Buying a property at auction can be a fast, exciting and cost-effective way to secure a property, but it also carries unique risks that buyers need to be aware of. Unlike a traditional purchase, where contracts are negotiated over several weeks, buying a property at auction is legally binding the moment the hammer falls. This makes preparation essential, particularly when reviewing the legal pack, securing finance and understanding the difference between the guide price, reserve price and the likely final sale price.
Below, our property team at AFG Law answers the most frequently asked questions from clients considering auction properties, helping buyers understand the process and avoid costly pitfalls.
What is the difference between buying at auction and buying through an estate agent?
The main difference is speed and certainty. At auction, if your bid is accepted, you exchange contracts immediately and are legally committed to the purchase price. Completion usually follows within 20–28 days. Through an estate agent, there is more flexibility and negotiation time, but also more uncertainty, as sales can fall through.
What is a legal pack and why is it important?
The legal pack is one of the most important documents when buying a property at auction. It typically includes:
- Title deeds
- Searches
- Special conditions of sale
- Leases (if applicable)
- EPC
- Any notices, restrictions or covenants
Because you exchange contracts the moment the hammer falls, there is no opportunity to negotiate after the auction. You must therefore review the legal pack carefully, preferably with a solicitor, before the auction takes place to identify any issues.
Do I need a solicitor before I make a bid?
Yes, it is highly advisable that you speak to a solicitor before making a bid. A solicitor can review the legal pack, flag risks and help you decide whether the property is suitable. They can also explain any unusual clauses, missing searches or conditions that could increase your costs or delay completion. Most problems arise because buyers bid without speaking toa solicitor or fully understanding what they are purchasing.
What checks should I make before bidding on a property?
You should:
- Inspect the property in person
- Ask the auction house questions about condition or access
- Have the legal pack reviewed by a solicitor
- Work out your maximum bidding limit
- Ensure finance or cash is in place
- Budget for fees, VAT or additional conditions
Preparation is the key to avoiding unpleasant surprises after the auction.
What are the risks of buying a property at auction?
Auction purchases carry several potential risks including the following:
- Missing documents in the legal pack
- Structural problems
- Title defects
- Existing tenancies
- Short completion deadlines
- Higher fees or unexpected special conditions
- Financial loss if you fail to complete
- Unexpected financial liabilities
It is for this reason that legal advice is strongly recommended.
Can I get a mortgage for a property bought at auction?
Yes, it is possible to get a mortgage when buying an auction property, but you should try to have a mortgage in principle before the auction and complete within the deadline. Some lenders will not consider properties that are uninhabitable or require major work. Some lenders won’t lend (despite a mortgage offer) if there are title defects with the property or missing documents, For this reason it is important to have the auction pack reviewed by a solicitor before the auction. Cash buyers therefore often have an advantage with auction properties.
What happens when the hammer falls – am I legally bound to buy the property?
Yes. When the hammer falls, you have exchanged contracts. This means:
- You must pay the deposit immediately (usually 10%)
- You are legally required to complete the purchase
- You could lose your deposit if you cannot complete
- You may also be liable for additional losses or penalties
There is no “cooling-off period” in auction transactions.
How much deposit do I need to pay on the day?
Most auction houses require a 10% deposit of the final sale price, along with an administration fee and, in some cases, the seller’s costs. These must be paid on the day of the auction.
What are the completion deadlines for auction purchases?
Completion typically occurs within 20 to 28 days, though this may vary depending on the seller’s special conditions. Buyers must ensure financing is in place before bidding. The timescale for completion will be set out in the Special Conditions contained within the auction pack.
What happens if I can’t complete the purchase on time?
If you fail to complete the transaction:
- You will lose your deposit
- You may be liable for the seller’s costs
- The seller may pursue you for “compensation” which will include any shortfall if the property sells for less at a later auction
This is one of the biggest financial risks when buying a property at auction. Some Seller’s may be willing to delay completion if the Buyer is not able to complete the transaction on the contractual completion date. The earlier this is raised with the Seller’s solicitor the more likely the Seller is to agree to extending the time for completion.
Are there extra fees when buying a property at auction?
Yes. In addition to your deposit, you may need to pay:
- Auction house administration fees
- Buyer’s premium
- Seller’s legal fees (if stated in the legal pack)
- VAT or SDLT (Stamp Duty Land Tax)
Always read the special conditions carefully.
Can I withdraw a bid after winning?
No. A winning bid is legally binding and treated as an immediate exchange of contracts.
Should I get a survey done before the auction?
It is strongly recommended, particularly for older or damaged properties. A survey can highlight structural issues that may affect value or mortgageability.
What is a guide price vs. a reserve price?
The guide price is the advertised starting point for bids. It is not the same as the final sale price and is often set deliberately low to attract interest.
The reserve price is the minimum the seller is willing to accept. This is usually kept confidential. If bidding does not reach the reserve price, the property will not sell.
Can I view the property before the auction?
Yes. Most auction houses offer open viewing sessions or private appointments.
What does it mean if the property is sold “as seen”?
“Sold as seen” means the seller makes no guarantees about the condition of the property. You take it exactly as it is, including any defects, rubbish left behind or unauthorised alterations.
What legal issues might be hidden in the auction pack?
Common issues include:
- Restrictive covenants
- Rights of way
- Boundary disputes
- Sitting tenants
- Missing searches
- Short leases
- Financial obligations
These can affect value, your ability to use or develop the property and your ability to get a mortgage on the Property. .
What if the property is still occupied?
If the property is still occupied (and the Seller has not agreed to sell with vacant possession), you will inherit the occupation, whether lawful or unlawful. You may need to serve notice, negotiate possession or comply with tenancy laws.
What if there are searches missing from the legal pack?
You should ask your solicitor to carry out searches urgently before the auction. Missing searches can expose you to planning issues, debts, or environmental problems. Often a seller will not include a search in an auction pack if it disclosed a problem with the property.
How do online auctions work compared to in-room auctions?
Online auctions follow the same legal principles but take place digitally via timed bidding. The moment the timer ends, the same legal obligations apply.
How can AFG Law assist?
Whether you are purchasing a commercial property or buying a house at auction, AFG Law can assist. At AFG Law, we have a team of highly experienced auction property solicitors who have years of experience dealing with property auctions. We know, as a buyer, you will be looking for a quick turnaround, which is why our knowledgeable and expert solicitors are the perfect choice.
With reasonable and budget friendly tailored fees, we will help you to purchase your dream property without the strain of expensive solicitor fees.
If you are looking to purchase a property at auction, contact us today to see how we can help you.