How do you buy at auction with your finance ready?

What signing at auction actually commits you to

Buy at auction and you sign an unconditional contract. There is no cooling-off period, and there is no subject-to-finance clause. If your finance then falls over, that is your problem and it is an expensive one, potentially including your deposit and the vendor’s losses.

Buying before auction, or by private treaty, is a different situation with different protections. It is worth knowing which one you are in.

Pre-approval is necessary and not sufficient

A pre-approval means a lender has indicated it would probably lend you an amount. It does not mean it will lend against the particular property you are about to bid on, and it does not remove the conditions attached to it. See how pre-approval actually works.

The realistic goal before an auction is not certainty, which nobody can sell you. It is to have removed every condition that can be removed in advance, and to understand precisely which ones remain.

Valuation is the risk people forget

Your lender lends against its valuation, not against the price you paid. Win an auction at a figure above what the valuer supports and the shortfall is yours to fund, in cash, on a contract you cannot exit.

This is the single most common way a well-prepared buyer gets caught. In a fast-moving or thinly-traded market, and for unusual properties where comparable sales are scarce, the gap can be significant. Ask your broker what the valuation risk looks like on the specific property before you bid, not after.

Prepare the property, not just yourself

Once you have a target address, there is work that can be done in advance: having the contract reviewed by your solicitor or conveyancer, checking whether the lender has any concern with the property type, building or postcode, and where possible getting the property in front of the lender before the day.

Some lenders will look at a specific property against an existing pre-approval before auction. That step converts a general indication into something much closer to a decision, and it is worth asking for.

Have the deposit genuinely available

You will usually need to pay the deposit immediately, commonly 10 per cent, by a method the agent accepts. Funds sitting in a term deposit, tied up in shares, or in an account with a daily transfer limit are not available in the sense that matters at 11am on a Saturday.

Check the accepted payment method with the agent in advance. Check your own transfer limits. Both are simple and both have caught people out.

A short pre-auction checklist

• A properly assessed pre-approval, with the remaining conditions in writing
• The contract reviewed by your solicitor or conveyancer
• The specific property raised with the lender, and the valuation risk discussed
• Deposit funds liquid and transferable on the day, by a method the agent takes
• A firm walk-away number, decided before you arrive
• Your broker reachable during the auction

The last one sounds minor. On the day, being able to get a straight answer in two minutes is worth a great deal.