SEEN the house of your dreams? Seen that it is for sale at auction, rather than with an estate agent? What now?

The key thing to remember is that if your auction bid is successful you are contractually obliged to buy the property. This differs from the usual house buying process where you have an offer accepted. In that case, binding contracts are not exchanged until several weeks later, during which time your solicitor will make various enquiries and searches on your behalf, before you finally commit. Either party can pull out without financial penalty.

For auction sales, pulling out after your bid has been accepted means you will lose your deposit (usually ten per cent of the purchase price). Therefore you need to be committed before you bid. Be prepared:

- Can you pay? You will need to pay a ten per cent deposit on the day, and the balance usually within 28 days.

- Do your research. Obtain the legal pack from the auctioneer and take legal advice. Some properties might have issues with title, or potential rights-of-way issues. All can be costly if not identified in advance.

- Consider a survey. Most people buying a house the traditional way would be advised to get a survey done, so it should be no different for an auction purchase.

- Don’t get carried away. If you have a budget, stick to it and do not get caught in a bidding war where you end up paying more than you can afford. If you are unsure about the whole process, try to visit another auction in advance to see what goes on.

While buying at auction could mean you get a bargain, if you want to avoid costly mistakes it is worth paying for the correct research in advance, even if ultimately you do not buy the house.