Buying Property at Auction: How It Works and What It Really Costs

When you buy property at a traditional auction, the hammer coming down is the contract. You're committed the moment the bidding ends, and you pay a deposit that day, usually 10%. The rest is due about four weeks later, often 20 business days, whether your mortgage is ready or not.

The money goes out early, too. In our worked example, a £100,000 lot means £14,200 leaving your account on auction day, and £109,410 in total before your solicitor, survey, insurance and any work. So how do you check a lot, work out what it will really cost and set a bid limit before the hammer falls?

Article published: September 2026

On a traditional sale, everything you'd normally do between an offer and exchange of contracts (the point you're legally committed) has to be done before you bid.

This is my experience, everybody's is different, and it's not financial, legal or tax advice. The contract rules are the standard RICS conditions, which cover England and Wales where an auction uses them; the stamp duty figures are for England and Northern Ireland, and the tenancy rules are England's.

How to buy property at auction: the steps before you bid

Most of the work happens before auction day. Every auctioneer has its own rules for registering, bidding and paying, but the order is broadly the same.

1. Find out how the lot (the property up for sale) is being sold. Traditional (you're bound when the hammer falls) or conditional (you get a set period to exchange). The catalogue says which.
2. View it, and get the legal pack to your solicitor. Viewings go through the auctioneer. Arrange any survey now too.
3. Work out the full cost. The price, the auctioneer's fees, any seller's charges, stamp duty, insurance and any work before it can be let.
4. Have the money ready. On a traditional sale, the deposit goes on the day and the balance on the completion date (the day you pay the rest and it becomes yours). On a conditional sale the payments come in stages, set by the provider.
5. Register to bid. Propertymark's buyer's guide lists proof of funds, ID and mortgage approval. Savills, for example, asks bidders to register in advance and upload ID for everyone named on the contract. Check the deadline.
6. Check the final addendum. This is the list of late changes. It can move the guide price, change the terms or pull the lot.
7. Know how the day works. In the room, by phone, by proxy or online, and how the deposit and fees get paid.

How do house and property auctions work?

There are two kinds of auction, traditional and conditional. The difference is when you're locked in.

Traditional auctions are the classic version. The RICS standard for auctioneers selling real estate puts it simply: "On the fall of the hammer there is a binding contract." Under its standard conditions, completion is the date in the lot's special conditions. If there isn't one, it's 20 business days after the contract date.

Compare that with a normal purchase. The government's guide to buying a home says an offer "is not legally binding until contracts are exchanged". At a traditional auction, winning the bid is the exchange.

Conditional auctions give the winner time. The payments come in three stages:

• A reservation fee or reservation deposit when you win. It's non-refundable. iamsold's fees page says its fee is on top of the price, while its reservation deposit counts towards it.
• A contract deposit at exchange. Zoopla describes 10%, within 28 days.
• The balance at completion.

Timetables vary. Propertymark describes 28 days to exchange and 28 more to complete. iamsold's auctions explained page says 56 days for standard freehold properties, from when the draft contract is issued. Conditional sales are often online, but not always: Auction House runs conditional auctions in the room too.

One more thing on the rules. The general sale conditions can be changed for a lot by its special conditions or an addendum. The auction conduct conditions can only be changed if the auctioneer agrees in writing before the auction, under the RICS conditions. So the legal pack for each lot has the final word.

Guide price vs reserve price

The guide price is the number in the catalogue. The reserve is the lowest price the seller will take on the day. They can be the same, but often they're not.

The reserve is normally kept private between the seller and the auctioneer. If no bid reaches it, the lot is withdrawn, under the auction conditions.

Here's the useful rule of thumb. Where a single guide figure is shown, the minimum sale price is within 10% of it, under advertising rules quoted in the RICS standard. Propertymark says the reserve "can be up to ten per cent higher than the guide price". So a lot guided at £100,000 can have a reserve of £110,000.

I've sold at auction myself. It was a really good property, cheap, with a good tenant in it. I put it in with a low guide price and a low reserve, thinking it would get bid up. But it was one of the last lots of the session, after lots of other properties and a long day. By then, buyers who could have been in for it had already bought something else and spent their budget. So it suffered.

The lesson for a buyer is that a low guide and reserve don't guarantee a bidding war. Where a lot sits in the running order changes who's still bidding. Late lots can face thinner competition, because some buyers have already spent their money. That's my experience, and everybody's is different.

A bid below the reserve may come from the seller's side, not another buyer. The conditions let the seller, or the auctioneer for them, bid up to the reserve but not at it. There's a name for it, and we've a separate page on off the wall bidding.

So the guide price tells you roughly where the seller's minimum sits. Your own numbers set where you stop.

What does buying at auction really cost?

The hammer price is only part of the bill. Fees and tax sit on top, and some of it is due the day you win.

The deposit has a hard deadline. If it isn't paid in full on time, the conditions let the seller treat the contract as over and claim against you.

Under the standard conditions, you pay the price you bid (plus VAT if it applies) and only the extra charges the special conditions state. There are four exceptions: insurance the seller has to keep, rent and bills shared out at completion plus any interest, unpaid rent, and payments set out in the auction terms. Unpaid rent is the one that can still catch you out, because it can be due even if nobody listed it.

