Auctions are how a large share of Melbourne homes change hands, and they are structurally tilted against the unprepared buyer. The contract is unconditional the moment the hammer falls, there is no cooling-off, and the pace on the day leaves no room to think. Everything that protects you has to happen in the week before.
The rule that changes everything: no cooling-off, no conditions
When you buy at auction in Victoria you sign the contract immediately after the fall of the hammer, and it is unconditional. There is no three-day cooling-off period, and you cannot make the purchase subject to finance, subject to a building inspection or subject to selling your current home. The same applies if you buy within three clear business days before or after a publicly advertised auction. If your finance falls over afterwards, you are still bound — and the deposit, typically 10%, is at risk.
Before auction day: the non-negotiable checklist
- Have the Section 32 and contract reviewed. The vendor’s statement tells you about easements, covenants, owners corporation liabilities and unpermitted works. Special conditions in the contract can shift risk to you in ways that are invisible at a glance.
- Get a building and pest inspection. You cannot make the purchase conditional on one, so it has to be done beforehand. Sellers’ agents sometimes offer a pre-purchase report; treat it as a starting point, not a substitute.
- Get finance to a stage your lender will stand behind. Pre-approval is conditional on valuation. Ask your broker whether the lender will do an upfront valuation on the specific property before the auction. If it cannot, understand that you are bidding on the assumption the valuation will hold.
- Confirm your deposit is available immediately. The deposit is usually payable on the day. Check the contract for the amount and the accepted method — bank cheque, electronic transfer or a deposit bond — and make sure your bank’s daily transfer limit will not stop you.
- Negotiate contract changes before the auction, not after. If you want a longer settlement, a smaller deposit or a special condition removed, the vendor can agree in writing before the auction and the amended contract applies to you if you win. On the day it is too late.
- Set a walk-away number and write it down. Auctions are designed to move you past it.
Registration and the rules on the day
In Victoria you are not required to pre-register to bid at most auctions, but the agent will ask for identification when you sign. The auctioneer must announce the rules, and vendor bids — bids made on behalf of the seller below the reserve — must be declared as such. Once the property is “on the market” the reserve has been reached and it will sell to the highest bidder. If it is passed in and you were the highest bidder, you get the first right to negotiate, which is where a lot of Melbourne sales are actually concluded. Note that a purchase negotiated on the day of the auction still has no cooling-off.
Bidding tactics that hold up
- Bid clearly and confidently at the increments the auctioneer calls, but do not be afraid to offer a smaller increment — the auctioneer can refuse, but often will not late in the auction.
- Do not wait until the end to enter. Buyers who bid early and steadily are harder to read than those who jump in at the reserve.
- If you are the highest bidder when the property is passed in, ask for a moment before negotiating. The agent will want a quick decision; you are entitled to a short pause to call your lender or lawyer.
Grants and concessions still apply
Buying at auction does not affect your eligibility for the Victorian first home buyer stamp duty exemption or concession, or the First Home Owner Grant on a new home. Your conveyancer applies for these as part of the transfer. What auction buyers sometimes miss is that the residency requirement is unchanged — you still have to move in within the required period, and stay for the required period, to keep the benefit.
If something goes wrong after the hammer
If your finance is declined after you have bought, tell your conveyancer immediately. Options include seeking an extension of settlement (at the vendor’s discretion, usually with penalty interest), alternative lenders, or in the worst case negotiating a release. A vendor whose sale collapses can forfeit your deposit and sue for any shortfall on resale. This is why the preparation above is not optional for first home buyers — you have the least buffer if it goes wrong.
We review auction contracts and Section 32s for first home buyers across Melbourne, typically within a business day or two, so you can bid knowing what you are buying. Talk to us before the weekend, or read our first home buyer guide.
Frequently asked questions
Can I bid at auction subject to finance in Victoria?
No. Auction purchases are unconditional. If you need a finance condition, the only route is to negotiate a private sale before the auction — some vendors will accept a pre-auction offer with conditions attached, particularly if it is strong.
What happens if I am the highest bidder but the property is passed in?
You get the first opportunity to negotiate with the vendor, usually on the spot. Any contract signed that day, or within three clear business days of the auction, has no cooling-off period, so have your advice and finance ready before you start negotiating.
Do I need to bring a bank cheque to an auction?
Check the contract. Many Victorian agents now accept electronic transfer or a deposit bond, but some still require a bank cheque or a same-day transfer. Confirm the amount and method with the agent before the day and make sure your bank will allow the transfer.