Buying at auction in Victoria is one of the
most common ways to purchase property in
Melbourne — and one of the most stressful
if you don’t know what to expect. Here’s
everything you need to know to walk in
prepared and walk out with the keys.
Why So Many Melbourne Properties Sell
at Auction
Melbourne has one of the highest auction
clearance rates in Australia. Vendors choose
auction because:
- It creates competitive bidding that can
push prices above reserve - Settlement terms are fixed and certain
- There is no cooling-off period for buyers
- It suits a market with strong demand
and limited supply
In some inner Melbourne suburbs, 70-80%
of properties sell under the hammer.
Understanding auctions is not optional
for Melbourne buyers — it’s essential.
Key Auction Terms to Know
Reserve price: The minimum price the
vendor will accept. The auctioneer will
announce when bidding reaches reserve by
declaring the property “on the market.”
Vendor bid: A bid made by the auctioneer
on behalf of the vendor to start or stimulate
bidding. Vendor bids must be declared and
are legal in Victoria. They do not count
toward the reserve.
Passed in: If bidding doesn’t reach the
reserve price the property is “passed in.”
The highest bidder gets first right to
negotiate with the vendor after the auction.
On the market: Once the reserve is reached
the auctioneer declares the property “on the
market” — meaning it will sell to the highest
bidder regardless of price.
Cooling-off period: There is NO cooling-off
period when buying at auction in Victoria.
Once the hammer falls you are legally bound
to complete the purchase.
What You Must Do Before Auction Day
1. Get finance pre-approved
This is non-negotiable. If you win an
auction you must pay a 10% deposit on
the day and settle within the agreed
timeframe — typically 30-90 days.
Without pre-approval you are taking
an enormous risk.
2. Review the Section 32
The vendor’s statement must be available
before auction. Read it thoroughly and
have your conveyancer review it. You
cannot renegotiate after the hammer falls.
3. Get a building and pest inspection
You bear all inspection costs before
auction — whether you win or not. For
a property you’re serious about this
is money well spent. Budget $400-$700.
4. Review owners corporation documents
If buying an apartment or unit check
all OC documents including financial
statements, meeting minutes and the
OC certificate before auction day.
5. Set your maximum bid
Decide your absolute maximum before you
arrive — not on the day. Auction
environments are emotionally charged
and it’s easy to overbid in the heat
of the moment. Write your limit down
and stick to it.
6. Attend other auctions first
If you’ve never bid at auction before
attend 2-3 auctions in the weeks before
as an observer. Watch how the auctioneer
works, how bidders behave, and how the
process unfolds. It will significantly
reduce your anxiety on the day.
7. Register to bid
In Victoria all bidders must register
before the auction with proof of identity.
Arrive early — typically registration
opens 30 minutes before the auction starts.
On Auction Day — What to Expect
Arrival
Arrive at least 30 minutes early. Register
to bid and get your bidder number. Inspect
the property one final time if allowed.
The opening
The auctioneer will introduce the property
and explain the process. They may start
with a vendor bid to set the opening price.
Bidding
Bids are typically made in increments
the auctioneer sets — often $5,000 or
$10,000 in Melbourne. You can bid in
smaller increments but the auctioneer
may not always accept them.
On the market announcement
Once reserve is reached the auctioneer
will declare the property “on the market.”
This is when you know the property will
definitely sell — keep bidding if you
want it.
The hammer falls
The auctioneer says “going once, going
twice, sold” and bangs the hammer. The
winning bidder must immediately sign
the contract and pay the deposit —
typically 10% of the purchase price.
Have a bank cheque or ability to
transfer funds ready.
Bidding Strategy
Bid with confidence
Hesitant bidding signals uncertainty
and can encourage other bidders. Bid
clearly and promptly.
Open strong
Some buyers open with a strong bid to
signal serious intent and discourage
less committed bidders. This is a
legitimate strategy.
Don’t show your ceiling
Never bid your maximum in one jump.
It signals exactly where your limit is.
Consider a buyers agent
Professional buyer’s agents bid at
auctions regularly. They remove the
emotion, know the tactics, and can
save you from overpaying. Their fee
is often recovered through better
negotiation outcomes.
If the Property Passes In
If the property is passed in — bidding
didn’t reach reserve — you have an
opportunity if you were the highest bidder:
- You get first right to negotiate
with the vendor - The vendor now knows the market
appetite for the property - There is often room to negotiate
between your highest bid and
the reserve
Passed-in properties can be excellent
buying opportunities — the vendor’s
urgency increases and competition
disappears.
Deposit and Settlement
If you win you must pay 10% deposit
on the day. This can be paid by:
- Personal cheque
- Bank cheque
- Electronic transfer (confirm with
agent beforehand)
Settlement is typically 30-90 days
as specified in the contract. Your
conveyancer manages the settlement
process from here.
Common Auction Mistakes to Avoid
- Bidding without finance pre-approval
- Not reading the Section 32 before auction
- Skipping the building inspection to
save money - Setting your limit on auction day
rather than before - Bidding beyond your pre-set maximum
- Not registering to bid before the
auction starts - Forgetting to arrange your deposit
payment method in advance
Should You Use a Buyer’s Agent?
For first time auction buyers a buyer’s
agent can be genuinely valuable:
- They bid on your behalf removing
the emotional pressure - They know auctioneer tactics and
bidding strategies - They help you set a realistic
maximum based on comparable sales - Their fee is often recovered through
better outcomes
Buyer’s agent fees in Victoria typically
range from $8,000 to $20,000+ for a
full service or a flat fee for auction
bidding only.
Next Steps
If you’re preparing to buy at auction:
- Get finance pre-approved immediately
- Engage a conveyancer to review
Section 32 documents - Book a building and pest inspection
for any property you’re serious about - Consider engaging a buyer’s agent
for your first auction
Disclaimer: This article is for
general informational purposes only
and does not constitute legal or
financial advice. Auction rules and
processes may vary. Always engage
a licensed Victorian conveyancer and
seek independent financial advice
before purchasing property.
Vic Property Guide 
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