Buying a property at auction can be an attractive option, particularly if you are looking for speed or for an opportunity that may not be available on the open market. However, it is very different from a standard purchase, and I often find that buyers underestimate the level of commitment they are making before they fully understand the risks involved.
One of the first things to be clear on is that not all auctions operate in the same way. There is a distinction between a traditional auction and what is often called the “modern method of auction”. The legal position and timescales are quite different.
In a traditional auction, when the hammer falls, contracts are exchanged immediately. At that point, you are legally committed to the purchase, and you are required to pay a 10% deposit there and then. Completion is then set within quite a short timescale, often around 20 working days. There is very little flexibility, and failure to complete can result in serious financial consequences, including loss of your deposit.
The modern method of auction works differently. Instead of exchanging contracts at the point of the auction, the successful bidder enters into a reservation agreement and pays a reservation fee. This secures the property for a fixed period, during which contracts must be exchanged, followed by completion within the set timeframe. Whilst this route allows more time compared to a traditional auction, the reservation fee is usually non-refundable, and the buyer is still expected to proceed within strict deadlines.
In both cases, the key point remains the same, which is that once you have been successful at auction, you are committed, and there is very limited scope to withdraw without financial consequences. For this reason, the work that would normally be carried out after an offer is accepted needs to be done in advance.
In practice, this is where having a conveyancer involved at an early stage makes a real difference. A legal pack can appear straightforward at first glance, but I often see auction packs that contain unusual or onerous conditions, missing information, or issues with title that are not immediately obvious, unless you know what to look for. A review before committing can highlight risks, clarify obligations and help you make an informed decision before you are legally bound to proceed.
The special conditions of sale are also important. These can significantly affect the overall cost of the purchase and may include additional fees, obligations to cover the seller’s legal costs, or requirements that differ from a standard transaction. The terms are binding once you proceed, so they need to be understood in advance.
Finance is another important consideration. If you require a mortgage, you need to be confident that funding will be in place within the relevant timescales and that there are no issues within the legal pack which will prevent your lender from lending. Delays are
not easily accommodated, particularly in a traditional auction, and failure to complete on time can result in financial penalties.
It is also important to consider the condition of the property. Auction properties are often sold as seen, and there may be limited opportunity to raise enquiries or request further information after the auction. Surveys and inspections should be carried out beforehand if possible.
That said, auction purchases can be very successful when approached in the right way. The key is preparation. Understanding the legal position before bidding, having the right advice in place and being clear on the risks will put you in a much stronger position.
If you are considering buying at auction, taking advice before you bid is essential. A review of the legal pack can often highlight issues that may not otherwise be apparent and help you make an informed decision before you commit.