A Liverpool example of the difference

In September 2025, I described a two bedroom freehold house sold at a Liverpool auction for £110,000. Our appraisal allowed £5,000 of work to make it lettable and estimated fees of £5,840. That took the subtotal to £120,840 before Stamp Duty Land Tax.

The source did not provide a complete itemised breakdown of the fee allowance. It should not be copied as today’s quotation or treated as proof that every other cost was covered.

The assessed annual market rent was £9,540. That is approximately 8.67% of the purchase price, but only 7.89% of the £120,840 subtotal, before running costs, borrowing and tax. The price on the screen was only part of the investment.

Separate the deposit from additional charges

A deposit usually forms part of the purchase price. A buyer’s administration charge, premium or reservation fee may be an additional cost. Do not add a deposit twice to your total investment, or assume that a fee reduces the eventual purchase balance.

Check the auction method and the actual terms. For example, Sutton Kersh’s current buyer guidance distinguishes its deposit from the buyer’s administration charge, which does not form part of the price. Other auction houses and individual lots may use different amounts and arrangements.

Confirm the money required on registration, exchange and completion, together with the refund position if you do not buy.

Read additional charges in the legal pack

Ask your solicitor to identify payments in the Special Conditions of Sale and any addendum. These can include contributions towards the seller’s costs or other transaction-specific charges. A fee shown beside the guide price may not be the only amount payable.

Budget separately for your own solicitor, searches, survey or specialist reports and any leasehold notices or management information relevant to the property. Check whether quoted figures include VAT and whether a minimum charge applies.

Include tax, funding and the time needed

Liverpool purchases fall within the Stamp Duty Land Tax system for England. The tax depends on the buyer, property and transaction. Use HMRC’s current SDLT guidance and calculator with your adviser rather than assume a low purchase price means no tax.

Finance costs can include arrangement fees, valuation, legal work, interest, exit costs and the consequences of a delay. Ask the broker for the full funding schedule and a realistic exit. Include insurance, utilities, any council tax liability and other holding costs while the property is being prepared.

Renovation costs need a scope, quotations and contingency. Allow time for the work and letting or sale. Our refurbishment costs guide explains why necessary work and optional spending deserve separate decisions.

Work backwards to the maximum purchase price

For a letting investment, test realistic income against the complete cost and the ongoing cash flow. For a resale, deduct acquisition, project, funding and selling costs, contingency and your required profit from a defensible end value. Recalculate price-dependent taxes and fees as the bid changes.

The same 2025 account described a separate three bedroom acquisition at £70,000, with the same assessed £9,540 annual market rent. Different property characteristics and unitemised purchase costs mean it is not a complete like-for-like appraisal. The comparison illustrates why each buying decision must stand on its own numbers.

Use a written ceiling and keep it when bidding begins. The bidding strategy case study shows the discipline behind that decision.

Learn the appraisal through property auction courses

Our property auction courses cover the connection between valuation, legal packs, finance and bidding. Property mentorship with Dominic Farrell provides a framework for applying those questions to your own objectives and the opportunities you investigate.

You can also explore the principles in Property Auctions: Repossessions, Bankruptcies and Bargain Properties and The Property Auctions Podcast. Do the maths prior to auction, while you can still change your offer or walk away.