Property auctions have been around for a very long time, they are steadily gaining in popularity as the way to buy and sell property effectively. If you've ever attended one, you already know why. Bidding for a property at auction generates fun and excitement purely because of the time aspect of the transactions. Successfully bidding on your desired property can be done and dusted in less than 5 minutes.

Compare this to conventional estate agent methods where a sale completion can take up to 8 weeks and even longer in some cases. So why doesn't everyone just buy and sell at auction instead?

The Fear Factor - Many people are just purely too afraid to attend. The butterflies settle in, the legs start to give way; they feel sick and lose the confidence they once had when the original idea was first in their minds. Sounds a bit far-fetched but it's true.

People would rather let estate agents do all the donkey work for them. It is purely a matter of preference for the individual. I personally can't understand why anyone would wish to pay 'over-the-odds' for a specific property when a similar one at auction can be purchased for a discount, unless of course you're after the one in the estate agent's window.

The majority of people attending auction nowadays are the ones building up a property portfolio, buying to rent out or buying to refurbish and sell on for a profit. There are also many people who have decided that even purchasing their first home to live in, is easier than some make out. In today's world of frenzied property purchasing and with so much television programmes showing us how easy it is to "buy and 'do-up' a property", is it any wonder why so many people wish to follow suit?

The profit potential can actually have such an adrenalin-rush effect, that, if you don't understand a few basic principles, you're doomed for failure ...even before you start.

But before you do decide to give it your best shot …even if it's just to purchase your first home, there are a few stringent rules and facts that you must adhere to and understand fully. Failing to do so could cost you BIG TIME.

So why does a vendor sell at auction?

A vendor (person selling the property) will sell at auction simply because of these main factors:

Properties can be purchased, contracts exchanged, completed and paid for in full within 28 days. An immediate audience with cash readily available. A competitive crowd and lively competition can produce active bidding, thus producing a much higher yield for the seller. The seller reserves the right to accept or reject the bid. The buyer can win only if he outbids all other bidders. Not much chance of the buyer pulling out after the gavel has been struck

Changing your mind at this stage or any other stage within the 28 day 'Pay-Up' time will result in your 10% deposit being forfeited along with any other fees that the auctioneer may wish to incur.

The types of property being sold at auction are mainly...

1. Repossessions.
2. Private Sale.
3. Government & Local Authority.
4. Commercial.

What is a repossessed property?

More often than not, mortgage arrears are the main attribute to a repossessed property.

The owner falling into mortgage arrears typifies a repossessed property. The lender under these circumstances will then evict the borrower and take possession of the property. The next stage is for the lender to sell the property in an attempt to recover the value of the outstanding loan given to the evicted owner. More often than not, the loan company will accept any reasonable offer even if the price gained at auction is less than what the property was originally bought for.

Cutting their losses doesn't exactly mean the loan company will lose money. There's always more people to burden these costs by way of administration fees, rise in interest rates and of course the almighty 'redemption' penalty.

Private Sale

The majority of auction room purchases are private sales. Individuals wishing to sell their property quickly with the benefit of having an instant audience for maximum exposure in the likelihood that it will gain a maximum price, provoked by a possible bidding frenzy.

Government & Local Authority Property

You will find many government and local authorities/councils offering properties for sale through the auction houses.

Why? To sell-off tired and worn out properties to make way for new developments.

Either way, many developers purchase these cheaply and normally convert them into river/dockside apartments giving these, sometimes listed buildings, a new lease of life. Some of the oddities you'll come across at auction will be: water towers, castles, lock-keepers cottages, churches, farm buildings, old electricity sub-stations and even public conveniences. Yes, people do by them!

Commercial Property

Opportunities in commercial property are in abundance in the UK. Company relocation, downsizing or lease holders selling up can offer the commercial property enthusiast a good form of investment with steady yields and no maintenance costs (these costs are often down to the leaseholder and can be stipulated in certain contracts).

Either way, the quick decision makers are not only able to seek out the occasional good investment, but the whole process of viewing any property; requesting legal packs and completing the memorandum of sale, can all be done inside a few days which makes buying property from auction, an extremely viable method.