investing in property - a section for landlords and property investors

This page includes guides for many different aspects of investing in property. Check back occasionally for any new sections as they are added periodically.

Guide to buying at auction

Buying at auction

Auctions are a great way to buy property competitively. But be warned, there is more to buying than just turning up and landing yourself a bargain.

The main attraction of buying at auction is that you avoid the conventional drawn out process of house buying. At auction it's condensed into a matter of minutes rather than months and when the hammer falls, you own the property.

Contact the relevant auction house and request their catalogue. Most auction houses hold regular auction sales with a catalogue printed some weeks in advance. You can also subscribe to catalogue mailing lists.

Go through the catalogue carefully, read the details thoroughly and identify the properties you are interested in.

Do arrange a viewing of the lot(s) - viewing arrangements will be listed in the catalogue.

View any properties you are interested in.

Research the property thoroughly and ask local estate agents and neighbours for their opinions.

Check the description of the lot in the catalogue is accurate.

Carry out the usual property/land searches – these are sometimes available from the auctioneers in the form of a legal pack.

Carefully read the conditions printed in the catalogue. Always get legal or professional advice from a solicitor and, in appropriate cases, a chartered surveyor.

Make financial arrangements to ensure you have a 10% deposit ready for payment on auction day, when the contracts are signed and access to the remaining 90% within 28 days.

Plan ahead if you need mortgage assistance. It's wise to arrange a mortgage in principal with a bank or building society before buying at auction. You could lose your 10% deposit if you fail to complete within the time given (normally within 20 working days). At rjfmortgages we have experience of buying at auction and can advise you

Be aware that buying at auction is a binding commitment and carries the same legal implications as a signed contract by private treaty. In most cases, auction offices have copies of legal documentation provided by the seller's solicitors which can be sent to you.

Auction day

Remember to take two forms of identification, cheque book and all your banking details with you to the auction.

If possible, arrive early and familiarise yourself with the empty auction room.

On arrival, you may need to register with the auction house in order to bid prior to the start of the auction. Check with your auctioneer.

On arrival, get a copy of any addendum sheet. These are distributed around the auction room and contain late information or alterations. Don't assume that all the properties included in the catalogue will be offered on the day of the auction. Some may be withdrawn or sold prior to the auction.

Take a seat or stand somewhere in the room where the auctioneer will able to see you bidding clearly.

When placing a bid, make sure you gesture clearly at the auctioneer. Subtle twitches and winks will not be picked up. Either raise your hand or nod/shake your head clearly. The auctioneer will warn the room when he is concluding a sale.

If a property fails to reach its reserve price, don't give up! The vendor may decide to accept your bid later at the end of the auction. Make sure you leave your details with the auctioneer.

Don't forget that the property becomes the buyer's insurable risk as soon as the hammer falls. The conditions assume that the buyer has acted like a prudent buyer. If you choose to buy a lot without taking these normal precautions you do so at your own risk.

If you're considering purchasing a property at auction you should always consult with auction professionals and solicitors. This article is intended as a guide only.

The role of the auctioneer

The auctioneer acts as an agent for each seller. They prepare the catalogue, from information supplied by or on behalf of each seller. They will usually have a photograph of the property, a brief description and a guide price.

The auctioneer sells each lot at the auction. During the auction, their decision on the conduct of the auction is final; they can cancel the auction, withdraw lots from sale, or alter the order in which lots are offered for sale.

The auctioneer looks for bids around the room, and will take bids until there are no more and, depending on whether the reserve price has been met, will sell the property to the highest bidder. This sale is confirmed when the auctioneers gavel (hammer) falls on the highest bid. At this point the successful bidder is immediately under a binding contract.

The auctioneer can also choose to refuse a bid and they don't have to explain why.

If there is a dispute over bidding they are entitled to resolve it and their decision is final.

If the reserve price is not met the auctioneer may choose to withdraw the lot and not sell it. However, they are still acting as agents for the seller and bidders can put in offers for the lot after the auction, which may or may not be accepted by the seller.

Likewise, acting as agents, the auctioneers can take offers placed by bidders before the day of auction to the seller and the seller may decide to sell before the auction