Buying Property at Auction in NSW: What Happens When the Hammer Falls
At auction there’s no cooling-off period and no second chance to check the contract. Everything that protects you has to happen before you raise your hand.
What happens when you buy at auction in NSW?
The moment the hammer falls, you’ve bought it. As the winning bidder you sign the contract and pay the deposit on the spot, usually 10% of the price, and there’s no cooling-off period to change your mind. An auction isn’t riskier than a private sale, but all of your checks have to be finished before auction day, not after.
- Is there a cooling-off period at auction? No. Once you’re the winning bidder the sale is binding, and walking away can cost you the deposit plus the seller’s losses.
- How much deposit do I pay on the day? Usually 10% of the purchase price, straight after the auction. A smaller deposit is only possible if the agent agrees to it in writing before you bid.
- What if the property is passed in? The highest bidder usually gets first chance to negotiate. If contracts are exchanged the same day, there’s still no cooling-off period.
- When should the contract be reviewed? Before you register to bid. Once the hammer falls, its terms can’t be negotiated.
Why auctions are different
In a private sale you make an offer, the contract gets negotiated, and most buyers exchange with a 5 business day cooling-off period to finish their checks. Auctions remove all of that. The contract is fixed before bidding starts, the sale happens in public in a matter of minutes, and the winning bidder exchanges contracts on the spot.
That’s the whole trade off. You get certainty the moment you win, but you lose every chance to fix a problem you didn’t find beforehand.
What buyers think
“I’ll get the contract checked if I win.”
“If it’s passed in and I buy it afterwards, I’ll get a cooling-off period.”
“I’ve got pre-approval, so my finance is sorted.”
What actually happens
By the time you’ve won, the contract is signed and binding, so any bad clause is now yours. A contract exchanged on the same day a property is passed in has no cooling-off period either. And pre-approval isn’t unconditional: an auction contract isn’t subject to finance, and your lender can still value the property below what you paid.
What to do before you bid
Treat every one of these as a stop sign. If one isn’t done, you aren’t ready to bid.
Get the contract reviewed
Ask the agent for the contract as soon as the property is listed and send it to us. We check the special conditions, the settlement period, the deposit terms and the inclusions list. Since 1 June 2026 contracts must use the 2026 edition, so an auction contract prepared months ago is worth a second look.
Do your inspections
Get a building and pest inspection, or read the one the agent provides and ask questions about it. Buying a unit or townhouse? Read the strata report too. After the hammer falls, anything you find is your problem.
Know your real limit
Speak to your lender or broker and get a conditional approval where the only thing outstanding is the valuation. Check recent comparable sales so you know what the bank is likely to value it at, because any shortfall comes out of your pocket.
Sort out the deposit
Check you can transfer the full 10% on the day, as many banks cap daily transfers. If you can’t, ask the agent before the auction to accept a smaller deposit with the balance paid later, and get it in writing. A deposit bond may also be an option.
Get an insurance quote
Bushfire, flood and construction type can make a property expensive or hard to insure. Find out before you bid, not after. Here’s why an insurance quote matters.
Register to bid
You must register with the agent before you can bid, showing photo ID and proof of address, and you’ll get a bidder number. Registering doesn’t mean you have to bid. It just gives you the right to.
The rules on auction day
NSW auctions follow set rules, and the conditions of sale must be on display. The ones buyers ask us about most:
- The reserve price. The seller sets a minimum price, usually kept private. Below it, the property isn’t sold.
- One vendor bid. The auctioneer can make a single bid on the seller’s behalf, and must announce it as a vendor bid.
- No dummy bids. Fake bids to push the price up are illegal.
- The auctioneer decides. If a bid is disputed, the auctioneer’s decision is final, and no bids are accepted after the hammer falls.
Bidding this weekend? Send us the contract today so it’s reviewed before you register.
Can I buy before the auction?
Sometimes. A seller may accept an offer before auction day, and it’s worth asking the agent to put your price forward if you really want the property. Expect auction style terms though: usually a 10% deposit and the cooling-off period waived with a 66W certificate. That means the contract review has to happen before you sign, exactly as it would for the auction itself.
What if it’s passed in?
If bidding doesn’t reach the reserve, the property is passed in. The highest bidder is usually invited to negotiate with the seller first. You’re not obliged to buy, but if you agree on a price and exchange that same day, there’s no cooling-off period. Negotiate as if the hammer had fallen.
You’ve won. What happens next?
You sign the contract and pay the deposit straight away. From there it runs like any other purchase: we complete the searches, your lender issues the loan documents, and we confirm the settlement date with the seller’s representative. You do a final inspection in the week of settlement, and once settlement completes you collect the keys from the agent.
The short version
When the hammer falls on your bid, you’ve bought the property. There’s no cooling-off period, the deposit is usually 10% on the spot, and a same day sale after a pass in is just as binding. Get the contract reviewed, the inspections done and your finance and deposit confirmed before you register, and an auction is no riskier than any other way of buying.
Bidding at auction?
Talk to Justin, Julie, Amanda or Nicole today. We’ll review the contract before auction day so you can bid with confidence.
