A Brief Introduction To
Property Auctions

How to safely identify
appropriate and profitable
property at auction!!!

PRE-AUCTION PREPARATION

Arriving at property auctions without being properly prepared is an expensive mistake made by many new investors. If you want to avoid the many pitfalls associated with buying at auction and reduce the chances of blowing your hard earned cash on a property that is only fit for demolition, you need to be well prepared.

Viewing

Since auction catalogues are usually produced about three weeks before the property auctions take place, you'll have the essential opportunity to view your favoured properties before attending the property auctions. It would be reckless to bid for any property on the strength of glossy pictures or a basic floor plan and you'll need to view any property that you like as soon as possible. If you find something suitable, you must strike quickly, as there is much organising to do before auction day. You can arrange a viewing through the auctioneer, who will either take a deposit for the keys, arrange a group viewing, or arrange a meeting with a local agent, who will visit the property with you.

Finance

Don't dive in head first at property auctions. Be sure you can afford to do this. Think about all the costs associated with buying, for example any repairs, renovation or redecorating costs, your mortgage and solicitor's costs. Work out the absolute maximum you can afford to pay for the property but, to ensure you're not overstretched, set your ceiling price a little below this. Remember that if your bid is accepted, you'll have to pay a 10% deposit immediately after the auction, so the funds must be available.

Ensure you have a firm offer of a mortgage, known as a DIP (decision in principle), before you make any commitment such as paying the auction deposit. Use a reputable mortgage broker to do the work for you, as there are many pitfalls awaiting those who take the DIY mortgage route. We would be happy to recommend a reputable national broker - please Contact Us for details. Your lender must be told that you're buying at auction but most will be OK with this, subject to their other lending criteria being satisfied.

When arranging your DIP, you want to know the maximum amount that would be available from your favoured lender, since property auctions can become very competitive and you don't want to win a bidding war and pay the deposit if you cannot raise the necessary mortgage. While it is easy to gain a DIP for a mortgage of £100,000 and later reduce the amount required, it will not always be possible to do the reverse.

Summary

OK, that's the end of this introductory section on property auctions, and I hope you found it to be informative.

The Blue Cherry Knowledge Base library contains a lot more 'free to all' advice and information on the property investment business. In addition to this introductory content, however, we also provide more in depth advice and information on the subject of property auctions and all the other topics listed in the library, including details of our own methods of operation, and some of the strategies we apply. This more in depth, valuable content is freely available to those who subscribe to our free E-Course by simply registering a first name and an e-mail address with us.

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