Buying property at auction is a strategy that many savvy investors in the property market do on a regular basis.
The rather obvious reasons for purchasing property at auction is the fact that there are gains to be had due to the fact that you can sometimes (not always) get a property for below market value. You can then choose to either do some improvement work or resell it for a higher amount than the cost of improvements and purchasing the property combined or you can rent it out instead.
Before most people go to a UK property auction for the first time, they are concerned about learning how to buy property at auction but there isn’t much to the bidding procedures, what really matters most is that you understand how to value the properties in question and make a bid which has factored in the necessary costs as well as potential profits which you might be able to reap from your investment.
For some specifics and some excellent advice on how to buy property at auction check out our auction property tips page.
A lot of people go to various UK property auction events these days; though a number of savvy seasoned investors also engage in the practice, smaller scale investors are also coming into the market as well. Individuals and families are also attending property auctions in order to get a home and not just some piece of investment property. Regardless of your reasons, at the end of the day all a bidder wants to know is whether they are getting the required property at a price which makes it a property of value to them.
When getting into a UK property auction, you should have been provided beforehand, with a catalogue of sorts detailing the property to be auctioned and which includes other necessary details. These days you can also check most of these things online, instead of having to wait or even pay for a catalogue.
Of course the property auctioneers gets a percentage of the proceeds and will intend to sell the said property to the highest bidder so it is essential you maintain a keen eye not only over the details presented but by physically visiting the property in question to find out whether you have missed any details of importance amidst the glossy marketing of the auction catalogue.
Bidding at an auction is a process where you need to detach yourself emotionally and think in terms of logic and you financial bottom line. Your focus should not be on the facial expressions of the property auctioneer, neither should you be marveling at his wit.
The auctioneer will use any legal means at his disposal to try and get the bidders to go higher. So he will try and build up competition between bidders and goad you into a bidding battle with the other people in the room.
When buying property at auction you should take a look at what you are ready to offer (based on your own research and due diligence) and never go above that bid. Make sure you do your research properly and ascertain the true value of the property and you won’t be bothered that the next person bidding higher when you have reached your limit is an experienced property investor so they must know something you don’t. At the end of the day, you’ll be coming up with the money for the property out of your pockets so failure to handle property at auction procedures properly could leave you in the red.
Maybe the person sitting across the room from you, has less overheads or owns his own building firm, so can do the renovation work for cheaper than you could. Or maybe they are inexperience and are actually going to be losing money on the project, they just don’t realise it yet.
Either way it makes no difference to you, you have worked out your figures and what is a profitable price to buy the property at, and that is what you must stick to. You don’t know the other persons circumstances so don’t assume because they are prepared to pay more than your top bid, that you should bid higher, because there must be something you have missed and be a profit in it for you.
The bottom line when it comes to buying a property at auction is to make sure you do all the legwork and research beforehand. Then you can step into the auction room with confidence, knowing that if you buy the property at or lower than the maximum price you have in your head, then you will be making a good profit.**Nothing on this website should be confused with financial or legal advice. If you need this, or any other type of advice, please seek the help of a competent professional. In addition, because real estate laws change all the time and differ from state to state, and even city to city in the same state, everything in these pages should be considered general marketing advice and ideas. Please see link to full Disclaimer at the bottom of this page.