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You don't need a paper cheque. You must pay the deposit by 5pm the next business day (that is my understanding anyway in Queensland). You can us bank transfer or get a bank cheque to the real estate office next business day, but if it comes to that, ask the agent anything you need to know...

Wouldn't you have the same risk of a silly technicality if you bought the same house at auction?

That is what it means and it means you would be buying under auction conditions. I would think it very unlikely that someone would take an offer that was subject to anything because they lose the momentum of the auction lead up. You would need to get your pest and building reports done and know...