Stamp duty needs the most care. HMRC's SDLT guide gives 14 days after completion to file and pay. But it also says your conveyancer (the solicitor or licensed conveyancer doing your legal work) will usually pay it on completion day. So the money is normally needed then, not two weeks later. Our stamp duty calculator works out the figure for a price.

Some auction fees get taxed too. HMRC's guidance on auction fees includes a buyer's premium that pays the seller's auction costs in the taxed price. A fee paid just to take part in the auction isn't. It depends on what each fee pays for, so it's one for your conveyancer.

A worked example: a £100,000 lot

Here's how that adds up on a £100,000 lot. It's an illustration, not a quote, and it assumes:

• a traditional auction of a home in England or Northern Ireland;
• a UK-resident buyer who will own more than one home and claims no relief;
• a buyer's premium of 3% plus VAT (£3,600) and an administration fee of £600 including VAT, both inside Propertymark's typical ranges;
• both fees pay the seller's auction costs, so both are taxed as part of the price, in line with HMRC's example.

Stamp duty uses HMRC's current rates: nothing on the first £125,000, plus the usual 5% on top for an additional home. So the tax is 5% of £104,200.

So £14,200 leaves your account on auction day, not £10,000. That's the cash to have ready, not just the deposit. And £109,410 is before your solicitor, searches, survey, insurance and any work.

This is how I'd set a bid limit, from the top down. I start with the most I can spend in total. The premium and the tax go up with the bid, so I can't just knock off a fixed amount. I pick a top bid, work out everything on top, and check the total. If it's over budget, I try a lower bid and work it out again.

What is in the legal pack, and what to look for

The legal pack is the seller's paperwork for the lot, and it goes to your solicitor before you bid.

I worked as a negotiator and valuer early on, to understand a sale from both the buyer's and the seller's side. The auction rules say it plainly: the catalogue particulars "have not been prepared by a conveyancer and are not intended to form part of a legal contract". The legal pack sets out what you're actually buying.

The heart of the pack is the special conditions: the contract terms for that one property. The RICS standard says they have to give the title number and say whether it's sold with tenants. Its templates also include a tenancy schedule, an arrears schedule and the sale memorandum you sign.

What your solicitor reads it for:

• The completion date. A date in the special conditions replaces the 20-business-day default. On a leasehold lot that needs the landlord's consent, completion can't be earlier than five business days after the seller confirms it, under the conditions.
• Extra charges. Anything the seller wants on top of the price.
• Tenancies and arrears. Who lives there, which kind of tenancy it is, on what terms, and what's owed.
• Title. Propertymark lists title restrictions, leasehold details, planning enforcement and missing building regulation certificates.
• The addendum. Late changes, which can arrive right up to the sale.

Written questions help. Under the conditions, you can rely on the seller's solicitor's written answers to written questions, within any limits those answers set. So the exact wording of each answer matters.

Sitting tenant or vacant possession

Whether a lot comes with a tenant or empty changes the whole set of numbers. A catalogue will often call a tenanted lot an "investment". The sale terms say whether it comes with a tenancy or with vacant possession, which means the seller must hand it over empty. An empty house on the viewing day isn't the same thing. They're different purchases with different numbers.

A lot being sold with vacant possession has no rent coming in until you let it, and the running costs are yours from completion.

A tenanted lot comes with the tenant in it. The tenancy schedule shows the passing rent, which is what the tenancy says is due now. That's what they've agreed to pay. It isn't proof they pay it. Ask for the payment record in writing.

Arrears matter on completion day. Under condition G11.2, the buyer pays any arrears of current rent, whether they're listed or not. Current rent means the rent instalment, plus any other sums the tenant owes on that date, due on the most recent rent day on or in the four months before completion. So a tenant's unpaid rent can become your bill on the day.

For private assured tenancies in England, the rules changed on 1 May 2026. The government's assured tenancy guidance says the Renters' Rights Act 2025 abolished assured shorthold tenancies in England and ended Section 21 "no fault" evictions. Most existing assured shorthold tenancies became assured periodic tenancies, running "on a rolling basis, for example, weekly or monthly", says the overview for tenants.

What that means for a buyer:

• Rent goes up once a year at most. The tenant overview says the rent can only rise once a year, not in the first 12 months of a new tenancy, using Form 4A with at least 2 months' notice. Buying the property doesn't start a new tenancy or reset that clock. A lot let cheaply stays cheap for a while.
• Getting it back needs a legal reason, called a ground. Under the government's possession guidance, selling is ground 1A and moving in is ground 1. Both need four months' notice, which can't expire in the first 12 months of a new tenancy. Ground 1A can't be used on an assured tenancy created before 1 May 2026 that wasn't an assured shorthold. If the tenant doesn't leave, the next step is court.

With a tenant already in place, a lot can work like any other buy to let property for sale, with no wait and no fee to find a tenant. That only holds if the tenant pays and the letting agent's terms carry on.

