Auctions are the most common way residential property is sold in Melbourne and Sydney — and they are deliberately designed to favour the vendor. Here is what you need to do before auction day to compete with confidence and avoid overpaying.

Step 1: Get Your Finance Unconditionally Approved

Auction contracts in Australia are unconditional. If you are the highest bidder above reserve, you are legally obligated to buy the property — with no cooling off period and no finance clause. Pre-approval is not enough. You need full, unconditional finance approval from your lender before you bid.

Step 2: Conduct Due Diligence Before Auction Day

Unlike private sales, you cannot add conditions to an auction contract. All due diligence must be completed before you bid:

• Commission a building and pest inspection ($400–$800)
• Review the Section 32 Vendor Statement (Victoria) or Contract of Sale (NSW/QLD)
• Check title for encumbrances, easements and covenants
• Confirm zoning, overlays and planning restrictions via council
• Review owners corporation certificates if applicable

Step 3: Establish Your True Market Value Limit

Your bidding limit must be based on comparable recent sales in the same suburb and price tier — not the agent’s price guide. Price guides are frequently set 10–20% below reserve in Melbourne. Research:

• Sales of comparable properties within 1km in the last 90 days
• Land size, condition and street position adjustments
• School zone premiums if applicable
• Recent auction clearance rates in the suburb

Step 4: Understand Vendor Bid Rules

In Victoria and NSW, vendors can place bids up to reserve via the auctioneer — these are called vendor bids. The auctioneer must announce each vendor bid as such. Vendor bids are designed to push the price towards reserve. Once the property is declared on the market (meaning a genuine bid above reserve has been accepted), vendor bids cease.

Step 5: Have an Auction Bidding Strategy

Walk in with a clear plan:

• Set your maximum bid based on comparables, not emotion
• Consider opening with a strong bid to signal confidence and deter weaker bidders
• Bid in consistent increments to maintain control of the auction pace
• Know when to stop — your limit is your limit

Step 6: Know What Happens If You Are the Highest Bidder

If the property is sold under the hammer, you sign the contract immediately and pay a 10% deposit on the day (or as negotiated). Settlement is typically 30–90 days. There is no cooling off period for auction purchases.

How a Collings Property Advisor Helps at Auction

Our advisors provide pre-auction comparable analysis, establish your evidence-based bidding limit, advise on auction strategy, and can attend on your behalf. All for a fixed fee of $4,500 + GST — a fraction of what a full buyers advocate charges.

FAQs

Can I negotiate after an auction?

If a property passes in (does not reach reserve), the highest bidder typically gets first right of negotiation with the vendor. Collings can assist with post-auction negotiation strategy.

What is a cooling off period at auction?

There is no cooling off period for properties purchased at auction in Victoria or NSW. You are legally bound the moment the hammer falls.

Do I need a lawyer before auction day?

Yes. Your solicitor or conveyancer should review the contract and Section 32 before auction day so you understand any special conditions.

Want expert guidance before your next auction? Contact Collings Property Advisory — fixed fee $4,500 + GST. Join the Collings platform free for suburb intelligence and GeeVee AI analysis.