IT WAS standing room only in the Palace Suite of the Royal Garden Hotel on Kensington High Street on Valentine’s Day. This was not a mass speed-dating event but the first big property auction of the year in London. The room was packed with developers, buy-to-let investors and the odd nervous-looking young couple. A few had even brought their children along.

“This is an easy, straightforward way of buying a property,” Savills’ auctioneer, Chris Coleman Smith, told the room. “Auctions are great for buyers and sellers, because you do the deal on the day.” He then added a rather blunt caveat: “If you’re not sure, go now. Don’t bid.”

The Royal Institution of Chartered Surveyors says that auctions now account for about 5 per cent of all property purchases in the UK. The draw for the seller is speed: they get the deal done on the day and receive their money within a month. This is attractive to buyers, too, although the deadline makes the process all the more fraught and emotionally charged.

Although the lure for buyers is the hope of getting a property on the cheap, the lots at Savills’ auction last week were not going for rock-bottom prices. Seasoned buyers in the crowd grumbled that bargains were easier to come by in December, but Mr Coleman Smith disagreed: “There were a few that should have gone higher, I thought.” He believed that the man who paid £1.4 million for a golf course in northwest London as an investment for his children had snapped up a great deal.

There was also plenty on offer at the Savills auction for those with a little less to spend. A three-bedroom flat in a terraced house in Southfields, southwest London, sold for just £150,000 — £5,000 less than its guide price. A two-bedroom flat in Balham, South London, sold for £201,000 — £40,000 more than its guide price but still significantly less than you would pay for similar properties in the area if you bought through an estate agent. Anyone considering buying at auction should expect to pay more than the guide price because properties usually sell for a fair bit more than the figure listed in the catalogue. A three-bed family house in Shirley, Croydon, for example, sold for £163,000 at the Savills auction, more than double its guide price of £80,000. The lot that caught my eye — a Grade II listed former artist’s cottage in the Cornish fishing village of Polperro — sold for £265,000, £80,000 above its guide price.

When the hammer finally stopped, 96 of the 110 lots had been sold, raising a total of £23.9 million. All but two of the properties sold went for more than the list price. Mr Coleman Smith said that the percentage of sales achieved, 87 per cent, was average for a Savills auction.

Eddisons’ first auction of the year in Leeds took place exactly a week ago at Leeds United’s Elland Road stadium. More than 75 per cent of the 58 properties offered were sold, raising £4.5 million. Eddisons’ auctioneer, Tony Webber, said: “Taking the auction as a whole, the prices achieved on the day have been calculated as 12 per cent above the guide price — a clear indicator of the current strength of the auction market in the North East of England.”

He added: “Concerns that house prices were set to plummet have been alleviated by their stability in recent months, and as a result investors are eagerly stepping back into the market.” Among Eddisons’ lots were a Victorian semi-detached house split into seven tenanted flats in Bridlington, East Yorkshire, that had a guide price of £100,000-£110,000 but sold for £182,500, and a freehold fish-and-chip shop with two upper floors of living space in Bingley, West Yorkshire, with a guide price of £100,000 that sold for £152,000.

The key to a successful day at auction is to come well prepared. Paul Stockwell, of the mortgage broker Savills Private Finance, says a surprisingly high number of people neglect to sort out their finance before they arrive. “A mistake that many people make is to be too presumptuous,” he said. “They just assume that they will be able to get the money. People want to get a buy-to-let loan on properties that need weeks or months of renovation. But a lender will generally give you a buy-to-let loan only if the property is ready to let to tenants.”

Before auction day you should arrange to view the property you wish to buy, and ideally obtain a valuation and a survey in addition. “Not everyone does this, since if they do not buy the property they will have wasted the money, but it is advisable to do so,” Mr Stockwell said. “You should also get a mortgage agreement in principle.”

Once you have bought a property at auction, you have just 29 days to pay the full amount. If that sounds like a tricky task, it is, because not all lenders will be able to arrange the loan in time. Using a mortgage broker is advisable, therefore. “You have to find lenders who can arrange the mortgage in time, who you can rely on,” Mr Stockwell said. “But you also need to look out for a good rate.”

HAMMER RIGHT

Develop a strategy beforehand. You should always have one discretionary bid in reserve, which should be just over your maximum limit in case your opposing bidder offers your limit.

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