Buying Property at Auction

Property auctions can offer genuine bargains and opportunities that are not available on the open market. Auction properties are often priced below market value to attract competitive bidding, and you can find unusual or unique properties that do not appear on the standard property portals. Auctions also offer speed and certainty — once the hammer falls, contracts are exchanged immediately, with completion typically 28 days later.

Properties at auction include repossessions, probate sales, properties in need of renovation, commercial and mixed-use buildings, land, and properties with complications (such as short leases or restrictive covenants) that make them difficult to sell through estate agents. For experienced buyers and investors, auctions can be an excellent way to find value.

However, buying at auction also carries significant risks. The speed of the process means you need to do all your due diligence before bidding, and a winning bid is immediately legally binding. This guide explains how to navigate the process safely.

Traditional (unconditional) auctions: This is the most common type. When the hammer falls, the buyer and seller are immediately bound by the contract. The buyer must pay a 10% deposit on the day (or immediately after for online auctions) and complete the purchase within 28 days (or as specified in the legal pack). There is no cooling-off period, and pulling out means losing your deposit.

Modern method of auction (conditional): This newer format gives buyers more time and flexibility. When you win, you pay a reservation fee (typically 4% to 6% of the purchase price) and then have 28 to 56 days to exchange contracts and a further period to complete. This allows time to arrange a mortgage and complete legal checks, but the reservation fee is non-refundable if you pull out.

Preparation is the key to success at auction. Start by researching auction houses in your area and reviewing their upcoming catalogues. Most auction houses publish their catalogue two to four weeks before the auction, giving you time to identify lots of interest and carry out due diligence.

View the property: Attend the open viewing (most auction properties have at least one or two viewing sessions). Inspect the property carefully, looking for signs of structural issues, damp, subsidence, or other problems. Take photos and measurements. If possible, view the property more than once and at different times of day.

Arrange a survey: For a traditional auction, you need to commission a survey before the auction date, as you will not have time afterwards. A RICS Level 2 or Level 3 survey can identify problems that could cost thousands to repair. The survey cost is at risk if you do not win the lot, but it is far better than buying a property with serious hidden defects.

Review the legal pack: Every auction lot comes with a legal pack containing the title deeds, property information forms, special conditions of sale, and search results. Have your solicitor review this pack before the auction. It may reveal issues such as restrictive covenants, boundary disputes, missing documentation, or problems with the title that could affect the property's value or your ability to obtain a mortgage.

Arrange finance: If you need a mortgage, obtain a formal agreement in principle and discuss auction purchases with your broker. Some lenders are reluctant to lend on auction properties, particularly those in poor condition. For traditional auctions, you may need a bridging loan if your mortgage cannot be arranged within the 28-day completion period. Cash buyers have a significant advantage at auction.

Before the auction, determine your maximum bid and stick to it. Factor in the purchase price, auction fees (usually a buyer's premium of 1% to 2% plus VAT), stamp duty, legal fees, survey costs, and any renovation work needed. Research comparable sold prices in the area to establish the property's market value, and decide the maximum you are willing to pay.

The guide price published in the catalogue is not the expected selling price — it is the minimum the seller will accept, and the reserve price (the lowest price the seller will sell for) is usually set at or just above the guide price. Properties often sell for 20% to 40% above the guide price, sometimes more for popular lots. Be prepared for this and do not get caught up in auction fever.

Write your maximum bid on a piece of paper and keep it in front of you during the auction. When bidding reaches your limit, stop. There will always be another property and another auction. Overpaying in the heat of the moment can turn a good deal into a poor one.

Arrive early, register with the auction house, and collect your bidding paddle. You will need to provide photo ID, proof of address, and details of your solicitor. If you are bidding on behalf of someone else, you will need a signed letter of authority.

Have your finances confirmed: for a traditional auction, you will need to pay a 10% deposit immediately after winning (usually by bank transfer or banker's draft, though policies vary). Ensure you have the funds accessible and know the process for payment.

When bidding, be clear and decisive. Make eye contact with the auctioneer and raise your paddle firmly. Do not be intimidated by other bidders or by rapid bidding. If the bidding stalls below the reserve price, the property may be withdrawn and available for negotiation after the auction.

If your bid is successful, you will immediately sign the contract (memorandum of sale) and pay the deposit. Your solicitor will then handle the conveyancing process, which must be completed within the timeframe specified in the special conditions (usually 28 days for traditional auctions).

Arrange buildings insurance immediately — as with a standard purchase, the risk passes to you from the point of exchange. Finalise your mortgage application (or draw down your bridging loan) and ensure your solicitor has everything they need to complete on time. Late completion can incur penalty interest charges specified in the contract.

Not all lots sell during the auction. Properties that fail to reach their reserve price (known as "unsold lots") are often available for negotiation afterwards. Contact the auction house as soon as possible after the auction to express interest. You may be able to negotiate a price at or below the guide price, and the process is usually the same as a standard auction purchase with the same terms and conditions.

Buying unsold lots can be an excellent strategy for securing a good deal with less competition. However, act quickly — other buyers will also be contacting the auction house, and good properties do not stay available for long.