I'm looking at a property going to auction next month; how do I go about getting a survey and full legal pack review done *before* auction day, and what are my options if I don't get the winning bid?
Quick Answer
Obtain survey and legal pack review before auction by instructing professionals early. Be prepared for costs, even if your bid is unsuccessful. This due diligence mitigates risk and informs future investment decisions.
## Due Diligence Steps for Auction Property Surveys and Legal Packs
When considering an auction property, commissioning a survey and a legal pack review is essential to mitigate unforeseen risks and costs. The process begins effectively once the auction catalogue is released, as this typically provides access to the legal pack and viewing arrangements.
### Accessing the Legal Pack
The legal pack for an auction property is usually made available by the auction house once the property is listed in their catalogue. This pack contains crucial documents such as title deeds, search results, property information forms (TA6, TA7, TA10), and special conditions of sale. It is mandatory to receive a solicitor's full legal pack review to identify any restrictive covenants, easements, or liabilities that could impact the property's use or future sale. For example, a property with an unknown flying freehold or a short lease (under 80 years) could significantly affect its value and mortgageability. Missing information regarding planning permissions or building control certificates, especially for extensions or renovations carried out after 2000, warrants further investigation.
### Arranging Property Viewings and Surveys
Physical inspection of the property is critical. Auction houses typically arrange block viewing times; it is advisable to attend these. While there, you can assess the property's condition, identify potential issues, and consider what type of survey is appropriate. For properties suitable for a BRRR (Buy, Refurbish, Rent, Refinance) strategy, a Level 3 Building Survey (formerly a full structural survey) is often recommended. This comprehensive report will detail the property's construction, condition, and any significant defects. Its findings are crucial for accurately quantifying refurbishment costs, such as extensive damp proofing, which could cost £2,000-£5,000, or a new roof, potentially £8,000-£15,000 for a terraced house, directly impacting your return on investment.
## Costs and Options if Unsuccessful at Auction
Undertaking due diligence before an auction incurs professional fees, regardless of whether you secure the property.
### Professional Fees Involved
For a legal pack review, expect solicitor fees ranging from £500-£1,500, depending on the complexity of the pack and the solicitor's hourly rate. A Level 3 Building Survey can cost between £600-£1,000 for a typical 2-3-bedroom property, varying by location and property size. These costs are part of an investor's initial due diligence budget. It's important to factor these in as sunk costs for each auction pursuit, as they are not recoverable if your bid is unsuccessful.
For example, if you spend £1,000 on a survey and £750 on a legal review, that's £1,750 per property. If you do this for two properties and don't win either, you're out £3,500. This is simply the cost of doing business in auctions, protecting you from buying a costly problem.
### Options if the Bid is Unsuccessful
If you do not secure the property at auction, your primary option is to accept the professional fees as part of the due diligence process. While the specific property is lost, the exercise of reviewing legal packs and surveys enhances your understanding of property assessment and risk. This knowledge is transferable to future auction opportunities, improving your ability to quickly identify red flags or viable opportunities. Some investors will make post-auction offers on properties that failed to sell on the day, using their existing survey and legal review to inform an immediate, often more aggressive, offer price. This is a common tactic for investors looking for below-market value deals who have done their homework. This strategy hinges on the property not meeting its reserve price. Ensure you communicate the limits of any existing legal review with your solicitor, as the offer process post-auction can differ.
## Investor Rule of Thumb
Never bid on an auction property without first undertaking a full legal pack review and a professional survey; the cost of due diligence is always less than the cost of an unknown problem.
## What This Means For You
Navigating auctions requires a structured, disciplined approach to due diligence. The fees for surveys and legal reviews are an investment in risk mitigation, not a guarantee of purchase. For investors considering BRRR projects, a comprehensive understanding of potential repair costs unearthed by surveys is vital. If you want to refine your auction strategy and learn how to factor these costs into your overall deal analysis, this is exactly what we unpick inside Property Legacy Education.
Steven's Take
The most common and costly mistake investors make at auction is getting caught up in the emotion and bidding without doing their homework. From the current market, I've seen too many investors win a property, only to find a £20,000 roof repair or a legal issue that makes the property unmortgageable. The fees for a survey and legal review, typically £1,500-£2,500 total, are not dead money. They are your insurance policy. If you lose the bid, you've learned. If you win, you win with your eyes open, knowing exactly what you've bought and what costs are coming. This controlled risk is fundamental to building a profitable portfolio.
What You Can Do Next
Contact the auction house immediately upon catalogue release to request the legal pack and confirm viewing dates for your chosen property. Doing this early provides maximum time for professional review.
Engage a solicitor experienced in auction properties to review the legal pack. Provide them with a clear deadline before the auction date to ensure all queries can be raised with the seller's solicitor. You can find specialist solicitors via the Law Society's 'Find a Solicitor' tool.
Instruct a RICS-qualified surveyor to conduct a Level 2 HomeBuyer Survey or a Level 3 Building Survey based on the property's age and condition. Ensure they are aware it is an auction property and can provide a rapid turnaround. Check the RICS website (rics.org) for accredited surveyors in your area.
Review your local council's website for any proposed changes to council tax on second homes or empty properties, as discretionary premiums can affect long-term holding costs if the property were to remain vacant for extended periods after purchase. For example, check london.gov.uk for London-based properties.
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