Traditional property auction

One of the options for buying and selling a property is through an auction.

The auction process differs from a standard sale or purchase through an estate agent or other agent working for the seller. The auction itself falls into either the traditional auction process or the modern method of auction, which we cover in a separate guide.

The traditional auction is probably familiar from television series such as Homes Under the Hammer, which follows prospective buyers bidding for a property through the work they complete to make it rentable or saleable.

The auction route is quite different from the standard way of buying a property, with a foreshortened timescale and real implications for how you finance the purchase. It's worth understanding what the process is, how it operates, what to look out for, the costs involved as a buyer or seller, the legal considerations, and the benefits and drawbacks of choosing a traditional auction.

The traditional auction is often called "unconditional", because once the hammer falls there are no conditions or contingencies that can hold up progress towards completion.

It's the speed and relative simplicity of buying this way, provided you've done your research before bidding, that makes an auction attractive to many buyers.

This approach tends to suit cash buyers and seasoned investors looking for a property to renovate and sell on, or one that will bring a strong rental yield.

The traditional auction runs to a shorter timeframe than the modern method, and usually takes place at the auctioneer's premises, though some auction houses now allow bidding online on the day.

Bidding continues until the highest bid is reached, provided it meets any reserve the seller has set (the value below which they won't sell).

As the successful bidder, you'll pay a deposit, usually 10%, to secure the property on the day. At the same time, you exchange contracts with the seller, which means you're now legally committed to seeing the purchase through to completion. Pull out from this point and you'll forfeit the deposit.

Because the property is bought as seen and described on the day, there's no room to attach conditions to the purchase afterwards.

You'll then have four weeks (28 calendar days) to complete. This condensed timeframe is what sets the traditional auction route apart from a standard purchase through an estate agent.

The route to buying at auction is significantly shorter than the standard homebuying process, so it's worth making sure every step is properly prepared for in advance.

2 to 4 weeks pre-auction

Identify the property or properties you're interested in, using auction house catalogues or online listings to build your shortlist.

Line up a conveyancing solicitor as soon as you've identified a property you might bid on. Go through the legal pack with them once you've registered your interest, so the titles, covenants and any special conditions attached to the sale are properly understood.

Arrange your finance, whether cash or a specialist loan or mortgage, since you'll need to move quickly if your bid succeeds.

Book visits to any properties you're interested in, ideally with a chartered surveyor, so you understand the condition of the building and the scale of any remedial work.

Set your maximum bid before the day to avoid overspending, since the hammer falling commits you to completion. Factor in the likely cost of stamp duty land tax (or land transaction tax in Wales).

Have your professionals on standby: someone to look over the property, confirm your finances and review the legal pack with you.

Auction day

Whether bidding online or in the room, when your lot comes up it's worth playing it cool but being ready to bid when it counts. Stick to the limit you set beforehand and don't get drawn into bidding past it.

If you're successful, you'll pay a deposit there and then, typically 10% though the auction house will confirm terms at registration, and exchange contracts with the seller. From this point you're legally committed to completing the purchase.

Post-auction

You have 28 calendar days from the auction to complete and pay the remaining balance.

Stamp duty (or land transaction tax in Wales) will also be due if the price triggers the relevant threshold. This is usually paid by your solicitor on your behalf, within two weeks of completion.

An administration fee, sometimes called a buyer's premium, is charged by some auction houses to cover processing the purchase and paperwork. This might be a fixed amount, such as £1,000, or a small percentage of the starting price. The auction house can confirm the exact figure.

Your deposit, usually 10% of the winning bid, is non-refundable and due immediately once the hammer falls.

A survey is worth commissioning for any property you're seriously considering. Bear in mind you'll pay for a separate survey on each property you bid for.

You'll also need a conveyancing solicitor to review the legal pack and carry out the standard searches. If the pack, survey or conveyancing process throws up an issue, additional work from third parties may be needed and charged as disbursements.

Finally, if your winning bid crosses a stamp duty or land transaction tax threshold, this is payable within two weeks of completion.

The auction house typically charges an entry fee to catalogue and manage your listing, usually somewhere between £250 and £500 including VAT. This is charged whether or not the property sells.

Your conveyancing solicitor will charge separately for preparing the legal pack, which is required for every property regardless of whether it eventually sells. We cover what the pack contains in more detail further down this page.

If the property sells, the auction house takes a commission, usually around 2% of the final hammer price.

On top of the legal pack, your solicitor will also charge conveyancing fees for managing completion and the transfer of ownership to the buyer.

The seller's solicitor prepares the legal pack ahead of the auction date. It has to be ready in time, since the successful bidder is committing to everything in it the moment the hammer falls.

In a standard sale, this kind of information is normally gathered in the run-up to exchange of contracts. At auction, the hammer fall is the exchange, so there's no equivalent window to work through anything afterwards. This is why buyers need to review the legal pack thoroughly before bidding, not after.

The legal pack typically includes:

• Title deeds, confirming current ownership and the property's boundaries
• Special conditions and covenants the buyer must adhere to as part of the sale
• Local searches, covering council responsibilities, council tax, planning history and any nearby projects that could affect the property
• Lease and tenancy agreements, where the property is leasehold, covering ground rent, service charges and any rules that apply to the leaseholder or tenant
• Property information forms (TA6) and fixtures and fittings forms (TA10)

As with any method of buying or selling, there are advantages and downsides to weigh up.

Advantages

Speed is the headline benefit. Once the bidding ends and any reserve is met, exchange happens immediately and the 28 day clock to completion starts.

Auctions also tend to see fewer fallthroughs than a standard chain-based sale, since exchange happens on the day rather than weeks or months later, giving both parties more certainty.

The timeline itself is fixed and doesn't move once the hammer falls.

Bidding can also push the final price above the guide price, since buyers competing against each other in the room can drive things further than negotiation over an asking price typically would.

The short window before the hammer falls leaves little room for the game-playing that can creep into a standard sale, and no scope at all for gazumping or gazundering.

Disadvantages

That same speed cuts both ways. While it brings certainty, it also demands far more preparation packed into a shorter period than a standard high street sale allows, which raises the risk of something being overlooked if you haven't lined up the right professionals in advance.

Arranging finance quickly enough can also be difficult, and a mortgage may not be practical within the timeframe, pushing some buyers towards alternative financing.

If the property fails to sell, the seller loses any upfront fees already paid to the auction house, depending on the auction house's terms.

And although completion is more likely than with other routes, a buyer can still withdraw after exchange. They lose their deposit, but the seller is left starting the process again, which can take time.

For sellers, auction tends to work well for properties that would struggle on the open market: those that are uninhabitable (lacking working kitchen or bathroom facilities), in poor condition and needing significant investment, or unmortgageable due to structural issues or non-standard construction. It also suits sellers who need a fast, certain sale.

For buyers, auctions tend to offer properties at a lower price point than the open market, and cash buyers are particularly well placed given the tight timescales involved. It's also a strong source of projects for developers and investors building a rental portfolio or looking to refurbish and resell.

Our specialist team handles auction property conveyancing for both sides of the transaction, from legal pack review through to completion. You can also call us on if you have any questions.