What you need to do before you bid
Because there’s no cooling off.
Most property buyers understand, in theory, that auctions come without a cooling-off period. What they underestimate is how much that actually changes what you need to do in the days and weeks before you bid. Once the hammer falls in NSW, you are unconditionally bound. You cannot pull out because your finance fell through, because a building inspection turned up something you didn’t like, or because you read the contract properly for the first time and found something you’d never have agreed to. The contract is exchanged at that moment, the 10% deposit is due immediately, and the clock on settlement starts ticking.
This isn’t meant to put you off buying at auction. The point is that the work you’d normally do after signing a contract under the cooling-off period has to happen before you bid. That shifts the burden, and a lot of buyers don’t realise it until it’s too late.
Get the contract reviewed before auction day
The vendor is legally required to make the contract available before auction, and you should treat getting your hands on it early as a genuine priority, not an afterthought. Ideally, you want it two weeks out. That gives your solicitor time to review it properly, raise any issues with the vendor’s solicitor, and if necessary negotiate changes before the auction date.
What are solicitors actually looking for in an auction contract? A few things come up more often than buyers expect. Examples include:
- Special conditions that extend settlement to an unusually long period, or that restrict what you can do with the property.
- Easements or covenants that limit how the land can be used;
- Inclusions and exclusions that don’t match what the agent told you was staying;
- Zoning issues, outstanding orders, or planning certificates that flag something worth investigating and;
- Contracts that are drafted in a way that are disproportionately favourable towards the vendor.
We highly recommend that you read our Contract Review article; which provides greater detail about the key issues that you should be aware of in a contract.
Understand what your finance pre-approval actually covers
A pre-approval is not the same as formal finance approval, and confusing the two is one of the more common ways buyers get into trouble at auction. Pre-approval tells you approximately how much a lender is willing to consider lending you, based on your income and liabilities as you’ve described them. It doesn’t guarantee that they’ll lend you that amount against a specific property.
Lenders assess the property independently, and it is not unusual for property to be valued lower than the price you paid at auction. If that happens, you’re still obliged to complete the purchase. The shortfall has to come from somewhere, whether that’s savings, another source of equity, or in some cases, a conversation with another lender. This is worth understanding clearly before you set your bidding limit, not after.
Talk to your broker or lender before auction day about how confident they are in your pre-approval for the specific property you’re buying, and at the price range you’re considering. You should ensure that you have alternative arrangements in place if there is an expected shortfall.
Get the building and pest inspection done beforehand
This is standard advice and it gets ignored fairly often, usually because buyers feel uncertain about spending money on a property they might not buy. That’s understandable. But weigh it against the alternative: buying a property unconditionally and discovering afterwards that the roof needs replacing, there’s active termite activity, or the lower level has had a history of water ingress.
A building and pest inspection in Sydney typically costs between $400 and $700 depending on the property and the inspector. It’s a much smaller number than the cost of addressing undisclosed defects post-purchase, and unlike a contract review you can sometimes share the report with other interested parties or use it as a basis for negotiating with the agent about whether the vendor might address a known issue before auction.
If the property is a strata property, a strata inspection report is equally important. This tells you the financial health of the owners corporation, whether there are any outstanding disputes or special levies, and what the capital works fund looks like. A building that’s been poorly maintained collectively can create costs for all owners, including the one who just bought at auction.
Check what’s actually included in the sale
Agents will sometimes describe what’s in a property in general terms, and those descriptions don’t always match the contract. This may include fixtures and fittings that you assumed were staying, garden sheds, specific appliances, window treatments, light fittings, pool equipment. The contract ultimately governs what is included. If the item isn’t listed as an inclusion, the vendor is entitled to take it.
Your solicitor should walk you through the inclusions and exclusions schedule in the contract. If there’s something you care about that isn’t listed, it’s worth asking before auction whether the vendor would be willing to add it. Pre-auction negotiation on contract terms is more common than buyers realise, and vendors are sometimes open to it rather than risk losing a buyer.
