What Sellers Need to Know About Auctions

Auctions, in real life, are not that complicated but it’s important for sellers to understand everything about this popular sale method.

Here are some tips for sellers on auction day:

Before auction day

Planning your strategy requires work. Here are the things that will happen before the auction.

  1. The marketing campaign

A marketing campaign usually runs for three to four weeks before auction day. A campaign consists of advertising and open homes, working with prospective buyers and delivering contracts.

  1. Set price expectation

The day prior to auction day, you and your agent talk about price expectations. An important part of this process is the feedback received throughout the campaign.

Both parties must also agree on the reserve price, the number at which the auction becomes “on-the-market,” plus any prospective seller bids; a method for encouraging bidding.

  1. The agent explain the auction process

To make the seller fully informed, the agent will go through what will happen on auction day. The location of the auction can either be at the property or offsite, like a boardroom.

Auction Day

The rules that govern auctions vary from state to state.

  1. Final public showing

Normally, the final Open for Inspection happens immediately prior to auction day.

At least 30 minutes prior to the start of the auction, your agent must present certain documents relating to the house and verbally provide information to prospective buyers.

  1. The auctioneer will carry out legal disclosure of information

Here are the rules that must be followed during auctions in NSW:

  • The highest bidder at the fall of the ‘hammer’ is the purchaser
  • The auctioneer can make one bid only on behalf of the seller
  • Prior to the auction, the auctioneer is required to disclose that the auctioneer is entitled to make one bid on behalf of the seller
  • The auctioneer must disclose immediately before, or during the actual bidding, that they are making a seller bid
  • The auctioneer has the right to decline a bid that is disadvantageous to the seller
  • The auctioneer cannot accept a bid after the fall of the ‘hammer’
  • With regards to a disputed bid, only the auctioneer can make a final decision
  • The winning buyer’s name must be submitted to the auctioneer as soon as possible

The rule in most states is that prospective buyers must register before auction day to receive a bidder’s number.


This is when the actual bidding commences. The auctioneer will call for an opening bid to commence the auction and then permit succeeding bids.

While the auctioneer can influence the tone of increments, bidders can submit other amounts. A seller’s bid can be utilised to motivate buyers to bid.

It is absolutely against the law for a non-genuine buyer to make a bid, which is called dummy bidding or false bidding.

When the reserve price is reached, the property is deemed to be ‘on-the-market’ and is sold to the buyer with the highest bid. Typically, a 10% deposit is paid up front, with the remaining to be paid on settlement.

If the reserve price is not reached

The property is passed-in if the reserve price is not reached. Commonly, the highest bidder is provided the first opportunity to negotiate with the vendor.

It is your agent’s job to do the work. A property doesn’t necessarily have to be sold at auction. There are circumstances when an auction fails, such as if it rained on the day or the main buyer fell ill.

It is not true that you will get less if your property gets passed-in. Your property can still be sold under auction conditions until 12 midnight on the day of the auction, sold in the following days or at another auction at a later date.