Auctions and private treaties


Not all properties listed for auction actually sell at auction. Potential buyers should ask the agent if the vendor is considering pre-auction offers. If a pre-auction offer is accepted, the auction is cancelled.

You can appoint someone else to bid for you (e.g. a buyer’s advocate, a family member or friend) but do not arrange to have someone else sign the contract of sale on your behalf or rely on the nominee clause in the contract without first seeking legal advice.

Where there is more than one buyer, all buyers should be ready to sign the contract at the auction. If someone else is attending an auction on your behalf, ask your solicitor to arrange a non-enduring power of attorney or use the template on the Office of the Public Advocate’s website ( You should tick “on this occasion” and write “To sign the contract of sale and the vendor’s statemnet for the property of [insert address]”. You can also include a price limit if you wish. If you are attending an auction but your partner cannot and you want their name to be added to the contract of sale later, sign the contract in your name and write “and/or nominee” next to it. Your conveyancer can then prepare a nomination document.

Conduct at auctions

In July 2008, new legislation commenced that prevents bids being accepted after the fall of the hammer at house auctions in Victoria. This removes the dubious practice of a successful bidder being gazumped by a late bid. Auctioneers are required to display the rules of the auction and to explain them to bidders before the auction begins.

The auctioneer must clearly disclose when a vendor’s bid is being made so other bidders know the source of the bid.

It is also common for an auctioneer to halt an auction to consult the vendor in private. This can occur when bidding is slow at the start of an auction, or when there is a lull in the bidding, and the auctioneer thinks it is necessary to get further instructions from the vendor. The auctioneer then returns and advises the audience about these discussions. Normally, the bidding process resumes. It continues until the property is passed in or sold to the highest bidder.

The auctioneer announces when a property is “on the market” (i.e. when the bidding reaches the level at which the vendor will sell the property). When this announcement is made, the auctioneer sells the property to the highest bidder, and does not pass in the property.

In contrast, if the property is passed in, the vendor’s estate agent begins post-auction negotiations with the person who made the highest bid.

Cooling-off rights do not apply to auctions.

Private treaty or agreements

Many properties are sold by private treaty or agreement. The buyer can make a written offer to the vendor by signing the contract of sale, making a down payment for the deposit, and instructing the agent to communicate the offer to the vendor for acceptance or refusal within a specific time. The offer can be for less than the agent advises the vendor is willing to accept. The down payment is returned to the buyer if the offer is not accepted.

Cooling-off period

The advantage of a private treaty contract is that the buyer often has a right to withdraw from the contract during the cooling-off period. If the land is residential, the buyer can end the contract during the three business days after the contract is signed and recover their deposit less $100 or 0.2 per cent of the purchase price, whichever is the higher amount. This right is not available to a buyer who:

has entered into an earlier contract with the same vendor with substantially the same terms;

purchased within three business days on either side of the auction date;

is a selling agent or company; or

has bought a commercial or industrial property.