The cheapest home to be sold under the hammer last week was in Traralgon, according to REIV data.

The three-bedroom home, which admittedly does need a major refurbishment or possible demolition, sold for $139,500 last week.

"The house needs a renovation," said Bill McMahon, of Ray White, who sold the property at auction. "It's worn out," he said.

A family bought the property and is likely to "remove" the house, he said. The 717sqm block would be suitable for development of units or townhouses he said.

Traralgon is 160 km from Melbourne, or a two-hour drive. The town has a population of 28,000, and is dependent on a paper mill and electricity plant. The controversial Hazelwood Power Station, which closed in March, is nearby.

There were a number of interested parties at the auction, said McMahon, who recommends auctions in Traralgon when appropriate.

"I think (auctions) are the way to go," he said.

"There wasn't a big crowd," said McMahon, explaining that the weather was terrible. The final price was within the vendor's expecations he said.

Read more about Victorian regional real estate:

Selling up in Melbourne to be mortgage free in Geelong

Twenty per cent of Newcastle sales from Sydney buyers: PRDnationwide

Pilbara region showing signs of recovery: REIWA