Our house in the middle of our street

I recently bought a flat in London at a property auction. Nobody really talks about buying your first house at a property auction but it’s been a very interesting process.

I’m going to try and put you off of the idea, but if you’re still not scared off by the end of this essay, then maybe it’s something for you to consider.

Auctions

From what I’ve heard about buying a house in the “normal” way, it seems like a very slow and drawn out process. You find a house you like, you make an offer, and then you wait for the seller to accept or reject your offer. If they accept, then you have to wait for the surveyor to do their thing, and then you have to wait for the mortgage to be approved, and then you have to wait for the solicitors to do their thing, and then you have to wait for the exchange of contracts, and then you have to wait for the completion date. It seems like a very long and drawn out process, and it’s not really clear how long it will take.

Auctions on the other hand are the wild west of the property market. You find a property you like. If you’re lucky, you can view it before the auction. Then you go to the auction, and you bid against other people who are interested in the property. If you win the auction, the fun begins.

The “fun”

Congratulations, you won the auction! It turns out that bidding on a property was the easy part. Now you have to go through the process of actually buying the property, which is a whole other can of worms.

Immediately after winning, daddy auctioneer will ask you for his cut. For my auction it was a fixed fee of £1800. Then, you have to do the ‘scary thing’. You pay a 10% deposit on the property, and this is a non-refundable deposit. If you fail to complete the purchase, you lose this deposit.

You must complete the purchase within 20 working days of the auction, and if you fail to do so, you lose your deposit and the property goes back on the market.

Cynics

You get a lot of people telling you that it’s a bad idea and to give up on the idea immediately, but I think it’s a really good option for highly driven people who are willing to work hard to get the process right.

Naysayers (often on Reddit, but on the internet in general) will give you these talking points:

• “You won’t be able to get a mortgage on it, so you have to have the cash ready to go, and if you don’t have the cash, you’re fucked.”
• “You won’t be able to get a survey on it, so you won’t know if it’s a good property or not, and if it’s not a good property, you’re fucked.”
• “The process is really complicated and you have to be really careful, and if you mess up, you’re fucked.”
• “There is a reason why the property is going to auction, and it’s probably because it’s a bad property, and if you buy a bad property, you’re fucked.”

These points do have a grain of truth to them, but they are also very much fear-mongering and not necessarily representative of the reality of the situation, which I’ll get into in the next sections.

On that last point - yes, there is always a reason a property ends up at auction. In my case the seller was the council, and the flat was at auction because it was in dire need of renovation:

• The floor was rotten.
• The lath and plaster walls were falling apart from damp.
• There were multiple leaks.
• The layout was horrendous - a massive bathroom and a tiny kitchen.

Most buyers (and most lenders) run a mile from a property like that, and an auction is the quickest way for the council to offload it. A “reason” isn’t automatically a red flag; you just need to find out what it is, and decide whether you’re bold enough to fix it. We were, and we did a full “gut and redo”.

Due diligence

The key to quashing the points made above by menacing naysayers is to do your due diligence. You must do your research on the property, the legal situation, the area, the market, and everything else you can think of.

For the property that I bought there were two 30 minute viewing slots before the auction, and I was able to attend both of them. In these viewings (which you must book in advance!) you can do the following:

• Invite a surveyor to do an initial survey of the property.
• Invite a builder you trust to kick the tyres and give you their opinion on the property.
• Pay for someone to come and value the property for you. ¹1This is especially important if you are going to get a mortgage on the property. There is no worse state you can be in than not being able to get a mortgage on the property after winning the auction, so you want to make sure that you have a good idea of the value of the property before you bid on it.

Valuation

For my property I paid for a valuator to come and value the property for me. I used a service called Houzecheck. They no-showed and as a consequence screwed me over by not having a valuation ready in time for the auction. Take away from this what you will, but I would be wary of using services like Houzecheck in the future, and I’m using this opportunity to publicly shame them.

To recover from this, I had to do my own valuation of the property, which was a bit of a nightmare, but I was able to get a good idea of the value of the property by looking at similar properties in the area and adjusting for any differences. Fortunately the property I bought was in fairly good condition (despite being a “fixer-upper”), and the area is extremely desirable, so I was able to get a good idea of the value of the property without having to do a full valuation. You can check property prices in the area on Zoopla.

Kicking the tyres

I had two people to give me an opinion on the property during the viewings, and I’d highly recommend doing this if you can too.

The first was a RICS chartered surveyor called Michael. Michael was an exceptionally nice guy and was very thorough in his survey. Finding a surveyor was actually quite difficult, as most surveyors didn’t want to do a survey² on a property where there was only 30 minutes to do the survey.

2I have a suspicion that most firms wanted to do a Level 3 survey only, and were not comfortable doing an initial survey in such a short amount of time. The cynical part of me thinks that a lot of these firms were just greedy - some of them promised to do a RICS Level 3 survey within the 30 minute viewing slot, which is just not possible.

