Yahoo Finance A fresher's guide to property auctions — the dos and don'ts of bidding for property
With sky-high property prices in many areas, it’s harder than ever to find value in the housing market.
But you can still pick up a property bargain at auction, where thousands of lots are sold every year.
These properties are great for investors or first-time buyers — as long as you’re willing to put a bit of work in.
Many, if not most, auction properties are projects. They need refurbishment and perhaps even rebuilding in places.
For those with the budget and patience to carry out the necessary work, there is money to be made at an auction. The home of your dreams may be waiting to be found.
It isn’t, however, a simple process. There are a number of dos and don’ts worth thinking about before you dive headfirst into a property auction.
Do
Get a catalogue and check it properly
Make sure you get a catalogue for the auction well in advance. This gives you the time and space to properly examine the properties on offer and to draw up a shortlist based on your own thorough research — including viewing the properties, ideally more than once.
Don’t forget to do all your due diligence, like checking the local market, arranging a survey, and so on.
Know your finances
Understand exactly what your budget is before you start bidding. You need to ensure you have enough money to pay the deposit on any property you successfully bid for. If necessary, you may need to make early mortgage arrangements to understand exactly how much you can borrow from a lender.
You need to know that you can afford a property before you bid for it. That includes both the cost of purchase, any auction fees, and a budget for doing any work to the property to bring it up to standard.
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Check the fine print with a solicitor
Once you have a good idea of the properties you would like to purchase, consult a solicitor on the small print in the catalogue and conduct some searches if you have any concerns.
You don’t want to bid blind on properties that come with all sorts of legal baggage that could have been seen by a solicitor from miles off. That would be an expensive mistake.
Take everything you need with you on the day
You’ll probably need a couple of forms of ID, proof of funds, and so on — check with the auction house what they require for you to make a purchase on the day. And don’t forget the documents when the time comes.
Don't
Buy a property without viewing first
A common error is for buyers to roll up to an auction and purchase properties on the day without viewing them first. It is essential that you view the properties you are thinking about bidding on.
Would you buy a car without looking at it first? Of course not — you’d be mad to. The risks are too high on a car, let alone a property, which is much more expensive.
You need to take a good look at the property to confirm that you really want it and there aren’t any obvious problems. It’s just common sense — so do it.
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Bid carelessly — it's binding
Auctions are a serious business. If you bid successfully and win the auction, it’s a binding legal commitment. You can’t just back out without consequence. So be sure that you want to win and also know when to stop.
Know your maximum budget and don’t get carried away by bidding beyond that. Stay calm, wait for others to bid first, and then make your move — but back down if necessary.
Bid at your first auction
Auctions are exciting and confusing. So go to a couple first just as a spectator to get a full understanding of how it all works, the dynamics of the room, and the tactics used by bidders. Make sure to talk to those with more experience than you to get their insights.
Get comfortable with auctions before going to your first as a proper buyer.
