Should I buy a property at auction?

Step 1. Understand how property auctions work

Property auctions follow a different process to a standard house purchase. Due to the majority of them being held online, the purchase process can be significantly quicker. Instead of making an offer and negotiating through an estate agent, buyers compete against each other by placing bids. The highest bidder wins once the auctioneer accepts their offer.

There are two main types of property auction:

Traditional auction – the buyer exchanges contracts immediately after the auction and usually completes the purchase within 28 days.

Modern method of auction – the winning bidder pays a reservation fee and is given a longer period to complete the purchase.

Before bidding, make sure you understand the auction terms, including:

• The required deposit amount.
• Completion deadlines
• Buyer fees (normally outlined in the legal pack)
• Any conditions attached to the sale. For example you could be required to cover the seller’s fees for any legal searches carried out.

Unlike a normal property purchase, there is no opportunity to renegotiate after winning. Doing your homework beforehand is essential.

Step 2. Research the property before bidding

Auction properties often attract buyers because they appear cheaper than similar homes on the market. However, there is usually a reason a property is being sold at auction, and understanding the full picture is crucial.

Common reasons properties go to auction include:

• Structural or unmortgageable property defects
• Bank repossessions
• Complicated legal terms such as probate or inherited estates or issues with boundary lines
• Being difficult to sell through traditional methods
  

Don't rely solely on the auction listing. Arrange a viewing, inspect the property carefully and understand what work may be required. If this is the first time you’ll be buying at auction, ideally take a builder, surveyor or an expert in property renovation with you.

Look out for:

• Signs of damp or structural issues
• The condition of the roof
• The age and condition of the boiler
• The state of electrics and plumbing. Is the property connected to mains water, and are the drains installed correctly?
• Condition of the windows and doors

A property that looks like a bargain can quickly become expensive if unexpected problems appear after purchase.

Nestee tips:

• Visit the property more than once if possible.
• Take photos and notes during viewings.
• Check the property on Nestee to understand potential issues that may not be obvious from a viewing.

Step 3. Get your finances ready

Unlike a traditional purchase, winning an auction usually means you need to move quickly. You should have your finances arranged before you start bidding.

Make sure you have:

• A mortgage agreement in principle if required
• Your deposit funds available
• Budgeted for auction fees
• Money set aside for renovation costs

It is important to remember that some mortgage lenders may not lend on certain auction properties, particularly homes that are uninhabitable or require significant repairs. Speak to your lender or mortgage broker beforehand to understand any restrictions.

Step 4. Review the legal pack

Every auction property should have a legal pack available before auction day. This contains important documents about the property and should be reviewed carefully before you bid.

The legal pack may include:

• Title deeds
• Local authority searches
• Lease information (for flats)
• Planning documents
• Any restrictions or covenants

It is strongly recommended that a solicitor, specialising in auction properties, reviews the legal pack before you commit to buying. Issues hidden within the paperwork could affect your ability to use, renovate or sell the property in the future. Make sure to find a solicitor before you start viewing auction properties. There is often a short timeframe between a property being advertised and the auction date, so your solicitor will need to review the legal pack and any searches within a matter of weeks.

For example, there could be restrictions on extensions, problems with ownership boundaries or unexpected costs linked to the property.

Step 5. Set your maximum budget

Auction rooms can be exciting places, and it is easy to get carried away when competing against other buyers. Set a realistic budget for what you would be willing to spend to purchase the property and on the additional renovation work. Add 10% to your budget to cover any unexpected costs that may arise, so you don’t find yourself out of pocket at a crucial point during the renovation.

Consider:

• The purchase price
• Stamp duty
• Solicitor fees
• Auction fees
• Renovation costs
• Future maintenance

Remember that your winning bid is not necessarily the full cost of buying the property. A cheap purchase price can quickly become expensive if the home requires extensive work.

The majority of buyers fall in love with a property because they see its potential. The problem is that potential can sometimes make us overlook the reality of what it will take to turn a property into a home. Before raising your paddle, make sure you understand exactly what you are buying and whether the numbers still work once all costs are included.

Step 6. Attend the auction prepared

On auction day, make sure you know exactly what you are willing to pay and how the process works.

Before bidding:

• Arrive early or log in ahead of time for online auctions.
• Have your identification and payment details ready.
• Understand the bidding increments.
• Keep track of your maximum limit.

If you are successful, you will usually need to pay your deposit immediately and exchange contracts on the same day.

There is no cooling-off period, so only bid when you are completely comfortable with the purchase.

Nestee tips:

• Check the property history before auction day.
• Understand any potential risks before committing.
• Don't let competition push you beyond your budget.

Step 7. Plan your renovation before completion

Many auction properties need work, which is often where the opportunity lies. However, it is important to understand the difference between a property that needs cosmetic improvements and one requiring major repairs.

Start by prioritising:

• Making the property safe with installations such as: a new fuse box, boiler, plumbing, connecting drains and water sources if required and ensuring the property is structurally sound.

• Fixing urgent repairs such as: any holes in the walls, ceilings or roof and checking for wood rot in the floorboards or dodgy electrics.

• Improving energy efficiency by upgrading oil or gas boilers to renewable alternatives and adding solar panels. If you are doing a full renovation it would be a good time to upgrade any radiators and windows, if your budget can stretch to this.

• Updating kitchens and bathrooms that need work.

• Adding value through practical improvements such as:

  • upgrading lighting to efficient LED alternatives
  • identifying where you will charge your devices and update the sockets to have USB charging ports
  • replacing external door and side gate locks
  • installing EV charging, if required

Make sure to budget for soft furnishings, painting supplies, curtains, carpets or flooring and light fixtures.

Having a renovation plan before you bid helps you decide whether the property is genuinely worth pursuing.

Final thoughts

Buying a property at auction can be a great opportunity for buyers who are prepared, but it is not a process to enter without research. The buzz of securing a property below market value can quickly disappear if unexpected issues appear after purchase.

The best auction buyers are those who understand the risks, know their budget and complete thorough checks before bidding. A property viewing only tells part of the story, which is why checking the property on Nestee before auction day can help you identify potential concerns and make a more informed decision.

Whether you are looking for a renovation project, your next home or an investment opportunity, taking the time to understand the property before committing could save you from expensive surprises later.