Property Auctions: A guide on how they work
Last updated: 06 October 2025 | Estimated read time: 6 Minutes
Property auctions are one of the most popular ways to buy and sell homes in Australia. With fast-paced bidding and no cooling-off period, it’s important to understand how auctions work, and what to expect, before raising your paddle.
This guide walks you through key auction terminology, the bidding process, and how to prepare financially so you can bid with confidence.
Auction basics: What you’re signing up for
Unlike private sales, auctions are unconditional. If your bid wins, you’ll need to:
- Sign the contract immediately
- Pay the deposit (usually 10% of the sale price)
- Commit to the settlement date outlined in the contract
There’s no cooling-off period, so it’s essential to be financially and legally prepared before auction day.
Common Auction terms explained
Here are a few key terms to know:
- Reserve Price: The minimum price the seller will accept. Once bidding reaches this amount, the auctioneer will announce the property is “on the market.”
- Passing In: If bidding doesn’t reach the reserve, the property isn’t sold. However, the highest bidder may get the first chance to negotiate with the seller.
- Vendor Bid: A bid made by the seller to start or stimulate bidding. Rules around vendor bids vary by state, check your local regulations for details.
Buying at Auction: What you need to know
Because auctions are legally binding, it’s important to:
- Do your research: Understand the auction rules in your state or territory.
- Get pre-approval: Know your borrowing capacity before bidding.
- Have your home loan deposit ready: You’ll need to pay it immediately if you win.
- Understand the settlement date: Typically 30–90 days, but this can vary.
If you can’t meet the settlement terms, you may lose your deposit and be liable for additional costs.
Helpful resources by state and territory
Auction rules vary across Australia. Here are links to official government sites for more information:
Understanding home loan pre-approval
Home loan pre-approval gives you an estimate of how much you may be able to borrow, subject to conditions like:
- Property valuation
- Pest and building reports
- Your financial situation remaining stable
It’s not a final approval, but it helps you bid within your budget. Keep your lender updated if anything changes.
Tips on bidding at an auction
Whilst there’s no sure-fire formula for success at auction, here’s some general tips that may help:
- Do your due diligence: Get building, pest, and strata reports before auction day.
- Know your legal obligations: Understand the contract terms and auction rules.
- Have your finances ready: Ensure your deposit is accessible and pre-approval is in place.
- Bid confidently: Communicate clearly with the auctioneer.
- Know your limits: Set a firm upper limit and stick to it.
Online auctions: What are they and how they work
Online auctions have become more common, offering flexibility and transparency. You’ll need to:
- Register on the platform and verify your ID
- Watch the livestream and follow the bidding process
- Bid in real time, just like a physical auction
Note: If you’re intending to bid, you’ll need to set up an account on the chosen platform ahead of time and complete an ID verification – usually requiring your driver’s licence. The details will be passed onto the agent you’ll have visited when inspecting the property.
Platforms like Realtair allow you to view bidding history and get a feel for how auctions unfold.
Ready to Bid? We’re here to help.
Want to find out where you stand?
Sign up to our newsletter
If you like this article, you'll love our Really helpful newsletter.
Personal information is collected, used, stored and disclosed in accordance with Pepper's Privacy Policy. I understand I can unsubscribe at any time.
Need some help with your first home loan?
Whether you’re confused the purchase process, wondering what LMI or LVR mean, or are looking for help along the way, our resources are here to make sense of all that finance jargon.
Information provided is factual information only and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser.
All applications for credit are subject to credit assessment, eligibility criteria and lending limits. Terms, conditions, fees and charges apply.
The results of the borrowing power calculator are based on information you have provided and is to be used as a guide only. The output of the calculator is subject to the assumptions provided in the calculator (see 'about this calculator') and are subject to change. It does not constitute a quote, pre-qualification, approval for credit or an offer for credit and you should not enter commitments based on it. The interest rates do not reflect true interest rates and the formula used for the purpose of calculating estimated borrowing power is based on the assumption that interest rates remain constant for the chosen loan term. Your borrowing power amount will be different if a full application is submitted and we complete responsible lending assessment. The results in the calculator do not take into account loan setup or establishment fees nor government, statutory or lenders fees, which may be applicable from time to time. Calculator by Widgetworks.
Pepper Money Personal Loans is a brand of Pepper Money Limited. Credit is provided by Now Finance Group Pty Ltd, Australian Credit Licence Number 425142 as agent for NF Finco 2 Pty Limited ACN 164 213 030. Personal information for Pepper Money Personal Loans is collected, used and disclosed in accordance with Pepper’s Privacy Policy & the credit provider’s Privacy Policy.
Pepper Money Limited ABN 55 094 317 665; AFSL and Australian Credit Licence 286655 (“Pepper”). All rights reserved. Pepper is the servicer of home loans provided by Pepper Finance Corporation Limited ABN 51 094 317 647. Pepper Asset Finance Pty Limited ACN 165 183 317 Australian Credit Licence 458899 is the credit provider for asset finance loans.
Pepper and the Pepper Money logo are registered trademarks of Pepper Group Assets (Australia) Pty Limited and are used under licence.
