Buying at auction checklist

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Property auctions update

 

 
If you are buying a property at auction to make money from buy to let or renovation, create a business plan first.
Sign up to the EI Group to find out about the auctions in your area.
Visit one or two auctions to understand how they work. You can buy the auction catalogue beforehand, or just see the properties (or ‘lots’) that are available on the day. Mark down what the FINAL price is versus the guide price.
  Contact the auctioneer when you see properties you like to organise a visit.
  Choose a legal company that specialises in buying properties via auction (you’ll need to work with a solicitor who ensures you complete within the time limit set at auction) for a specialist legal company contact us.
  Carry out viewings as soon as you can, but make sure you visit each property twice. Once by yourself, then again with a professional builder and/or an independent Royal Institute Chartered Surveyor (RICS) to secure a value.
  If you can, choose several properties to make offers on, just in case you don't win one of the properties on the day and there are others you are interested in.
Check via professionals such as builders, electricians, gas engineers etc what work is required to bring the property up to scratch to live in, rent or sell on. Just because ‘it needs a lot of work’ doesnt mean you know exactly how much, so dont skimp on these experts!
Ask your legal company to check the ‘legal pack that accompanies the property details. Make sure you give them plenty of time to advise you of any restrictions to works that can be done to the property, anything about letting the property etc.
Prior to the auction make sure that you work out the maximum amount you can afford to pay for the property/what you think it is worth.
Secure a mortgage if required PRIOR to auction. Make sure the mortgage company is aware and secure in writing that they understand they will be required to complete the funds within four weeks.
Contact the auctioneer and ask how the deposit will work if required to pay on the day. Do you need a specialist cheque such as a bankers draft? Make sure funds are in place prior to auction day.
Strategies to maximise profit:
  • Lots out of area  (find lots been offered by auctioneers based a long way away, except London based national auctioneers)
  • Lots out of ‘type’ or ‘character’ (look for lots that the auctioneer does not sell regularly.  ie a commercial auction selling a flat)
  • Withdrawn lots  (If the lot is withdrawn, find out why, it may come back on the market)
  • Unsold lots  (If the lot does not sell the vendor may be desperate and accept offers below the reserve)
  • Lots with a high guide price  (A high guide price deters interest so the vendor may get nervous and sell at a lower price)

 


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