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Going, going… property investment auction guide

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More and more buyers and sellers are opting for the uncertainty of open auctions over the traditional time and expense of agents and lawyers, says the National Property Auction (NPA) index, saying it registered a 16 per cent increase in property sold at auction in 2004.

The total value of property investment auctions has risen to £3.38 billion, says the NPA. Deals have become more open and transparent, says the association, and often offer discounted property simply not available in the traditional market.

Property investment opportunities offered by many institutions involved in large scale sell offs – such as banks, investment funds and branches of government will head straight for auction house rather than offering through agencies.

And with discounts of as much as 40 per cent on investment property it is not so difficult to see the attraction for priced out first time buyers.

An increase in the number of property repossessions and mortgage foreclosures has also recently provided a slew of property coming up for auction. Most buyers are currently speculative property investors, and it is wise to know your business to before you begin to bid.

To help demystify the auction process, and explain what precautions can be taken by the general investor, the Royal Institute of Chartered Surveyors (RICS) has published a guide for owners, developers and those interested in property investment.

"Properties on sale at auctions are usually available at a competitive price," said Richard Auterac, chairman of RICS real estate auction group. "Auctions also provide a platform for open and fair competition between bidders."

Once the hammer comes down, neither the seller nor buyer can withdraw and the process is completed within a set time - with no danger of any link in the property chain breaking."

Auctioneers recognise that to keep auctions at the forefront of the property market they need to deliver a professional service which responds to the changing needs of their clients," he added.

The guide will provide information on the property investment bidding process, from both a buyers and sellers perspective and on topics ranging from checking guide prices to bidding online.

It recommends straightforward and easy to follow precautions for effectively negotiating the process of inspecting investment property and financing purchases, and provides an easy to use guide to RICS Common Auction Conditions.

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