Guide to Property Auctions
I thought I’d give you a guide to property auctions this week. If you can’t see the video, click here.
First time bidding
I’ve been keeping an eye on the market lately as I look to build my buy-to-let portfolio and it struck me that many people are scared when they first go to auction because they don’t know what to expect..
Your first time bidding at auction can be a scary, but thrilling experience. As I can’t be there with you to hold your hand I thought it could be helpful to give you some pointers so you can make the most of your maiden voyage.
As you step through the door for your first time buying you should have already practised by attending at least one other to get your nerves out of the way when it doesn’t matter. You could even pick a property to bid on in your head – just sit on your hands though in case you get carried away!
The auction house will release a catalogue of all the lots about a month beforehand, so you have plenty of time to view any relevant properties. Do this thoroughly and don’t just assume you’re getting a bargain because it’s at auction.
I’ll give you tips on viewing properties in a future blog.
The legal pack is a must
The auctioneers will also have a legal pack which you can usually get online. You, or even better, a solicitor should go through this with a fine-tooth comb before the auction.
Buying at auction is faster than other routes, but this means you need to be prepared, so come with money and ID. You must have the funds available – a 10% deposit ready on the day of the auction as the contracts will be signed there and then. The other 90% will be payable within 28 days usually, so arrange a mortgage in principal before auction day, if necessary.
It may be a long day, and not always in the most comfortable room, so come prepared. You may be grateful for layered clothes and a packed lunch!
What you should know
Stand at the sides or back when bidding so you can have a clear view of the room and your competitors!
Know the lingo: the ‘guide price’ is what the property is expected to sell for and what the vendor is hoping to achieve. The ‘reserve price’, however, is what must be reached for the auction to be valid.
You can still make an offer though if the property doesn’t reach this and is withdrawn. The reserve price is confidential, but it’s likely that the price at which it was withdrawn is just shy of this.
When bidding, be aware that the auctioneer is allowed to bid-off-the-wall, which is essentially pretending someone else is bidding against you. This is only allowed up to the reserve price – so don’t get stroppy if you think he’s being naughty!
The auctioneer can also take proxy bids – this would be prearranged between the auctioneer and a bidder who can’t attend, as opposed to those in the room, or on the phone.
Remember when the gavel comes down if you were the last bidder you are legally bound to buy the property, warts and all!
Enjoy the ride!
Above all else, enjoy yourself! If you have done all the necessary homework and haven’t gone beyond your price just enjoy the rush you will get from winning your first of hopefully many property auctions.
Once you have the place you may want to read 10 tips for an Easy Renovation