Michael initially declined to do the survey as professionally he did not believe it was possible to do a proper survey in such a short amount of time.

After some discussion, and the surprising realisation that we were a five minute walk from his place, he agreed to do an initial survey of the property, with the understanding that it would be a very basic survey and that we would have to do a more thorough survey after the auction if we won. Michael was very honest with us about the limitations of the survey, but he was still able to give us an excellent idea of the condition of the property and any major issues that we should be aware of.

The second person I had was a builder called Miro, who is a builder I know and trust, who has been in the business for a long time and has a lot of experience with properties in London. I knew him through my brother who has used him for a lot of renovation work on his house. Miro was very helpful in giving me a “thumbs up” on the property, and was able to give me a good idea of the work that would need to be done on the property and the cost of that work. Importantly he was able to give me a good reality check. I was perhaps too optimistic about how fast we would move in, and Miro was able to adjust my expectations and give me a more realistic timeline for the work that would need to be done on the property.

Legal pack review

I used a solicitor to review the legal pack for the property, and this was an extremely important step in the process. The legal pack is a collection of documents that the seller’s solicitor provides to potential buyers before the auction. The legal pack contains important information about the property, such as the title deeds, the lease, restrictions, special conditions, asbestos reports, and more. It’s crucial to have a solicitor review the legal pack for you, and for this process I used Farnworth Rose Solicitors.

I also used LLMs to analyse all the documents in the legal pack and flag anything that appeared concerning. Using LLMs to do this was a bit of an experiment ³, but it turned out to be very useful.

3I made a Cursor project that extracted text from all of the PDFs / documents in the legal pack. Tesseract was used in the case of scanned documents. All of this text was then fed into a LLM with a prompt asking it to write up its findings etc. I also utilised the agent within Cursor to ask more specific questions about the legal pack - and it would decide which files to look at to answer the question. This process was very helpful in giving me a good understanding of the legal pack, and it was also very fast - much faster than having a solicitor read through all of the documents.

Concurrency

Unlike the “normal” process of buying a house, where you have to wait for each step to be completed before moving on to the next step, with auctions you can do a lot of the steps concurrently. Whispering the magic words of “it’s an auction property, so we have to complete within 20 working days” to your solicitor and mortgage broker will make miracles begin to happen. The miracles are so powerful that you will develop faith in divine powers.

Mortgage

This part was genuinely terrifying.

I kicked off two quotes with my mortgage broker First Thought Financial. We had Halifax and Santander lined up as both are fairly auction-friendly lenders (they work fast - which is one of the most important things when buying at auction). Our broker, Carly, was excellent and extremely responsive (despite our endless questions and worries), and she was able to navigate the process of getting a mortgage for an auction property with ease.

However this part is arguably the most stressful part of the process.

There were major pain points around the new leasehold. Because I was buying the flat from the council, there was no existing lease to buy - a brand new lease had to be created as part of the sale. This step seemed to throw absolutely everyone off and add multiple days of delay to the process, which is a huge deal when you only have 20 working days to complete.

There were errors on the mortgage illustrations that we had to get corrected. I was able to spot some of these errors myself on a read-through of the illustrations. However, some of the errors were hard to spot (digit transpositions, incorrect floor number, etc) and catching them early was crucial in ensuring that the rest of the process was not held up. To assist with this, I used a similar approach to the legal pack review and made LLMs review the mortgage illustrations and flag any issues, which was outstanding at catching the errors and getting them corrected quickly.

In the end both mortgage applications came back with offers at the same time. Running two in parallel cost us an extra £150 for the valuation on the mortgage we didn’t take, but that is a very cheap insurance policy when the alternative is losing your deposit. Halifax was the fastest and had the better rate, so we went with them.

If neither had come through, the fallback was a bridging loan. It’s an option, but not one you want to rely on: bridging loans are expensive and need a lot of paperwork of their own, so it is far better to get the mortgage right first time.

Solicitors

We used Farnworth Rose Solicitors as our solicitors, and they were exceptional. They were extremely proactive and were conscious of the tight timeline. The only “pain point” was the sheer volume of anti money laundering checks, bank statements, proof of address, proof of income, and more that they required from us. This was a bit of a nightmare to get together, but it’s understandable given the current regulatory environment.

Setting a maximum bid

Before the auction you need to know your walk-away price, and you need to stick to it.

I valued the property myself (thanks again, Houzecheck) from the area, the room sizes, recent sales nearby and Zoopla. Then I took off the cost of the work needed: a full gut and redo of the flat, which I estimated at around £80k.

The other constraint was my Lifetime ISA. I wanted to use it, and a Lifetime ISA can only be put towards a home costing £450,000 or less. So my maximum bid was set at the Lifetime ISA limit - going even £1 over would have meant losing the bonus and paying a withdrawal penalty on top.