Know your actual limit, then decide on your bidding limit
These are two different numbers. Your actual limit is the maximum you can genuinely afford to pay, accounting for stamp duty, legal fees, any immediate repairs or works you know are needed, and a buffer for the unexpected. Your bidding limit is the number you’ve decided to stop at on the day. It should sit at or below your actual limit, and it should be set before you arrive, not in the heat of the moment.
Auctions are deliberately designed to create urgency and competition. That’s their purpose. The adrenaline of the room, the presence of other bidders, the sense that you’re about to lose something you want, all of it creates pressure to go one more bid. Knowing your ceiling in advance, and genuinely committing to it, is the most practical thing you can do to protect yourself from buying at a price you’ll regret.
Register to bid before the auction
In NSW, bidder registration is required at all residential property auctions. You will need to register with the agent before bidding begins and provide photo identification. Agents typically handle registration on the day, but it’s worth confirming the process and timing when you make your final pre-auction contact. If you intend to buy in a company or trust name, check with your solicitor and the agent in advance about what documentation is required, as requirements can differ.
It’s also worth understanding vendor bids before you arrive. In NSW, an auctioneer is permitted to make bids on behalf of the vendor up to the reserve price, and is required to identify each one as a vendor bid at the time it is made. These bids are designed to move the price toward the reserve — they do not represent genuine competition from another buyer. Knowing this helps you read the room more accurately and avoid bidding against bids that were never from a real competitor.
What happens when the hammer falls
If you’re the successful bidder, the exchange of contracts happens immediately. You’ll be asked to sign the contract on the spot and pay the deposit, which in NSW is typically 10% of the purchase price. You need to have this ready, usually as a bank cheque or electronic transfer, though agents will advise on accepted payment methods beforehand.
Settlement is then set by the contract terms, commonly 42 days in NSW, though this can vary. From that point, your solicitor handles the formal settlement process: ordering searches, liaising with the vendor’s solicitor, arranging the transfer of title, and working with your lender to ensure funds are available in time. There’s more to that process than most buyers realise, which is covered in detail in our article on what happens after contracts exchange.
If the property passes in
Not every auction results in a sale. If bidding fails to reach the vendor’s reserve price, the auctioneer will declare the property passed in. As the highest bidder at pass-in, you typically have the right to negotiate with the vendor first — before the property is opened to other buyers. This is a private negotiation, not an auction, and the rules change accordingly.
Importantly, a sale negotiated after pass-in is treated as a private treaty sale, which means a cooling-off period may apply. This is a meaningful distinction: unlike a sale at auction, you may have a limited window to reconsider. Your solicitor can advise on how the cooling-off period applies in your circumstances and whether any conditions should be attached to the offer. If you find yourself in a post-auction negotiation, contact your solicitor before you sign anything.
What your solicitor can negotiate before the auction
Most buyers assume the auction contract is fixed. This is an incorrect assumption. Solicitors regularly raise issues with a vendor’s solicitor prior to auction, and in some cases get contract terms amended. This might mean adjusting the settlement date to fit your circumstances, clarifying an ambiguous clause, adding an inclusion that was verbally promised, or removing a special condition that was unreasonably drafted.
Whether the vendor will agree to changes depends on the property and how motivated they are to sell. But you can’t negotiate what you haven’t read, and you can’t read it properly without having it reviewed by a professional. This is the core reason why getting legal advice early gives you options that last-minute buyers don’t have.
The checklist
We have created a printable checklist that covers the key issues discussed in this article that you can work through in the weeks before auction day. It covers the timeline from first inspecting a property through to what to bring on the day.
If you’re preparing to bid and you haven’t had the contract reviewed yet, that’s the most useful thing you can do in the time you have. Our property law team handles pre-auction contract reviews regularly, and we can usually turn around a review and advice letter within a few business days. Reach out via the contact form or call the office to discuss timing.
This article is general information only. It does not constitute legal advice and should not be relied upon as such. For advice specific to your situation, please contact & Legal directly.