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Property auctions are the key to good property investment

Property auctions are the key to good property investment

One of the best ways of achieving financial freedom is by means of property investment, and there are several reasons why you should take a good look at property auctions as being the key way to obtaining cash positive properties. The recent financial climate has affected South Africa in much the same way as it has affected other countries. This has caused a downturn in the property markets with the resulting depressed prices. The country has not been left behind in the number of foreclosures by the banks, with the inevitable result of there being many repossessed properties now held by banks.

Banks don’t really like holding pieces of paper – they’d rather have cash in their vaults, and it is for this reason that there are so many bargain properties on the market. Repossessed properties are not the only bargain properties that are on sale at auctions. You will also find properties that for some other reason estate agents are unwilling to list. This could be because there is some sort of legal restriction on the property, because the property has strong renovation potential, or because it has been on the market for such a long time that agents are no longer interested in selling it.

There are several advantages of buying investment properties through auction houses. Providing you have the finances arranged and can come up with a cash deposit, the sale and transfer of such properties is almost always much faster than purchasing through an estate agent. There is no chance of the seller changing his mind and dealing with another purchaser – when the hammer falls at an auction the property is yours. Another reason for auctions being the key to obtaining cash positive properties is that you will never be forced into encountering a property chain, which can be the cause of many a sale breaking down.

This is where there is an offer to purchase includes a clause making the offer dependent on the purchaser selling his or her property, which in turn may depend on the prospective purchaser of his property receiving an offer and so on. Such a chain can cause unacceptable delays in the sale of a property and frequently cause a sale to fail.

Because of the reasons mentioned above, properties sold through auctions are inevitably cheaper than those acquired through an agent. This is particularly so in the case of properties that need some work to be carried out. The main thing on your part is that you have to do your homework before deciding to bid on an auctioned property.

The first thing to do is to look at the property and

  • Establish that it is located in a suitable area
  • Research the probable value of the property by comparing it with similar properties nearby.
  • Decide on what your maximum bid will be
  • Arrange for finance, deposits etc.
  • Register with the auctioneer

This is an excellent time for buying investment properties through auctions, especially buy to let properties.

 
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