Bidding

Absolutely thrilling. The auction we had was an online auction, which was a bit of a shame, I would have loved to have been in the room for the auction, but the online format did make it more accessible for us.

The UI was surprisingly simple and plain. There was a feed of the current bids and the current price, and there was a timer counting down to the end of the auction. There were big “+” and “-” buttons to set your bid, and there was a big “Bid” button to place your bid. Like eBay you can set a maximum bid, in this case it’s called a proxy bid, and the system will automatically bid for you up to your maximum bid.

Unlike eBay you can’t get sniped. If there is a bid the auction is extended by 60 seconds.

During the auction there were two other bidders going back and forth, but they hadn’t hit the reserve price (which was unknown to us). Looking at other properties up for auction I was able to correlate them as the same bidders over multiple properties, so I had a good idea we were up against people who weren’t really that serious about the properties, and were just trying their luck on a few properties to see if they could get a good deal. Eventually they both stopped bidding at the 40 minute mark, and the auction fell quiet.

Our strategy was to signal as little information as possible. We bid in the final 2 minutes with a single large proxy bid that was our maximum price, and then went hands off and let the auction do its thing.

Should someone else bid after us, we’re at the mercy of what they do - if they bid above our maximum, we lose, and if they bid below our maximum, we win but have to pay a higher price than we would have liked.

We bid, the price shot up to the reserve price, and then sat there, and sat there, and sat there… we had won with a single bid! Those final two minutes were absolutely surreal, and I was in a state of shock for a few minutes after the auction ended, just trying to process the fact that we had won the auction and bought a house.

Did it really happen? Did that auction just end with that single bid?

Completing

The period between winning the auction and completing the purchase is torture. I just want to get into the house.

We did complete within the 20 working days. The sting in the tail was my Lifetime ISA. Hargreaves Lansdown took far longer to release the funds than I expected, and with the completion deadline (and my 10% deposit) on the line, this caused me an immense amount of stress. I called them every single day. After human number six, it was suddenly smooth sailing.

If you’re using a Lifetime ISA, start the withdrawal as early as you possibly can, and chase it like your deposit depends on it - because it does.

Costs

We bought the flat for £390,000. The 10% deposit (£39,000) is part of that price, not an extra cost, but it has to be paid on the day in cash (your own money, not the mortgage). Here is what it cost on top of the price itself:

Item	Cost
Auctioneer’s fee (paid on the day)	£1,800
Legal pack review before the auction	£900
Surveyor (pre-auction inspection)	£450
Full Level 3 survey after winning (stage two)	£350
Builder’s opinion	Free (he was lined up to do the renovation, and had done major works for my brother and mother)
Seller’s legal costs, charged to the buyer	£7,800
Stamp duty	£4,980
Conveyancing (legal fees, the new lease, searches, Land Registry, admin)	£2,730.40
Valuation for the mortgage we didn’t take	£150
Mortgage broker	£1,000
Total	£20,160.40

The biggest surprise is the £7,800: the seller’s legal costs, set at 2% of the price. This is common at auction and is buried in the special conditions of the legal pack - another reason to have a solicitor read it before you bid, and to add it to your maximum bid calculation.

On top of all that comes the renovation, which I estimated at around £80,000.

Should you do it?

I promised to try and put you off, so here goes.

The stress is fucking insane. You have to be properly organised. We had everything planned in advance, so that the instant we won the auction we pressed “go” on the conveyancers, the mortgage, and everything else. If you don’t do this, there is a high probability that you end up fucked.

You need:

• A really good conveyancer who specialises in auctions.
• A really good mortgage broker who will sort you out, and can run more than one lender in parallel.
• Your paperwork (ID, proof of address, bank statements, proof of income, proof of deposit) ready before you bid.
• A fallback, such as a bridging loan, that you hope you never use.

If that list sounds exhausting, buy the normal way. If it sounds like a challenge, read on.

Conclusion

Overall, the process of buying a house at auction was a wild ride, but it was also a very rewarding experience. It’s a process very much geared towards cash buyers, but with the right team and a lot of hard work, it’s definitely possible to navigate the process successfully as a mortgage buyer too.

Due diligence is absolutely crucial in this process, and it’s important to have a good team of professionals (surveyors, builders, solicitors, mortgage brokers) to help you through the process, as navigating it alone is chilling to think about.

LLMs were a surprisingly useful tool in this process, and I would highly recommend using them to assist with the legal pack review and the mortgage illustration review, as they can help you catch issues that you might miss on your own. It’s so good having a ‘co-pilot’ that has infinite patience and attention to detail to help you navigate the mountains of paperwork and documents that are involved in this process. Sometimes being able to ask ‘stupid questions’ and get clear answers is the best way to understand the process and ensure that you are not missing anything important.