Auctions provide an excellent way to buy property competitively, with a number of great deals often secured under the hammer. However, as any astute investor will know, there is far more to do when purchasing property than simply turning up and making a bid.
For anyone looking to buy their first property via auction, here are some top tips from Neil West at Belvoir Cheltenham and Belvoir Gloucester to help you secure a successful investment on auction day.
+ Purchase practise
The atmosphere of the auction room can be intimidating for those who have never previously experienced it so visiting an auction in advance can be useful.
Before bidding for a property at auction it’s advisable to attend several sales as a spectator.
This will help you to get a feel of how they work and enable you to gain an understanding of how the bidding unfolds, the way that people bid, how prices rise and what sort of increments are used.
Having this background knowledge of the sales room and what happens there will inevitably boost your confidence when bidding on a future property.
+ Research and review
Always identify which properties are going to be on your list of possible purchases before the big day.
It’s vital to know which property, or properties, you’re interested in so you can do your research in advance.
Look at the guide price, research market value and get an idea of the potential rental return too. Additionally, commission a HomeBuyer Report and gain quotes and timescales for any work that may be needed in order to get the property rental ready.
+ Money matters
When buying at auction the sales and completion process are speedy so make sure your money adds up.
Before bidding always make sure you have all your funds in place.
Generally, successful bidders will have to pay ten percent of the purchase price as soon as the hammer falls and then the remainder by completion which is usually within a month.
+ Budget breakers
Always set a maximum price that you’re willing to pay for a property… and stick to it.
It’s easy to get carried away with the excitement of the auction room and wanting to win the bid but don’t be tempted to exceed your pre-set budget.
Your maximum purchase price should have been carefully planned out in advance, taking into account any work that is needed and other expenses, plus the possible rental return and potential for capital growth.
Over-bidding at purchase can seriously affect your yield moving forward and long-term profit potential.