Auction Advice for Property Investors

For those looking for a great deal in investment property in the UK, auctions are a good place to start. Auctions have been particularly attractive for the naturally competitive British. The bidding war not only keeps our adrenaline flowing, but also provides us with a very convenient way of landing a choice property.

In an auction, the long and drawn-out process of traditional house-buying is eliminated. What usually takes numerous months of negotiations is condensed to a matter of minutes at an auction. When the gavel falls, the house is yours.

However, buying a property at auction can also be quite complicated. Even before you actually set foot into the auction house, there are some things bidders must know:

- For first time bidders, it is wise to sit in one first as an observer before you participate as a bidder.

- Subscribe to catalogs from relevant auction houses to know all about the latest properties up for grabs. Most auction houses provide catalogs or mailing lists upon request. Catalogs are a good way to find a property you might be interested in. Be informed of the specific conditions on the properties. If needed, seek the advice from a solicitor or a property mentor.

- Once you have eyed properties you might like, arrange for a viewing of the lots. Research the property by asking the local estate agents or people in the neighborhood. Conduct all the necessary legal and structural surveys. Whether the property is meant to be your new home or an addition to your investment portfolio, get an estimate on the amount of repairs it may cost. Renovation can be costly so factor this amount into your maximum asking price.

- Before going to the auction, make sure your financial arrangements are in order. Upon offering the winning bid, you are expected to immediately fork over an amount equivalent to 10% of the property price. The remaining balance is usually paid within 28 days. Therefore, arranging for mortgage assistance beforehand is important since the 10% deposit could be lost if the balance is not paid within the time stipulated.

An auction is a terrifying yet exhilarating experience at the same time. Keep in mind that an auction is neither a gamble nor a game. You are bidding at an auction to purchase a property at a bargain price, not out to win at whatever cost. Therefore, on auction day it is important to:

- Arrive early. Familiarize yourself with the venue and choose a seat in a place where the auctioneer can clearly see your bid. Make sure that you get there well prepared – and armed with two personal identification cards, the all-important bankers draft and other banking details.

- Upon arrival, register with the auction house and get a copy of the addendum sheet. The addendum sheet contains any late changes and alterations. Some properties may already be sold prior to the auction and are no longer available.

- Stick to your maximum bid. It is easy to get carried away with the heady atmosphere at an auction. Remember, your goal is to buy a property at a price below market value. If the price has gone beyond your budget, then it is definitely time to put the paddle down.