The way a property is sold changes the finance risk you carry. Private treaty usually gives you a finance clause and a cooling-off period. Auctions give you neither: the fall of the hammer is an unconditional contract, deposit payable on the spot. Your preparation has to match.
Auction: unconditional means unconditional
If you win at auction and your finance falls through, you lose the deposit (usually 10%) and can be sued for any resale shortfall. So auction bidding requires more than pre-approval: it requires pre-approval from a lender whose valuation and policy you already know will hold for that property, at your bidding limit.
The auction-ready checklist
- Formal pre-approval, not a website estimate, refreshed within 90 days.
- Valuation risk checked: your broker can often order or model the bank valuation before auction day.
- Contract reviewed by your conveyancer before you bid.
- Deposit accessible on the day (bank cheque or transfer arrangements confirmed).
- A hard walk-away number set in advance, below your approved maximum.
Private treaty: use the conditions you are given
A subject-to-finance clause is your safety net; use it and set a realistic finance period (14 to 21 days). Cooling-off periods vary by state and usually cost a small penalty to exercise. Even with the clause, a fast, well-prepared application beats scrambling: sellers accept clean offers over hopeful ones.
Same preparation, different stakes
The homework is identical in both cases; auctions simply remove the margin for error. Get pre-approval sorted properly, then have Nathan pressure-test your bidding limit before you raise a hand.