This can be an exciting way to secure your dream investment property, particularly as you might bag a bargain and get some great deals; but it isn’t for the faint hearted.
Things can happen very quickly in the auction room and you need to have done your homework beforehand in order to bid confidently and avoid paying too much.
Looking to buy property is an exciting time. It is even more exciting when you think you may bag a potential bargain. However, you have to be aware and beware when it comes to buying property at auction as you don’t have a lot of time to do the necessary research – but once you’ve bought it, you will have a lot of time to reflect on any mistakes!
Typically auction catalogues are released 14 days prior to auction. That means you have just two weeks to view the property, check the legals, get a survey, raise the finance, research the area, assess demand, research the end value, cost any works, get quotes from trades people – it’s a lot of work to do in a short space of time! Because there is so much to do – and so little time – and because you are focussed on “bagging a bargain” it can mean the simplest things get forgotten. That means from the outset you must focus on getting the answers to 2 key questions – this will help you understand more about the property:
Who is selling the property?
Most auction houses will show who is selling the property – it may by order of the mortgagees/ LPA receivers/ a housing association or if it says nothing it will typically be a private individual/ company. If in doubt, give the auctioneer a call and ask.
Why are they selling the property?
If it is a mortgagee/ LPA receiver they often need to sell the property quickly to raise the funds to clear the debt that is owed. If it is a housing association they may be selling the property as it is deemed too expensive to refurbish for their own use, or they may need to raise additional funds for other properties. If it is a private individual – it could be they need to raise funds quickly, or maybe the property has a problem which means it cannot be sold easily on the open market. (Thanks to Sam Collett for providing the above article)
- Every property investor should consider buying at auction as part of their strategy.
- When you have chosen a property that’s in the auction, you should plan your exit strategy – know what you’re going to do with the property
- Visit the property with the valuer
- Have the legal pack checked
- Visit the local letting agent – Do your Due Diligence!
- Choose the auctions wisely – sometimes going to the quieter auctions pays off
- Never, ever bid first
- Be careful of ‘off the wall bids’
- Bid when the auctioneer says “going once, going twice” – and watch other bidders, who’ve done their homework
- When the auctioneer says “it’s in the room” that means it’s met the reserve price
- Stick to your ceiling price
- Make a note of all the lots that don’t get sold – unsold lots means – more motivated seller