Auctions usually appeal to buyers and sellers for one main reason: speed. For sellers, a legally binding deal can be completed in a matter of weeks and provides certainty, streamlining the delays that are commonly associated with private sales.
For buyers, auctions offer transparency. Individuals can see competing bids in real time, which means there’s no chance of being outbid at the last moment. Auctions also attract properties with lower guide prices, which can appeal to those seeking a renovation project or a value-driven acquisition. That said, guide prices are often set low to generate interest, so the final hammer price can be considerably higher.
What Types of Auctions Are There?
When buying a house at auction, buyers typically encounter one of two formats: traditional or modern auction.
Traditional Auctions
Also called unconditional auctions, the traditional format is fast and direct, with sales usually held in person at an auction house, although online bidding has become increasingly common.
Once the hammer falls, contracts are exchanged immediately and the winning bidder must pay a deposit (typically 10% of the purchase price) on the spot. Completion must then take place within 28 days and is best suited to cash buyers or experienced investors who can move quickly.
For those relying on a mortgage, the timescale can be challenging unless you’ve arranged your finances in advance. Pulling out after the auction is not an option, as you’ll lose your deposit and may face additional penalties.
Modern Auctions
The modern method (sometimes called conditional auctions) works slightly differently, running online and can often last up to 30 days. Buyers can place bids at any time during the window and the winning bidder will need to pay a reservation fee (often around 5% of the purchase price), which covers the auctioneer and agent’s costs.
Unlike traditional auctions, contracts are not exchanged immediately, with a window of 56 days given to complete the purchase. The first 28 days are used to exchange contracts and pay a 10% deposit, while the following 28 days allow for completion.
How Should I Prepare for an Auction?
Unlike private sales, where you might have weeks to arrange finances and carry out property checks, auction properties demand that you do your due diligence beforehand.
View the Property Thoroughly
It’s essential to view the property before bidding and take note of its condition, so it's important to consider bringing a surveyor, architect or builder along for the viewing. They can identify structural problems or repairs that might not be immediately apparent and these visits can help buyers feel confident with the sale.
Arrange Your Finances Early
If you’re buying with a mortgage, it’s important to obtain an Agreement in Principle (AIP) from a lender. Inform them that the property is being purchased at auction, as some lenders are less comfortable with this process than others.
Cash buyers should also ensure proof of funds is readily available, as auctioneers will often request it and deposits and fees are due immediately if sold.
Review the Legal Pack
The auction house will provide a legal pack that is usually free to download and contains essential documents such as title deeds, searches, alongside details of fixtures and fittings. It is advisable to have a solicitor review it before auction day to ensure there are no hidden issues.
For traditional auctions, it’s also important to arrange a survey before bidding, since contracts are legally binding once the hammer falls. If you pull out of a traditional auction purchase after winning the bid, you will forfeit your 10% deposit and may also be liable for administrative fees. In a modern auction, if you withdraw within the first 28 days before exchanging contracts and paying the deposit, you will lose the 5% reservation fee.
Understand the Guide Price
Don’t take the guide price at face value, as many properties often sell for significantly more, especially if demand is strong.
What Happens on Auction Day?
On auction day, preparation and discipline play an important role. Bring photographic ID, proof of address and financial documents such as your mortgage AIP or proof of funds. If you’re bidding online, these may need to be submitted in advance.
If you’re successful, be prepared to pay your deposit or reservation fee immediately. You’ll then move into the legal and financial stages of the purchase.
What Happens After the Auction?
Winning at auction is only the beginning. If you purchased through the modern method, this is the time to arrange a survey. While not legally required, a survey will help identify potential problems and provide peace of mind.
Mortgage buyers will need to complete their lender’s valuation to confirm the property is of suitable security and ensure essentials like a functioning kitchen and bathroom are in place. Once the lender is satisfied with this, the mortgage offer should follow.
As soon as contracts are exchanged, you become legally responsible for the property, which means arranging home insurance immediately to cover risks such as fire, intrusion, flooding or structural damage.
Buying a home at auction is not without risks, but for the right buyer, it can be an excellent opportunity. The process is fast, competitive and often rewarding, provided you’ve done your research. The key is preparation: understand the auction method, line up your finances, review all legal documents and set a strict budget.
With these steps in place, auctions can open doors to exclusive renovation projects and potentially outstanding deals. However, knowing exactly how to approach the process with discipline and knowledge will give you the best chance of success.
With the guidance of our property experts, Sotheby’s Concierge Auctions provides a seamless route to some of the world's finest luxury properties. The September Collection highlights prime global estates and allows buyers to engage with some of the most sought-after residences currently on the market.
