Want to buy a property at auction? Here’s everything you need to know about the process and top tips for being the winning bidder.


Key takeaways

You can buy at auction the traditional way or via the ‘modern method’. The modern method is online and has a longer timescale, so you’re more likely to be able to secure a mortgage against the home. Either way, you'll need to put down a deposit or reservation fee on the day of the auction. Be aware that it's non-refundable should you change your mind

Property auctions are a good way to land a bargain or get a quick sale. In the past, auctions were mostly open to cash buyers and investors. But now it’s much easier to buy a home at auction with a mortgage.


1. How do property auctions work?

At a property auction, interested buyers submit bids and the highest bidder gets to buy the property. Unlike the usual property sales process, an auction is binding as soon as the winning bid is accepted. You’ll usually have to pay a deposit or reservation fee on the day of the auction.

If you change your mind after a successful bid, the money put down is non-refundable. You’re also likely to incur hefty administration fees. There are two different ways of buying properties at auction:

The traditional method: often the domain of experienced investors and cash buyers, these auctions mean the winning bidder puts down a 10% deposit on the day of the auction and has to pay the rest within 28 days. You'll exchange contracts on the day of the auction, too.

The modern method: auctions are held online and the winning bidder puts down a reservation fee to secure the property (around 5%) on the day of the auction. The buyer then has 28 days to exchange contracts, with a further 28 days to complete. The reservation fee is paid in addition to the amount bid on the property and is held by the auctioneer until contracts are exchanged. 


2. Finding properties up for auction

To find properties at auction, you’ll need to track down the auction houses operating in the area you want to buy. 

The listings should also make it clear if the property is being sold via the traditional or modern method. Contact auction houses to ask for their latest catalogues and put yourself on the mailing list. Always choose a regulated auctioneer, such as a NAVA Propertymark protected auctioneer. 


3. How to prepare for the auction 

There is usually about a month between a property going online or a catalogue being distributed and the auction date. Earmark the properties you’re interested in and contact the auctioneer to book viewings.

Get your finances sorted

Unless you're a cash buyer, you’ll need to get a mortgage Agreement in Principle (AIP) from a bank or building society before the auction. This will give you a firm sense of your budget. But you'll also need to explain to the lender that the purpose of the loan is to fund a property at auction.

Get researching

Find out about property prices in the area and settle on a ceiling price that feels fair and like a good deal to you. Take an expert such as a surveyor, builder and/or architect with you on viewings to conduct a thorough inspection. Don’t be afraid to ask for as many viewings as you need.

Don’t be guided by the guide price

The auction guide price, as the name suggests, is just a guide. In fact, it’s often set low in the catalogue to entice bidders and the property could sell for 10% more or even higher. The guide price on a property can even be raised before the auction even starts, usually when it’s generated a lot of interest. Make sure you monitor it closely in the lead-up to the day.

Study the small print

The auctioneer will present you with a legal pack for the property – usually for free. This will include local searches, title deeds, an information form and a list of fixtures and fittings. The small print here is crucial, so now is the time to instruct a solicitor to study the paperwork on your behalf and make sure it’s legitimate and watertight. Being up to speed on the ins and outs of a property before the auction also means the solicitor will be able to hit the ground running if your bid proves successful.


4. How to succeed at an auction

Don’t let yourself get carried away on auction day and bid way above your ceiling price.

Be sensible. If the home you’re bidding on goes above what you want to pay, walk away. There’s always next time! Once the hammer goes down, if you’re the winning bidder, you’ll be bound by the terms and conditions of the auction. You’ll have to pay a mandatory 10% of the sale price on the day of the auction, and the 90% balance 28 days thereafter. Make sure you have the funds available.

 Top tips for auction day

  • Be 100% prepared: You’ll have to bring two forms of ID to an auction, plus proof that you can afford the 10% deposit.
  • Stick to your plan: Have a bidding strategy clear in your mind and set your maximum bid to what you know you can afford.
  • Don’t lose heart: If you were outbid on the property you wanted in this auction sale, at least you didn’t blow your budget. It could be a lot easier next time.


5. What happens once I’ve won an auction?

Congratulations. It’s now time to pay your deposit (and reservation fee if you’ve gone via the modern method) and get cracking with the legal side.

Commission a survey 

It’s not a legal requirement to commission a survey (a health check on a property) but it’s a very good idea.

Secure your mortgage

Your lender will have to carry out its own valuation to check the home is worth what you're planning to pay for it. This can be tricky if the property is in a bad state. Most mortgage lenders won't let you borrow against a home without a functioning bathroom and kitchen. But, if you’re organised and the property is in a liveable condition, a mortgage is a feasible way of funding a property purchase at auction.

Get covered with insurance

As soon as the hammer comes down on your winning bid, the property is your responsibility. This means lining up buildings insurance from that day, which will protect the bricks, mortar and structure in events such as fire or flooding.


6. Can I avoid losing my deposit if I pull out of an auction?

Once the hammer falls on a traditional auction, you are required to pay a deposit of 10% of the purchase price. You are expected to pay the remaining 90% balance within 28 days. This is a legally binding contract. Consider it a non-refundable deposit.  

If you cannot find the remaining balance, or your mortgage lender declines to lend it to you, you will lose it. The same goes for the reservation deposit (usually around 5%) that you will pay on the day of the auction if you are buying via the modern method. The only difference is, if your seller pulls out and you are buying via the modern method, you will get your reservation money back.


7. Tell me more about the modern method

The 'modern method' is also known as a conditional auction. The main difference from the traditional method is that it's slightly more flexible. The winning bidder puts down a non-refundable reservation fee to secure the property (around 5%) on the day of the auction.

It involves a longer timeframe, because the buyer has 28 days from the auction to exchange contracts, with a further 28 days to complete. The reservation fee is paid in addition to the amount bid on the property. As such it should be taken into consideration when deciding how much to bid. 

The reservation fee is held by the auctioneer until contracts are exchanged. This fee is used to pay the estate agent's and auction house's costs. There is slightly more wiggle room than the traditional method should the bidder wish to pull out. Although in such cases the reservation fee is non-refundable. 

In some instances of the modern method, a buyer will be required to pay a reservation deposit instead of a reservation fee. The reservation deposit paid is typically 4.2% of the purchase price, but unlike a reservation fee it forms part of the final purchase price. Another key difference is that when using the modern method, should the seller pull out of the sale, the buyer's reservation deposit is then refunded to them.

For all property related advice, feel free to contact our experienced sales team by contacting us here