The thought of buying property at auction seems to fire the public imagination, perhaps because of the popularity of TV shows like HomesUnder The Hammer, and many would-be property investors and developers often imagine the auction is where they will start their property business.
For many beginners the auction is where they’ll start their search for a property ripe for refurbishment and upgrading.
However, there’s a common misconception that a property bought at auction is always a bargain, and that auctions are a dependable source of ‘cheap’ property.
Although it’s true that it’s possible to find bargain property at auction, not every property is a bargain. After all, it’s the auctioneer’s job to encourage frenzied bidding and there have been many, many times when a buyer has paid over the odds at an auction, only to regret it later.
Property auctions are also the market place of choice for many property sellers who have a defective, or hard to sell, property. So what looks like a bargain can turn into a nightmare for the unwary who soon find out why that particular property was ‘cheap’. There is a reason why ‘cheap’ doesn’t always mean ‘bargain’.
But it’s not all doom and gloom, far from it, and if you take a few simple steps both prior and during the auction it’s entirely possible to have the winning bid for the property of your dreams and to make the killing you’ve always dreamed of.
The difference between success and failure is often doing just a few simple things, both prior to, and at, the auction.
If you want to successfully trade property at auction there are a number of skills you need to know and learn. In no particular order I’d suggest these are:
* Being able to identify each of the 5 different types of property you’ll find in an auction sale so you can recognise which ones to avoid
* Being able to undertake the 6 steps for preparing for an auction – these are essential if you are not going to walk away with an expensive white elephant
* Know what to do at the auction – this might sound obvious but each auctioneer runs their auction slightly differently which can be confusing for a beginner
*Being able to accurately assess a property’s value and then calculate, and decide upon, your maximum bid
* Knowing how to bid at the auction. Again, this might sound obvious but there are ways of doing it which can give you the upper hand.
*Knowing what to do if your property is withdrawn, either prior to the auction, or at the auction itself if bidding doesn’t reach the reserve
*Knowing what to do when you are the winning bidder including knowing where the finance for purchase is coming from
I regularly buy property at auction to renovate and sell-on although nowadays, to be honest, I have delegated the task to a team of agents who source property for me and will go and bid on my behalf. This suits me better because, no matter how much preparation you do, you can’t always guarantee that you will secure the property, at least not at the right price. Anyone can buy a property if they pay too much and keep on bidding, but that’s not the point. So if the agents are prepared to speculate their time, I am happy for them to attend on my behalf.