The purchase that changed my approach

For years, I concentrated on unconditional auctions. In my 2024 account, I described finding a property on the EIG website offered through a conditional auction, also known as the modern method of auction.

The low guide price prompted questions about the property, tenancy, legal position, location and the seller’s circumstances. My conclusion in that account was that the seller wanted to sell, rather than there being a problem in the areas I had considered.

I registered with the auction platform, calculated a maximum bid including its substantial fees and set the automatic bidding limit. My bid was the highest but remained below reserve. The seller accepted it.

The original auction account image records a £14,000 sold price for Windsor Road, Liverpool. That figure is the recorded sale price, not the total amount invested after fees and other costs.

Check what “conditional” means for this auction

The sale method determines your obligations. In a conditional auction, the successful bidder generally enters a reservation agreement and is given a period to progress towards exchange and completion. The terms of the agreement matter.

For comparison, iamsold’s published conditional auction terms distinguish reservation fees, reservation deposits and the reservation period. They are an example of an operator’s terms, not the identified terms of my historical purchase. Read the latest documents for the lot you intend to buy.

Ask your solicitor to explain when each obligation arises, the deadlines, what payments are refundable, and what happens if either party does not proceed. Check the legal pack, Special Conditions of Sale and any addendum prior to auction.

An online auction can be conditional or unconditional. The screen you bid on does not establish the contract. Our guide to buying property at auction explains the wider preparation.

Calculate the maximum bid after allowing for fees

Start with the amount you can justify investing in the property. Deduct the costs that sit outside the bid, including the auction charges, legal fees, transaction taxes, surveys, works and finance. Keep a contingency appropriate to the uncertainty.

Check whether charges include VAT, whether a percentage fee has a minimum, and whether any payment forms part of the price. Recalculate costs that vary with the bid. Never assume the advertised guide includes everything you must pay.

Automatic bidding still needs human judgement

The platform can place bids up to the limit you set. It cannot inspect the building, read the legal pack or decide whether your rent assumption is credible.

Understand the platform’s bidding increments, closing rules and any extension process. Set the limit only after completing the appraisal. My account was based on years of auction experience; it is not a reason to bid on an unfamiliar property without doing the work.

The auction bidding strategy case study shows why stopping at your limit can be the right decision.

A bid below reserve can start a negotiation

The reserve is the seller’s minimum for the auction. Being the highest bidder below reserve does not, by itself, establish a completed purchase.

In this case the seller accepted the offer. For another property, ask the auctioneer what can be negotiated and have the resulting agreement documented correctly. Do not increase your offer simply to reach a reserve that your appraisal cannot support.

Our unsold auction property guide explores the opportunities that can remain after bidding ends.

Put the reported yield in context

The original account described a tenanted property in good condition and quoted a yield of about 33% at market rent. It did not publish a full cost schedule or establish a net return after operating costs, finance and tax.

The accompanying three-year payback statement was a simple headline calculation. At a 33% annual rent-to-price ratio, roughly 3 years of gross rent equals the price used in that ratio. That does not mean the investor has recovered the full investment in spendable cash after costs.

Use the gross yield, net yield and cash flow guide to work through the distinctions. Check actual rent, tenancy terms, expenses and the full acquisition cost on any property you consider.

Build the judgement behind the bid

The lasting lesson is to investigate the opportunity, price the costs and keep control of the maximum bid. The auction method is part of that assessment.

Dominic Farrell’s property mentorship helps investors develop those skills. For structured introductory training, explore our property auction courses. For a different purchase route, read the Sefton Park receiver acquisition case study.