Research is the single most important barrier between you and getting good value, so don’t cut any corners here. As mentioned in a previous blog, you should familiarize yourself with auctions in general—how they work, how they play out and what to look out for. The best way to do this is to watch an auction online or attend one in-person.
Once you get this nailed down it’s time to create a shortlist of your favourite properties, searching through auction catalogues or the most popular property websites. Don’t get carried away and make sure these fit your needs and criteria—and your budget!
Check out estimated market value by comparing it to similar properties in the area and the sold prices where possible.
- View properties in person
I would recommend viewing in most instances, certainly if the property is going to be a fa,ily home moving forward. In many cases, investment properties with sitting tenants, HMO’s and developments don’t always need to be viewed provided all the relevant documentation is available to you. Next, research each property inside and out, making note of their key features and keeping an eye out for any potential pitfalls. This will give you a full understanding of what you are getting yourself into, from the overall cost of owning it to the repairs needed and upside value.
- Commission a survey
Many properties are sold at auction for the simple reason that they often will struggle to secure mortgage lending. They can be sold on the open market, but the auction arena is usually the better route to protect the sellers. For a few hundred pounds you can hire a professional to survey the property and uncover any underlying problems, a necessary cost to protect yourself from costly repairs or any other future headaches.
- Don’t forget about unsold and withdrawn properties
It’s very common for properties to go unsold or to be withdrawn from auction. The reasons for this are numerous. Whatever the reason, these cases provide huge opportunities for buyers to find even better value in the prices. If you see a withdrawn or unsold property you like, don’t hesitate to contact the auctioneer to tell him you’re interested in purchasing it. If the seller is motivated enough, they may very well let you buy it at a discount price without having to go to auction.
- Understand the legal pack
All auction properties should be accompanied by a legal pack, filled with vital information like title deeds, environmental liabilities, fixtures-and-fittings list, covenants and other legalities. Read it. Then read it again, to be safe. If you have any question about the contents, you should consider having a solicitor look over it.
- Get your finances in order in advance
Long before you go to auction, it’s vital to have your finances completely in order. Because, the fact is, once the gavel strikes, you are legally committed to pay it all—a minimum 5% deposit on the day.
If you can’t pay it all, the best case scenario is you will lose the 5% deposit (possibly 10%) and any shot at buying the property. The worst case scenario is you will have to cover the costs of re-selling the property and perhaps even have to pay more significant penalties down the road. Whatever you do, don’t let this happen.
- Formulate a bidding strategy
Before you go into the auction, it’s paramount to know exactly how much you can afford. It’s easy to get tempted and go overboard. But despite how much you like the property, don’t let it bias you into bidding more money than you can comfortably spend. You will only regret it in the long run.
And if your winning bid doesn’t meet the property’s reserve price, don’t worry. Stay focused. The vendor might be willing to make a deal with you after the auction, depending on how much they want the property off their hands.
Also, never be afraid to put in an offer ahead of an auction. It might work or it might not. In either case, it doesn’t hurt to try. And it might help you dodge a potential bidding war in the auction room, saving you a lot of time, stress and money in the process.
- Register in advance
You can log-on to most of the properties or auction catalogues and pre-register to bid on any properties in advance of the auction start date, be-it an online auction cycle or an event auction.
- Stay cool, calm, and composed
Ask anybody who’s sat through auction: It’s a pressure-cooker environment. You’ll sweat. You may panic a bit. And you will probably leave a bit stressed-out after the fact. It’s to be expected. To dampen any nerves, it’s advisable to arrive early so you can get your mind right and find a seat where the auctioneer can clearly see you. And if you don’t think you are up to the task, find someone you trust who can handle the bidding for you. Staying collected and focused is key.
- Obtain insurance for your property
So the bidding ends and you won your new property. Take a moment and celebrate, but not too much. The property is 100% your responsibility now and, therefore, getting it insured as soon as possible is highly advised. It’s a significant investment and it’s better to be safe than sorry, after all.