Checking the rent before you bid

For a tenanted lot, use the passing rent, checked against the payment record. Not the "potential rent" in the particulars. Note when the tenancy started and when the rent last went up, because that decides the earliest date it can go up again.

For an empty lot, use what similar homes in the same street are letting for. Look at current listings and ring a local letting agent before the sale.

Then run the yield on everything you'd put in. Our rental yield calculator asks for a property price, monthly rent and annual running costs. Put the total cost at your top bid in the price box, not the guide price.

Can you get a survey before an auction?

Yes, and before is when it counts. Viewings go through the auctioneer, and Propertymark suggests taking a surveyor, or someone who knows building work, with you.

A house survey works the same as on any purchase.

You can survey after the hammer, but on a traditional sale it won't get you out. Auction House's survey guide is clear you can't retract the sale "based on the outcome of a post auction survey".

A lender's valuation isn't a survey either. The government's How to buy a home guide says a valuation "does not protect you in the event that something goes wrong with the property". It's for the lender. The survey is for you.

Surveys cost money whether you win or not. Get outbid on three lots and that's three survey fees. The payoff is finding damp, a structural problem or a roof on its way out before you're committed.

On a conditional sale, there's time to survey between winning and exchange. The reservation fee is gone by then, but the survey can still tell you whether to exchange.

Who insures the property after the hammer?

On a traditional sale, usually you, from the moment you win (the contract date). Under condition G3.1, the risk of loss or damage passes to the buyer at the contract date. The exceptions are a tenancy, or special conditions, that make the seller insure.

Damage doesn't get you out of the deal either. Condition G3.3 says it doesn't entitle the buyer to a lower price, a delay or to refuse to complete. A fire or a burst pipe between the hammer and completion is your problem. So line up cover, and check who insures, before the auction.

The completion deadline, finance and refurbishment

The lot's terms set the completion timetable, and on a traditional sale it's fixed on the day you bid. The contract doesn't depend on getting a mortgage, so a delayed mortgage doesn't move the date. The money has to be there on the day, wherever it comes from.

Auction House's mortgage guide describes buyers having their mortgage offer in hand when they bid. It also says auction finance "can be more expensive but can be organised very quickly".

In my experience, finance is one of the biggest costs in any deal. Bridging can come with fees to get in and fees to get out, plus the interest, and it all comes out of the profit. A fixed completion date is how people end up paying for it when they never planned to. Talk to a broker before the sale, not after.

Refurbishment lots need two budgets. One to buy the property, with every cost above. One to get it ready to let: the works, insurance while it's empty, the months with no rent, and interest on any money borrowed. Add them together, then compare that total with the rent the finished property can earn after running costs. Auction catalogues are one place to find properties to renovate, and the same checks apply.

What happens if you cannot complete on time?

It gets expensive quickly. Under the standard conditions:

• Interest runs every day you're late, unless the delay is the seller's fault. The rate is whatever the special conditions say. If they say nothing, it's the higher of 6% or 4% above Barclays base rate.
• Either side can serve a notice to complete from the completion date onwards, if completion hasn't happened. It gives ten business days, not counting the day it's served. Whoever serves it has to be ready to complete themselves.
• If you still don't complete, the seller can end the contract, keep the deposit, sell the lot again and claim damages.

So before you bid, check you can pay each amount by its date, even if a mortgage runs late.

Can you buy a property before or after the auction?

Both happen. The conditions say a lot "may be sold or withdrawn from sale prior to the auction". So you can make an offer to the auctioneer during marketing. It also means a lot you're working on can vanish, so register your interest and keep checking.

After the auction, a lot that missed its reserve may still be for sale. Auction House says the auctioneer "will then invite offers from any interested parties after the auction", and lists its unsold lots online. An unsold lot isn't automatically cheaper, though. The seller's minimum may not have moved.

Where auction lots come from

The wording gives you a clue. Lots marked "by order of the mortgagee" or "by order of the receivers" are sales by a lender or a receiver (someone appointed to take control of a property and sell it). Our guide to repossessed houses for sale covers what's different with those sellers. "Investment" often means there's a tenant. "In need of modernisation" means work, and that work goes in the budget before you bid.

I've tried to buy at auction, and I've never won a lot. I've always been outbid. The main reason was competition on unique lots.

When a property clearly stands out from the rest of the catalogue, it tends to go one of two ways. Either it's unique because it has problems, and you have a clear path. Or it's unique and seems to have no issues, and it pulls in a lot of competition. If you're buying on a strict budget, you have to be prepared to be outbid on those.

My view is that the better prices are on the samey stock. Properties that look like everything else around them, don't stand out, nothing exciting. Buyers tend to overlook them, and they can sometimes be picked up for a good price compared with local values.

Auction is one route to below market value properties. Samey or not, a discount only counts once it's measured against recent sales of similar homes nearby, with the fees, tax and works added on. A low guide price on its own proves nothing. The same test applies to any UK investment property, auction or not.

Direct sales are another route: our partners go direct to sellers such as developers, homeowners and landlords leaving the market.

Whichever way you buy, write your bid limit down before the day, and work it back from the total cost, not the guide price.

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