Common Pitfalls and How to Avoid Them

Failing to Review the Legal Pack

One of the biggest mistakes auction buyers make is not thoroughly reviewing the Buyer Pack before placing a bid. This pack contains crucial legal documents, including title deeds, property searches, leasehold information (if applicable), and special conditions of sale. Buyers who skip this step risk purchasing a property with outstanding legal disputes, hidden costs, or restrictive covenants that may affect its value and use.

To avoid always download and review the Buyer Pack in advance. If any terms or legal conditions are unclear, seek advice from a solicitor who specializes in auction purchases.

A standard Buyer Pack typically includes:

Bidding Beyond Your Budget

The competitive nature of auctions can often lead buyers to bid higher than they originally intended, driven by the excitement of the moment. Overbidding can lead to financial strain, especially if additional fees, taxes, or renovation costs arise after the purchase.

To avoid setting a strict maximum bid before the auction and stick to it. Use the auto bidding feature if available, which automatically places bids up to a pre-set limit to prevent emotional decision making. Always factor in additional costs such as auction fees, stamp duty, legal expenses, and potential property improvements when setting your budget.

Not Having Finances in Place

Unlike private sales, auction properties require immediate financial commitment. Buyers must pay a deposit typically 10% of the purchase price as soon as the auction ends. The remaining balance is usually due within 28 days for traditional auctions or up to 56 days for modern auctions. Buyers who fail to meet the payment deadline risk losing their deposit and facing legal consequences.

To avoid arrange finances before bidding. If using a mortgage, ensure you have an agreement in principle from a lender that supports auction purchases. Cash buyers should have proof of funds ready for verification.

Underestimating Additional Costs

Many buyers focus only on the auction price and overlook the additional costs involved in completing the purchase. These can include buyer’s premiums, legal fees, stamp duty, renovation expenses, and property insurance. In some cases, properties may also come with existing debts or service charges that the new owner is responsible for.

To avoid always calculate the total cost of ownership, not just the winning bid amount. Read the auction terms carefully to identify any hidden fees or charges associated with the property. Consulting a solicitor can help clarify financial obligations.

Overlooking Property Condition

Auction properties are typically sold as seen, meaning buyers inherit any structural issues, maintenance problems, or outstanding repairs. Some properties may appear attractive in photos but could have hidden defects that require expensive renovations.

To avoid when possible, visit the property in person or arrange for a professional surveyor to conduct an inspection before the auction. If an in-person visit isn’t feasible, carefully review property details, floor plans, and any available reports in the Buyer Pack.

Misunderstanding Auction Rules

Each auction has its own set of rules and conditions, which dictate how bidding works, deposit requirements, payment deadlines, and completion terms. Buyers who do not fully understand these rules risk missing important deadlines or making costly mistakes.

To avoid familiarize yourself with the auction house’s terms and conditions before bidding. If unsure, ask the auctioneer or seek professional guidance.

Delays in Completing the Purchase

Once a bid is won, the buyer must complete the purchase within the specified timeframe. Any delays in transferring funds, signing contracts, or meeting legal requirements can result in penalties, financial losses, or even the property being relisted.

To avoid have all necessary documents, finances, and legal arrangements in place before the auction. Work closely with your solicitor to ensure a smooth and timely completion.

Not Checking Leasehold Terms (If Applicable)

For leasehold properties, failing to check lease details can lead to unexpected financial commitments, such as high ground rents, short lease durations, or restrictive clauses.

To avoid review lease terms carefully in the Buyer Pack and confirm the lease length. Leasehold properties with fewer than 80 years remaining can be difficult to mortgage and may require costly lease extensions.

By being aware of these common pitfalls and taking proactive steps to avoid them, buyers can confidently navigate the auction process and secure a property without unnecessary risks or financial surprises.