How can brokers support clients considering buying at auction?

Loans Warehouse is warning that property buyers entering auctions without funding in place are increasingly exposing themselves to significant financial and legal risks, as tight completion deadlines leave little room to resolve unexpected issues.

While property auctions remain an attractive route for investors and homebuyers alike, the requirement to complete, typically within 28 days of the hammer falling, means buyers must be fully prepared before bidding. Failure to do so can result in lost deposits, failed transactions, and exposure to unforeseen costs or legal complications.

The specialist finance broker says a lack of awareness around funding options and legal risks is leaving some buyers vulnerable.

Vikki Edwards, head of bridging and development at Loans Warehouse, said: “Auction purchases move incredibly quickly, and once the hammer falls, buyers are legally committed.

"If funding isn’t already in place, or if issues arise during the process, there is very little time to react. We’re seeing more cases where clients are caught out, not because the deal is bad, but because they weren’t fully prepared for the speed and complexity of the transaction.”

One recent case handled by Loans Warehouse highlights how quickly challenges can arise.

A client who had successfully secured a property at auction discovered that key details around private water and drainage were missing from the legal pack. Both the client’s solicitor and the lender’s solicitor strongly advised against proceeding without a completed local authority water search.

However, the search results were not due back for another 20 days, beyond the auction completion deadline, placing the client at immediate risk of losing their deposit.

Despite the uncertainty, Loans Warehouse worked closely with the lender to secure a pragmatic solution, allowing the transaction to proceed using an indemnity policy. This enabled the client to complete within 28 days and avoid financial loss.

“This is a good example of where the right support and lender relationships can make the difference,” Edwards added.

“But it also highlights the risk, if funding and strategy aren’t considered upfront, situations like this can easily lead to failed completions.”

Loans Warehouse is encouraging brokers to engage with clients as early as possible when auction purchases are being considered.

“If a client is even thinking about buying at auction, that’s the time to have the conversation,” said Edwards.

“We can help structure funding, identify potential risks, and make sure there’s a clear plan in place before they bid. Once the auction is complete, options become far more limited.”