Properties are usually repossessed when an owner has defaulted on their mortgage and fallen into arrears, or the mortgage lender, who – as a result - applies to the courts for the issuing of a repossession order. This is usually followed by an eviction order. That’s how most repossession houses enter the real estate market as houses for sale.

The sale of the property goes towards paying off the previous owner’s debts, and the lender is legally obliged to get the best possible price. In order to recoup their investment as quickly as possible, lenders will often price the property below market value to encourage a sale.

The advantage of selling repossessed homes at auction is that lenders can usually achieve a quick sale at a guaranteed minimum price. This is because the contract of sale at auction must be completed within 20 working days of the auction date.

Repossessed residential properties will often need renovation work which means there is an opportunity for the buyer to make some money and also increase the value of their property. Also once the hammer falls at a property auction there is no chance of going back on a deal so buying repossessed houses at auction gives a certainty of purchase.

There are several things to look out for when identifying a repossessed home at an auction. Check the auctioneer’s catalogue. In some cases it will say “by order of the mortgagees”, in other cases it may say “by order of the receiver”. However, not all properties will have this information in the catalogue. If you suspect the property is a repossessed home, the easiest thing to do is phone up the auction house for clarification, and do remember to check the legal pack.

Homebuyers should be aware that the process of purchasing property at auction is quite different from buying a home through an estate agent. Before you consider buying, try to attend at least a few auctions to get an idea of what the process involves. The biggest and most important difference is that buying at auction is legally binding, so you must do your homework about the property before the sale.