There's no guarantee that you'll make a killing, of course, but set about it the right way and, who knows, you could well end up with cut price home, or a nice little earner which will turn a healthy profit once it's been fully refurbished.
But tread carefully: buying property at auction is a rather different proposition to buying in the usual 'by private treaty' method. Once the hammer comes down, that's it: the deal is done and there's no backing out. You will be asked to sign a contract there and then, cough up a ten per cent deposit and complete within 28 days of signing.
So before you sally forth with a full repetoire of twitches, nose rubs, and sly winks, all carefully practised in front of a full sized mirror, you'll need to get your act together and collect all of the relevant information on the auction properties you hope to bid for.
Local searches, a survey, and finance will all need to be sorted out in advance, so if you have a property in mind instruct your surveyor and solicitor and conslut with your lender. You will also need to be clear about how high you are willing to go and fix a price limit which will not be exceeded. Only then can you think about turning up to bid.
Prices
Information on the properties is provided by the auction houses, who produce a catalogue 3-4 weeks before the property auction with price guides and details of what's about to come under the hammer.
Some come with the legend 'unless sold prior' appended to the details, which means that the owner will sell before the auction if a good enough offer is made. But according to Chris McHugh of McHugh & Co. "9 out of 10 properties will go under the hammer rather than in advance of the auction".
As for the price guide, this is a conservative estimate which will usually be exceeded. "There's also a reserve price," says Chris McHugh, "agreed between the vendor and the auctioneer. Again the price achieved is usually well beyond the reserve. To give an example: at our last auction a two bed flat in Baker Street had a reserve of £150,000 but went for £197,500".
If the reserve is not reached the property is withdrawn, but if you are among the last bidders on a withdrawn property it is possible to approach the agent with a price and see if the vendor will accept the offer.
Surveys and Searches
Having perused the catalogue and decided what takes your fancy you must then arrange to view the property and have a survey done. Many auction properties, as John Weatherall of Andrews & Robertson points out, "are unmodernised or need refurbishment so it's definitely a good idea to get a professional to cast a skilled eye over prospective purchases."
The auction house will provide a seller's pack with all of the details that your solicitor will need, usually for a fee of around £10. Once you've got that little lot together you're in a position to take on all comers. But remember: if you are outbid for the property you don't just lose the house, you also forfeit the cost of the survey as well as the solicitor's fees.
Bidding
Auction houses generally give the hammer a good going over six or seven times a year. Most take place in hotels or similar establishments and they can attract quite a crowd. Expect anything from 200-600 to show up.
Bidding in such an environment is not for the fainthearted and can be a nerve-racking process, so if you're new to the business it's definitely a good idea to attend a couple of property auctions and see how it's done.
And if you still don't fancy it you can always get your solicitor to come along and bid for you. Alternatively, you can choose to remain out of sight and bid over the phone. You can also bid online at some houses auctions.
But whether you take the plunge yourself or use a professional, there is one simple, golden rule: fix a limit in advance and stay within it. Auctioneers are paid to get the best price and proceed accordingly, but a cool head and a clear limit will ensure that you don't get drawn in by the excitement.
Finance
If you are successfully with your bid you are contractually obliged to complete the deal and you must have that 10 per cent up front. It is, therefore, essential to have the finance sorted out in advance.
"House auctions," says John Weatherall, "are not for the 95% mortgage brigade. Because many properties need attention, rewiring, a new roof, the plumbing sorted out, and the building society will probably want you to have the cash to pay for the refurbishment. Most owner occupiers are second or third time buyers with something to spare from a previous sale."
It's perhaps for this reason that most who buy at auctions are professional investors, builders and the like, but as the benefits become a matter of public knowledge more and more owner occupiers are getting in on the action.
And who can blame them: the bargains are there to be had and the buzz and drama can be addictive. Provided you're careful, getting hammered makes a good deal of sense, and knocking down a house may well be the best chance you have to build up a property portfolio or take that next step up the ladder.
View the latest auction properties in our special Auction Edition
Michael O'Flynn
© Find A Property 2000-2007
