How first home buyers can buy at auction

Buying your first home is an exciting milestone, but auctions can be one of the most nerve-wracking parts of the journey.

With fast bidding, no cooling-off period, and legal obligations the moment the hammer falls, auctions are not for the faint-hearted. But with the right preparation and strategy, you can step into your first auction with confidence.

Here’s how to make it work for you.

1. Understand the Market Before You Bid

Start by doing your research. Attend a few local auctions as a spectator to understand how the process works and familiarise yourself with the language and pace. Look at recent sales of similar homes in your desired suburb and use this to determine fair value. Your mortgage broker can also provide property reports that help guide your expectations.

2. Get Pre-Approved and Know Your Limits

Before you raise your hand, speak to a mortgage broker and get your loan pre-approved. You’ll need to have a deposit ready (usually 10%) and understand exactly what you can afford to spend. This ensures you don’t bid above your means and gives you the confidence to act quickly when the bidding heats up.

3. Conduct Thorough Inspections

Unlike private sales, auction purchases have no cooling-off period, so it’s crucial to do your due diligence before auction day. Arrange a building and pest inspection and have your solicitor review the contract. You need to know exactly what you’re buying and what your legal obligations will be.

4. Set Your Budget and Stick to It

Auctions are emotional environments, and it’s easy to get caught up in the excitement. Decide on your maximum bid ahead of time and don’t go over it. Walking away is better than committing to a loan you can’t comfortably repay or won’t get approved for.

5. Know the Auction Rules

Familiarise yourself with auction rules and terminology. Understand how vendor bids work, and clarify all sale terms before auction day. Your solicitor or conveyancer can walk you through the fine print to ensure there are no surprises.

6. Arrive Early and Register to Bid

Get to the auction at least 30 minutes early. This gives you time to register, ask final questions, and observe the crowd. It also helps you get comfortable with the setting and gives you an early read on the competition.

7. Start Strong and Bid Confidently

Confidence counts at auction. Consider making a strong opening bid to signal intent. Bid clearly and decisively to stay in control of the pace. Don’t be afraid to pause when needed, but avoid showing uncertainty, it can encourage other bidders.

8. Use Strategic Bidding Tactics

Try bidding in unusual increments to throw off other bidders (e.g., $505,000 instead of $500,000). Respond quickly to keep momentum and show strength. If bidding slows, take your time, it might give you valuable insight into who’s nearing their limit.

9. Know When to Walk Away

If bidding goes beyond your budget, hold your ground. There will always be other opportunities. Sticking to your limit ensures you don’t overstretch financially and that peace of mind is worth more than winning any auction.

10. Be Ready to Sign if You Win

If you're the successful bidder, be prepared to sign contracts and pay the deposit immediately. There’s no backing out once the hammer falls, so ensure you’re fully committed and financially ready.