Paying the deposit at auction — how much, when and how in NSW and Victoria

The short version

When the hammer falls, the highest bidder is the buyer. You sign the contract there and then and pay the deposit on the day — most commonly 10% of the purchase price. Because an auction has no cooling-off period in either NSW or Victoria, that money isn't a placeholder you can walk back from. It's the first, binding step of a contract you're now locked into. So the deposit has to be arranged before you raise your hand, not scrambled together afterwards.

How much is the deposit?

The standard deposit is 10% of the price you bid. That's the figure written into most auction contracts, and it's what the agent will expect on the day. On a $900,000 purchase, that's $90,000 payable immediately — a number that catches a lot of first-home buyers off guard, because their savings are often earmarked for the deposit they'll give their lender at settlement, not one due the moment they win.

A smaller deposit — often 5% — is sometimes possible, but only if the vendor agrees before the auction and it's reflected in the contract on display. You cannot negotiate the deposit down after you've won; at that point the contract terms are fixed. If a 5% deposit matters to you, ask the agent in the days beforehand and get any agreed change confirmed in the contract you'll be signing. In Victoria, the Sale of Land Act 1962 (Vic) also restricts deposits above 10% on most residential sales, so a deposit higher than that is unusual.

When is it due?

Immediately. The winning bidder signs the contract straight after the auction, and the deposit is payable on signing — commonly described as "on the fall of the hammer". There's no grace period built in the way buyers sometimes assume. If the contract allows a short window to transfer funds, that's a concession in the drafting, not a right, so read it rather than rely on it.

How do people actually pay it?

The accepted methods are set by the contract and the agent, and they vary. In practice you'll usually see one of:

• Bank cheque or personal cheque — still common at auctions. If you're bidding, some buyers bring a bank cheque, though the risk is guessing the final price.
• Electronic transfer (EFT / PayID) — increasingly standard, but daily transfer limits with your bank can trip you up. Raise your limit ahead of time.
• A deposit bond or bank guarantee — a substitute for cash, but only if the vendor agrees to accept one and it's arranged in advance. Don't assume it'll be accepted on the day.

Whatever the method, the deposit is normally paid into the selling agent's or the vendor's solicitor's trust account, not handed straight to the seller.

Why there's no going back

A private-treaty sale usually carries a cooling-off period, and if you use it you forfeit only a small, capped amount — 0.25% of the price in NSW, or $100 or 0.2% in Victoria. An auction has none of that. There's nothing to forfeit because there's no cheap exit at all. If you win and then can't complete — finance falls through, valuation comes in short — you're in breach of a binding contract, and your whole deposit is at risk, along with the vendor's other losses. That's the real reason the deposit conversation belongs before the auction, alongside your unconditional finance.

What to check before you sign

1. The deposit percentage in the contract. 10% unless the agent has agreed otherwise in writing before the auction — confirm which it is.
2. The exact amount in dollars at the price you're prepared to bid to, so there's no arithmetic under pressure.
3. Accepted payment methods, and whether a deposit bond or bank guarantee is allowed — sorted well beforehand.
4. Your bank's transfer limits, raised ahead of time if you're paying by EFT.
5. Where the deposit is held — a trust account, not paid directly to the vendor.
6. That your finance is genuinely unconditional, because there's no cooling-off and no subject-to-finance safety net once you've won.

Common questions

Do I really need 10% in cash on auction day?

You need the deposit — usually 10% — available in a form the contract accepts, on the day. It doesn't have to be physical cash: a bank cheque, an electronic transfer within your limits, or an accepted deposit bond can all do the job. What you can't do is turn up hoping to sort it out later. Arrange it before you register to bid.

Can I ask to pay a 5% deposit?

You can ask — of the agent, before the auction. If the vendor agrees, it's written into the auction contract and applies to whoever wins. What you can't do is negotiate it down after the hammer falls; by then the terms are set.

Is the deposit the same as my home-loan deposit?

No, and it's a common mix-up. The auction deposit is paid to the seller's side on the day you win and forms part of the purchase price at settlement. The "deposit" your lender talks about is your equity contribution to the loan. The money often overlaps, but the timing is very different — the auction deposit is due the day you win, not at settlement. Our deposit and settlement guide walks through how the deposit sits within the wider purchase.

What happens to the deposit if I can't settle?

With no cooling-off period at auction, failing to complete is a breach of contract. The vendor can generally terminate, keep the deposit, and pursue you for further losses — for example if they resell for less. This is why the deposit and your finance need to be certain before you bid, not hoped for afterwards. See our guide to how auctions work and to registering to bid.