Commercial auction finance

Deadlines come from the contract

Completion timing is set out in the auction contract, including any special conditions in the legal pack. Different auction houses and lots use different terms, and some online auctions run conditional processes with reservation fees. Read the conditions for the specific lot, ideally with a solicitor, because missing the date can mean losing your deposit and facing further claims.

Due diligence before bidding

Lots are often sold with limited information and can include tenanted property, vacant buildings or titles with complications. The RICS consumer guide stresses checking the legal pack and inspecting the property. Lenders will review the same documents, so problems you miss may surface after you are already committed.

• Title, leases and any occupation by others
• Special conditions, buyer fees and costs added to the price
• Searches, planning and condition
• Whether the property is mortgageable as it stands

Preparing finance

Talk to a broker before auction day so lenders can review the lot, your finances and your exit. A lender's valuation may differ from the guide or hammer price. Remember that a lender agreement in principle is not a binding offer.

Hypothetical example, not a real client: a buyer bids on a tenanted industrial unit. Before the auction, the buyer shares the legal pack with a lender, confirms the specific completion terms and plans a refinance onto a longer-term loan, with a fallback if that refinance is delayed.

After the hammer

You pay a deposit on exchange, so have it ready in cleared funds. Instruct your solicitor and confirm valuation access immediately. Insurance responsibility may pass on exchange depending on the conditions.

Pre-auction and post-auction offers

Some lots sell before the auction or immediately after if unsold. These deals may still use the auction contract and its timetable, so the same discipline applies: read the conditions, check the completion terms and have finance ready. Do not assume a private negotiation automatically gives you more time.

Setting a bidding ceiling

Auction rooms reward discipline. Before bidding, set a maximum that reflects the lender's likely view of value, your total costs including buyer fees and tax, and the cost of works. Competitive bidding can push prices above what a lender will support, leaving you to fill the gap. If the price passes your ceiling, letting the lot go is often the right outcome.

Remember that a guide price is a marketing indication, not a valuation, and a reserve may be set differently. Lenders rely on their own valuer, whose figure may differ from both.

Also budget for what happens straight after completion: insurance, securing an empty building, urgent repairs and the professional fees for any refinance. These come out of the same pot of cash as the deposit.

If the lot is tenanted, read the leases in the pack carefully, because the income they describe is what a refinance lender will later assess, and unclear or missing leases can make that exit harder than the purchase.