changes to the contract of sale or cancelling of the sale are permitted and significant financial and legal consequences apply in these circumstances, so bid carefully. 

Now it is time to hand over to your solicitor or conveyancer who will finalise the transfer of ownership and funds by the agreed settlement date. 


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To learn more, speak with our team today at 0402 513 446. 

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