Skip to content

How does buying a house at auction work?

Jonathan Leggett
Written by  Jonathan Leggett
Kim Staples
Reviewed by  Kim Staples
5 min read
Updated: 09 May 2024

If you know what you're doing, you can bag a bargain at a property auction. But there's a lot to get to grips with, especially if you're a first-time buyer. Read on and we'll walk you through it...

Buying a property at auction certainly isn’t for everyone. But it can be a very cost-effective and quick way to get your hands on a home.

Here’s a look at the good and bad of buying at auction and everything else you need to know, whether you're a first-time buyer or looking to move from your current home.

How does buying a house at auction work?

Buying a house at auction works much like an auction for antiques or collectibles. It’s just that your outlay is likely to be much bigger and you'll own a house when the gavel goes down.

Ahead of the auction, the estate agent or auction house that’s running the auction will list the property or properties up for sale online. They’ll typically list them about a month in advance.

Depending on the auction format that the auctioneers choose, there may be a designated time and date for the auction to take place, at which point you’ll submit your bid.

Or there may be a cut-off date and you’re free to submit your bid online at any time beforehand. This is the more modern way of running property auctions.

In both types of property auctions, there will be a reserve price that’s set by the seller, which is essentially the lowest price that the seller is willing to accept. If bids fail to reach the reserve, the property won’t be sold.

If you table the highest bid, you’ll win the property and will be obliged to pay a reservation fee, also known as the deposit. This is due on the day of the auction.

couple signing mortgage agreement

Why do people choose to sell a house at auction?

There is a lot to be said for selling a house auction. Here’s why sellers might choose to auction their home:

  • It’s a fast way to sell: The timeframe for completed sales is typically much faster than selling in the traditional way. So if you’re looking to sell a house quickly that you may have inherited, for example, an auction is a good way of doing so

  • Auctions are easier for the seller: Because auctions work to fixed timeframes, things progress almost "automatically". This saves sellers the stressful experience of chasing solicitors and estate agents to try and push the sale along

  • Seller may not have money for repairs: If a property needs a lot of expensive work, the seller might opt to offload it via auction to effectively pass the outlay to the buyer

How to succeed when buying a house at auction

Getting the right property at the right price requires doing some groundwork and keeping your cool during the auction. Here’s some handy tips to give yourself the best chance..

  • Sign up for mailing lists: Make sure you’re on auction houses’ mailing lists, so you get notified of properties going to auction in the area you’re looking to buy. This will ensure you get up-to-date auction catalogues, too

  • Fix viewings: If there’s a property you like the look of, make sure you get a good look at it ahead of the auction. And if you can, take an expert with you, such as a builder or surveyor

  • Do all your financial groundwork: Ensure you’ve got a mortgage in principle, so you’ve got a solid idea of your budget and you’re able to move quickly. You should also find out what deposit is required and what forms of payment are accepted. As a rule, you’ll need to pay 10% deposit when the hammer falls

  • Work out a hard-and-fast budget: It’s easy to let ‘animal spirits’ take over and get carried away at the auction. But if you’ve got a firm budget in mind, that’s less likely

  • Don’t pay too much heed to guide prices: It sounds obvious, but remember that they’re only there as a guide. And bear in mind, that they’re often set low to pique interest

  • Pay attention to the small print: Different auctions apply different terms of sale, which you’ll need to adhere to. So get a copy of the terms and conditions and enlist a solicitor to look over them. That way, you know when payments are due and you won’t get a nasty shock on the day - or, worse, after you’ve had a bid accepted

  • Attend an auction beforehand: As a first-time buyer, you’re unlikely to be too familiar with the ins and outs of property auctions. So make sure you attend one in the name of research. That way you’ll know how they typically work

  • Get to the auction early: Try and get to the auction at least 20 minutes before it gets started. That’ll give you time to familiarise yourself with any changes to the terms of sale that could be announced on the day

  • Bring supporting documents: You’ll need photo ID and proof of residence if you’re going to make a bid

  • Remember there’ll be other chances: If a property doesn’t sell at auction, you may be able to buy it privately. And don’t lose heart, if you miss out on a property, there will be other auctions

What happens after you've won a house at auction?

So you’ve tabled the winning bid – in most cases there’s now no going back. Here’s what you’ll need to do next:

  • Pay for a survey: You’re not legally obliged to get a survey, but it’s a wise thing to do. That way you’ll get a comprehensive idea of any issues with the property. And remember: if you bid for the property in a ‘modern’ auction, you can still withdraw from the purchase if problems are uncovered

  • Progress with your mortgage: Lots of buyers at auction pay cash. But if you’re buying with a mortgage, your lender will value the home. This is to verify that the property you're buying merits the purchase price. You’ll only receive your mortgage offer if the lender is satisfied that the property meets its standards and is deemed to be liveable

  • Take out buildings insurance: As soon as possible after contracts are exchanged, sort out buildings insurance. So if the worst happens, the structural foundations and bricks are covered

What costs apply when buying a house at auction?

Costs to be aware of when buying a property at auction include:

  • The fees payable to your solicitor or conveyancer

  • Administration fees of between £300-300 payable to the auction house

  • Stamp duty (but you may be exempt if your property is beneath the thresholds and you meet the right conditions)

  • Buildings insurance, which you should take out as soon as possible after exchanging contracts

Other useful guides

Compare mortgages with MoneySuperMarket

Looking for a first-time buyer mortgage to take your first step on the property ladder? Or perhaps you're looking to remortgage?

Either way, it’s easy to find and compare mortgages from a range of leading lenders with MoneySuperMarket.

Whether you’re looking for a fixed-rate, a tracker, or a discount mortgage, our mortgage comparison tool can help you find a great deal for you.

We’ll just ask you a few questions about the property you’re looking to buy or remortgage and how much you’ll need to borrow.

We’ll then show you results including the initial interest rate and your monthly repayments and any product fees you’ll be asked to pay.

Compare mortgages now
Find a mortgage