Bidding at auction

About the Victorian auction system

Since the first Melbourne property auctions in 1837, the public auction system has provided a popular method for buying and selling Victorian residential real estate.

Auctions are widely regarded as the best way to determine the true market value of a home – especially in areas of strong buyer competition.

Real estate auction rules

Victorian Government legislation sets out rules for the conduct of residential auctions, and the responsibilities of the vendor, agent and purchaser. Under the legislation, the auctioneer must read out the following words at the commencement of any public real estate auction:

  1. Today’s auction will be conducted in accordance with the rules in Schedule 1 of the Sale of Land Regulations 2004 and any additional conditions that were made available for inspection before the start of the auction.
  2. The auction rules permit the making of bids on behalf of the vendor.
  3. The law prohibits the making of vendor bids other than by the auctioneer.
  4. During the auction, the auctioneer will say “VENDOR BID” when making bids on the vendor’s behalf.
  5. The auctioneer will indicate bidders on request.
  6. The law prohibits a person from falsely claiming or falsely acknowledging that he or she made a bid.
  7. The law prohibits an intending bidder or a person acting on behalf of an intending bidder from intentionally preventing or causing a major disruption to the auction.
  8. The law provides for substantial penalties for any person who engages in prohibited conduct.

Before an auctioneer calls for bids, he or she must also announce to bidders that the rules of the auction prohibit the auctioneer from accepting bids or offers after the property has been ‘knocked down’ to the successful bidder.

Buyers should also be aware that unlike private sales, there’s no cooling-off period when a property is purchased at an auction.

Frequently asked questions

Do I have to register to bid at a Victorian real estate auction?

When is a property considered to ‘sold’ at a public auction?
The property sells to the highest bidder, as long as the seller accepts the price.

What’s a vendor bid?
A vendor bid is a bid made by the auctioneer on behalf of the seller. Such a bid can only be made by the auctioneer, who must declare every vendor bid. There is no limit to the number of vendor bids that can be made, however Buxton generally limits vendor bids to a maximum of three.

What’s a reserve price?
The reserve price is the minimum price that the seller wants for their property. The reserve is typically set by the seller the day of, or the day before the auction. It is worth noting that although an auctioneer will often announce that a property is “on the market” (indicating that the reserve has been met) there is no legal requirement for the auctioneer to do so.

What does it mean when a property is ‘passed in’?
An auction property will be ‘passed-in’ when the bidding has not reached the seller’s reserve price – and the property has not been sold. What usually happens after a property is ‘passed-in’? The highest bidder has the first right to negotiate to purchase the property. If the property is ‘passed-in’ on a vendor bid, the seller/agent is free to negotiate with any potential buyer. What happens if the property is ‘passed in’ on a vendor bid? The seller, through their agent, can rightfully negotiate with any genuine potential buyer.

Tips for buying at auction
There's an art to bidding at auction, but first you have to know the rules.

On the day of the auction

  • Ensure you arrive early and make a final inspection of the property.
  • Arrive in sufficient time to check the contract, vendor’s statement, information about auctions and the auction rules, which will all be on display. Pay particular attention to the rules. They tell you how the auction will be conducted.


  • To purchase a property at auction, the most important advice we can offer is simply to make sure you bid! Make sure your bid is visible to the auctioneer, and they acknowledge that they have received your bid. If your bid is the highest and the seller accepts the price, you will buy the property. If your bid is the highest, and the property is passed-in, you will have the exclusive right to be the first to negotiate a purchase price with the seller – via their agent.
  • If you have participated in the bidding, or have been sitting back watching how it is progressing, and the auctioneer announces the property is going to be passed in, it is a good strategy at this point to bid up to obtain the right to first negotiate with the owner. Securing does not cost anything and you have created the exclusive right to negotiate to purchase the property before anyone else. This exclusive first right of negotiation comes into existence the moment the auctioneer concludes the auction by passing in the property.

If the property is ‘passed in’

  • Once the property is passed in, it is too late to shout out a bid in an attempt to get to the front of the negotiating queue. The auction is over. You have missed out on securing the right to negotiate first. The auctioneer can’t re-open the auction to accommodate your late bid and override the right someone else has secured ahead of you.
  • The length of time you have to negotiate with the owner/selling agent may depend on whether you are prepared to accept the owner's price. If you are not prepared to meet the owner's asking price, the owner may end negotiations with you immediately and start negotiating with another interested party.
  • If you are not confident about bidding at auction you should consider using a buyer's advocate to assist you, by bidding on their behalf. If you decide to use a buyer’s advocate, it is important to ensure that they are a licensed estate agent and a member of the Real Estate Institute of Victoria (REIV).

Reference source: REIV.

If you require any further real estate advice or information, or wish to arrange a current market appraisal on your property, please contact your nearest Buxton office.


The above information is provided in good faith and was thought to be accurate as at the date of being posted to this web site. Buxton Real Estate Group suggests you obtain independent professional advice before acting on any of the information presented herein. Buxton and its agencies accept no responsibility for any omissions or errors contained within this article.

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Information for overseas buyers

Recognising the important contribution that overseas investment makes to the Australian community and economy, the Federal Government has streamlined the purchasing process for foreign property buyers to encourage investment.

You should consult the FIRB website at for full details, and seek legal advice before acting on any of the information. If you’d like to find out more about purchasing property in Australia, please contact us.

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