Buying At Auction

You have finally found the right home and it’s being sold at auction.

This is enough to scare some potential buyers away; however, provided you are adequately prepared, purchasing at auction need not be a traumatic experience. Auctions are becoming more popular when selling property, particularly in the middle to higher price bracket, or where it is considered unique for that area. Following is a step-by-step guide to help you purchase a home at auction. If you have any further questions please speak with one of our Mortgage Brokers.

Prior to the auction, you may wish to consider these steps:

Finance Pre-Approval

You need to make sure you are able to finance the purchase of your new property, so it pays to arrange finance pre-approval prior to attending any auction.


A pre-approval is an indication from the lender that they will lend you a predetermined amount of money, subject to a satisfactory valuation on the property, and if required, mortgage insurance approval. Having said that, it is worthwhile considering getting the lender to conduct a valuation of the property as it will give you an idea of the value of the property and bidding limit at the auction. This is particularly important if you have a limited deposit or if you are borrowing 100% of the purchase price as the lender will use that valuation as the basis for the loan. This means that if you pay more than the valuation amount you will have to come up with the minimum or if you can access more funds, then this is not so important.


You will need to obtain a copy of the contract and other statutory documentation to check the terms and conditions of the sale. It would be wise to have your solicitor/conveyancer peruse the contract and even conduct preliminary searches. It would be terrible to find out after you have bought the house that, for example, there will be a four lane highway built along your back fence, or that the electricity company plans to build high voltage power lines nearby, thereby lowering the value.


If you bid successfully at an auction the house is yours at the fall of the hammer. You will then have to sign an unconditional contract, which means there can be no conditions which might halt or delay the sale. This is where your finance pre-approval is important.


Ensure that you have the correct deposit available on the day of the auction. This is usually 10% of the agreed purchase price which you will be required to pay immediately. If you do not wish to pay this much, ensure you negotiate this with the agent and/or the vendor prior to the auction.

Most agents will accept a personal cheque within 24 hours, but ensure you confirm with them prior to the auction. If your deposit is not immediately available then you could consider using a Deposit Bond. Your Mortgage Broker can explain how a Deposit Bond works as well as arrange it for you.

Conditions on Contract

It is very rare for the vendor to allow you to place conditions on the contract. This means that generally you must arrange everything prior to the auction, including: finance, building inspections, pest inspections, land surveys, etc. Also make sure the settlement date noted on the contract is suitable to you, and if it’s not, then you must negotiate a mutually agreeable date prior to the auction.

If you are the successful bidder at the auction you may want to consider these steps:

Building Insurance

In most states you become liable for the insured risk on the property immediately. This is the insurance policy that covers you in the event your house is destroyed by fire or other events. You must have adequate building insurance at the appropriate time so make contact with your insurance broker before the auction and immediately after you are successful.

Personal Protection Insurance

Now that you are financially committed to this property, it makes sense to ensure you can continue to meet the mortgage repayments in the event of something unforeseen occurring.


You will need to pay the deposit into the agent’s trust account, usually within 24 hours. Make sure you obtain a receipt from the agent. If you are using a Deposit Bond then you’ll need to give them the Guarantee Certificate.


If you have not already done so, arrange finance for the purchase. If you already have a pre-approval (the recommended method), then all you have to do is forward a copy of the contract and deposit receipt to your Mortgage Broker so that final approval can be obtained.


Notify your conveyancer or solicitor of your purchase so that they can commence the necessary paperwork and searches prior to settlement. See our Process from Contract to Settlement Information Sheet for a detailed explanation of the process from contract signing to settlement.

Bernie Lewis works with BLHL Conveyancing Services who can provide our clients with an efficient and professional transfer of your property.

For further information please speak with one of our Mortgage Brokers today! Call 8300 8300 or visit https://www.bernielewis.com.au/contact-us/