Elvis Sings Country Favourites was one of about 20 records for auction at the Regent Theatre's Anything But Books Sale.
The album was among 20,000 pieces of vinyl donated for the sale, and volunteer Barry Morris said he came across the album while setting up for the event.
"My immediate thought was, `You've got to be kidding'.
"I remembered the famous story about the guy who bought a book about Mt Everest at the Regent Book Sale for $1 and sold it later on eBay for $1200 because no-one had noticed it was autographed by [Sir Edmund] Hillary and Tenzing Norgay.
"I thought this might be one of those items."
Mr Morris said he and other volunteers searched the internet to verify the authenticity of the autograph. But searches found Elvis' signature was less than consistent.
The only way to be certain was to send it to the United States to be authenticated, he said.
But after a little more conversation, the penny dropped.
The album was released in 1985 - eight years after Elvis' death in 1977.
Rather than be auctioned, the album will be placed among the $1 stacks at the sale tomorrow.
Gems up for auction include the Beatles' debut album Please Please Me released in 1963 and in mint condition, and a limited edition of the Beatles Christmas album, which was released to the Beatles' fan club.
Mr Morris said he had no idea what people would pay for the albums at the auction, but believed they could fetch thousands of dollars on the internet.
The sale runs from 9am to 5pm and includes CDs, DVDs, videos, artwork, jigsaws, board games and "elegant junk".
