Buying at auction: the moment risk transfers

These are listed in the order worth acting on, which with buying property at auction is not the order they are usually presented in.

The order of events is reversed

In a conventional sale, an offer is accepted and the checks follow; at auction in many systems, the checks must be complete before the bid. Where the hammer creates a binding contract, there is no survey clause, no financing condition and no cooling-off period. A deposit is usually payable immediately and completion follows within a short fixed period rather than a negotiated one.

The rules vary by country and by auction house, and conditional auction formats behave differently, so read the specific terms.

The legal pack is the whole due diligence

The pack typically contains title documents, searches, leases where relevant, and the special conditions of sale. Special conditions frequently shift costs onto the buyer, including the seller legal fees and sometimes the auction commission. Having a conveyancer read it before the auction costs a fee for a property you may not buy, which is the price of not buying a problem.

In practice, bidders who skip this step are the reason some lots sell below what the property would otherwise fetch.

Money has to be ready

A short completion period rules out most standard mortgage timetables, so bidders often use cash or bridging finance. Bridging is materially more expensive than a mortgage and is only sensible where the exit is certain and quick.

On an ordinary week, a lender may also decline the specific property, which is a risk you carry alone once the hammer has fallen. Failing to complete generally means losing the deposit and potentially more, depending on the conditions.

Ask why it is at auction

Speed and certainty are legitimate reasons, and executors, lenders in possession and public bodies use auctions routinely. Other lots are there because the title is defective, the property is unmortgageable, the lease is short or there is an occupier.

The useful part is this: unmortgageable is not the same as unbuyable, but it narrows your future buyer pool to people in the same position. The guide price is a marketing figure and the reserve is the number that matters, and they are not the same.

Inspect before, not after

Access for viewings is usually limited to set slots, and some lots cannot be entered at all. A survey on a property you may not win feels wasteful and is cheaper than the alternative on an old or damaged building. Where access is impossible, price the unknown into the bid rather than assuming the best case.

Vacant properties that have been unheated for a long period carry a predictable set of problems.

Adjust the size of it until it is something you would actually do tired.

Bidding discipline

Set a maximum that includes the buyer premium, the legal costs you are absorbing and the work you have identified. Auction rooms and online auctions both produce competitive momentum, and the maximum should be written down before it starts. Lots that fail to sell can often be bought afterwards at the reserve, which is worth asking about.

This is general information; a conveyancer and, where finance is involved, a regulated adviser should look at any specific lot.

Everything above, in order of what to do first

1. The order of events is reversed. In a conventional sale, an offer is accepted and the checks follow; at auction in many systems, the checks must be complete before the bid.
2. The legal pack is the whole due diligence. The pack typically contains title documents, searches, leases where relevant, and the special conditions of sale.
3. Money has to be ready. A short completion period rules out most standard mortgage timetables, so bidders often use cash or bridging finance.
4. Ask why it is at auction. Speed and certainty are legitimate reasons, and executors, lenders in possession and public bodies use auctions routinely.
5. Inspect before, not after. Access for viewings is usually limited to set slots, and some lots cannot be entered at all.
6. Bidding discipline. Set a maximum that includes the buyer premium, the legal costs you are absorbing and the work you have identified.

The takeaway

Do every check before the hammer, because afterwards there is nothing left to check.

Small and repeatable beats ambitious and abandoned, almost every time.