Buying at auction can feel like the "scary" end of the property market—fast-paced, public, and final. But with the right preparation, it's also one of the clearest, most transparent ways to buy your first home. There are no hidden negotiations, no waiting around for counter-offers—just a date, a bidding room (or screen), and a fair result.

At INNOVEST, we've guided many first-home buyers through successful auctions. This article breaks down each step so you'll know what happens, what to bring, and how to avoid expensive mistakes.

What Is an Auction, and How Does It Work?

An auction is a public sale of a property, usually run by a licensed auctioneer. Unlike private treaty sales, there's no "subject to finance" or "subject to building inspection" clause—once the hammer falls, the sale is unconditional.

The Typical Process:

1. The seller sets a reserve price (the minimum they'll accept)
2. Registered bidders gather (in-person or online)
3. The auctioneer starts bidding and calls for offers
4. When the highest bid meets or exceeds the reserve, the hammer falls—and the property is sold

If the reserve isn't met, the property is "passed in." The highest bidder usually gets the first chance to negotiate directly with the seller.

Pre-Auction Preparation: What You Need to Do Before You Bid

Because auctions are unconditional, you must have all your ducks in a row before the auction day.

Get Pre-Approved Finance

Talk to your adviser early to secure a pre-approval—a written confirmation from a lender of how much you can borrow.

Learn more in our First Home Buyer Guide NZ.

Order the Reports

Because you can't make your offer conditional, do your due diligence beforehand:

• LIM report: From the local council
• Building inspection: Identifies hidden issues such as leaks, rot, or structural problems
• Valuation report: Some lenders require one

Review the Auction Documents

Ask your lawyer to review the auction agreement and title. They'll check for easements, covenants, or clauses that could limit your plans for the property.

Getting Finance for an Auction Property

Lenders treat auctions slightly differently. Because you can't add finance conditions, they'll want to see as much information as possible about the property before auction day.

Your INNOVEST Adviser Will:

• Liaise with lenders to confirm if your pre-approval covers this specific property
• Request a "desktop valuation" (free or low cost) to gauge lender confidence
• Ensure your KiwiSaver and First Home Loan can be timed correctly if you win
• If you're using equity in an existing property that you own to pay the deposit, ensure you have these funds made available prior to auction day
• If required, buyers can request "variations" to auction agreements (like different settlement dates or deposit structures) before auction day

Understanding the Rules on Auction Day

Registration

You must register to bid—bring a photo ID. You'll receive a bidding paddle or number.

Deposit

If you win, you'll pay a deposit (usually 10%) immediately, often by EFTPOS, bank cheque, or online transfer.

Have your lawyer or adviser confirm acceptable payment methods in advance.

Unconditional Sale

Once the hammer falls, there's no backing out. The property is yours, and settlement follows on the date stated in the auction agreement (usually 30 days later).

Bidding Strategies for First-Home Buyers

Know Your Limit

Set a maximum price and stick to it. It's easy to get caught up in the energy of the room. Discuss your upper limit with your adviser and, if possible, attend a few auctions first to understand the pace.

Stay Calm and Visible

Make confident bids. Auctioneers respond to assertive bidders—it signals seriousness and can discourage hesitation from others.

Bring Support

Take a friend, family member, or your adviser for backup. They can help you stay composed and focused.

Common Mistakes to Avoid

1. Bidding without finance confirmed
2. Skipping legal checks
3. Not factoring in insurance or moving costs
4. Letting emotion overrule your limit
5. Forgetting KiwiSaver timing

Your INNOVEST adviser ensures each of these bases is covered so you're confident—not panicked—on the day.

What If the Property Passes In?

If bidding stops below the reserve, the property is "passed in". The highest bidder is invited to negotiate directly with the vendor. Here, your adviser and lawyer become invaluable—they can help secure a deal quickly and fairly.

After You Win: What Happens Next

1. Sign the sale papers with the auctioneer or agent
2. Pay your deposit immediately
3. Send all documents to your lender and lawyer
4. Finalise your loan (your adviser coordinates this)
5. Arrange insurance (lenders require proof before settlement)
6. Celebrate—you're a homeowner!

Use our Mortgage Repayment Calculator to check your repayments and explore refinancing options later.

When Buying at Auction Might Not Be Right for You

Auctions might not suit your situation if:

• You haven't secured pre-approval
• You need conditions such as "subject to finance" or "subject to builder's report"
• Your deposit funds (e.g., KiwiSaver) won't be available in time

In these cases, a private treaty or negotiation sale may suit you better. Your adviser can guide you toward listings that match your readiness.

Final Tips Before Auction Day

Ready to Bid with Confidence?

Buying at auction doesn't have to be daunting when you have experts beside you.

INNOVEST advisers can help you:

• Understand the full process
• Confirm your borrowing power
• Recommend a lawyer
• Coordinate with your lender
• Be fully prepared when the hammer falls