We've spoken to a number of proprietors at Belvoir Lettings from all around the country, who have given us their top ten tips on property auctions.
Property auctions can be terrifying to the uninitiated, partially due to the huge sums of money involved. Unlike a local auction house where you might end up with a dodgy teaset, in a property auction you could end up with a dodgy house.
So how can you make sure you avoid making basic errors with your cash at a property auction? We've spoken to a number of proprietors at Belvoir Lettings from all around the country, who have given us their top ten tips on property auctions.
1. Repossession concessions
Cash in on repossessions. "In the current climate there are a lot of repossessions being sold at auction," says Ben Davies, Belvoir Swansea. "There are some very good deals to be had and many properties fetch far lower prices than their market value."
2. Keep calm
Don’t be the one to unnecessarily push the price up. Entering the bidding process too early, displaying over-eager behaviour or bidding in overly large increments can add pounds to the purchase price.
"One of the biggest challenges when buying at an auction can be staying calm and not getting too carried away with the process when bidding for a property," says Adam Rastall, Belvoir Liverpool West Derby. "You don’t want to pay more than you had originally planned."
3. Hidden issues
Beware of hidden issues. "Some properties are sold at auction because the owners are aware of ongoing issues with the property or the area," advises Rastall. "They have chosen to sell at an auction because they have a better chance ‘to offload’ the problem property than they would selling it through an estate agent." Always do your research before bidding.
4. Valuable viewing
View the properties you are interested in before the hammer falls. “I would always advise viewing a property prior to buying at auction,” says Rastall. “You may find the area where the property is located is not desirable or that the property has several maintenance issues that must be resolved prior to it being let.
“Contact local agents and go online to check past sold prices for the street and other information needed to help you make an informed decision about whether to purchase or not.”
5. Time slot
“Take note of when the lot you’re interested in is due to be sold,” says Wayne Mearns, Belvoir Southend-on-Sea. “Each lot averages about five minutes to sell. If your chosen lot falls around lunchtime the room can be up to 50 per cent emptier than in the morning... meaning less competition. And, typically, afternoons are far less busy than the mornings too."
6. Try before you buy
Familiarise yourself with the auction process before making an investment decision for real. "It's always advisable to go to at least two local or national auctions before bidding on a property to observe proceedings and pre-plan your strategy," says Mearns.
7. Don’t panic buy
What are you going to do if you’re unsuccessful in securing the property of your choice? Answer: don’t panic buy!
"I’ve known landlords go to an auction and fail in their bid on the specific property they’ve spent time researching," says Rastall. "Not wanting to leave the auction empty-handed, they’ve then gone on to buy a property that looks good on paper but they’ve neither viewed nor researched.
“This can be a massive risk due to hidden problems that may only be discovered on viewing the property or area.”
8. Punctual power
Arriving at an auction house in plenty of time will allow you to get a good bidding position, plus enable you to assess your competition... and the length of their purse strings!
9. Money matters
Make sure you can raise the capital needed to buy the property and that your finances are in place before committing.
Also, will the investment add up? Always ensure you know the potential monthly rental return and what your outgoings are likely to be.
Remember, successful investment property purchases are built on solid financial facts.
10. A word of advice
“If you see a tempting property up for auction, contact an independent lettings specialist to get their opinion on the area, the street, the type of tenants that the property would be suitable for and the anticipated rent that could be achieved,” says Rastall. “As they are independent, they will be able to give you objective and honest advice on the property.”