As more and more people look to the real estate market for their future a light has been cast on the property auction sector. This is an area of the market which is portrayed as “easy” but is it really as lucrative as many would have you believe?
Property TV programmes
It is no coincidence that the rise in the number of property investors in the UK, and around the world, has occurred at the same time as property TV programmes have grown in popularity. Each and every day seems to see an array of property “reality” programs many of which centre on the property auction market. We sometimes forget that the hour or so of footage we see in these programs will have been edited from many hours of footage. What you see on the television is the “best” stories available and the most concise conversations.
Buying a property at auction
It would be wrong to suggest that property TV programmes deliberately look to mislead viewers but many of the warnings are often ignored by viewers. The idea of acquiring a property at a “rock bottom price”, renovating and selling on in just a few short months obviously appeals to everybody with an interest in money. However, before you even contemplate acquiring a property at auction you need to find out exactly how the auction system works.
Funding available
Whether you have a mortgage in place or perhaps cash from a previous sale you are legally signing up to the purchase of a property once the gavel goes down on your bid. Normally you will be required to put down a 10% deposit as soon as your bid is accepted with the rest to follow. It is therefore vital that you have your funding in place before you even consider visiting a property auction.
Research the property in detail
All property auction houses will make available a legal pack for those interested in bidding on a particular property. It is imperative that you go through the legal pack with a fine tooth comb and visit the property at least once. We have all heard the horror stories of people bidding on a property “too good to be true” to find exactly that once the gavel has gone down and they have committed themselves to the purchase. Just because a property is being sold at auction does not necessarily mean it is a high quality asset – it may need a lot of work!
Strip emotion from your bidding
While easier said than done you should not let your emotions get the better of you when bidding at a property auction. You need to go in there with a maximum bid in mind, take your time and not get overexcited. Showing your hand too early in the bidding process can boost the price so sit back, watch the early bidders come and go and then when the ground is clear enter the fray.
Watching TV you may be given the idea that you are hurried into making a bid by the auctioneer when in reality they want the best price even if they have to give you a few more seconds to think it over. Take your time, review the situation and your financial position because at the end of the day if you are not successful there will always be another property just around the corner. With sensible planning and research it is possible to make a good return on assets bought at property auctions.