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Selecting The Right Property at Auction

Selecting The Right Property at Auction

By purchasing the right property through an auction as opposed to through the conventional means, an estate agent, it is possible to make a considerable saving on the purchase price when compared with the true value of the property. However, how do you know the right property when it comes along? The first thing that you have to establish is the reason you want to purchase a property – is it for your own personal residence or are you buying to let? Clearly there is a big difference between the two, since you will almost certainly be more fastidious in selecting property that you intend to live in yourself than you would be when buying to let. Some of the factors that you have to keep in mind when selecting property are:

  • How much you can budget
  • Any costs that may be incurred in the future – rates, taxes, levies, maintenance etc.
  • Factors regarding the location of the property
  • The local area dynamics – is it developing or running down?
  • The history of the area and future projections
  • If renting, the probable class or affluence of tenants

Some of the above will depend upon your viewing the property, and you should try to do this at least two or three weeks before the auction takes place. You can arrange to see any of the properties listed by simply contacting the auctioneers beforehand. You should arrange to view the property at least two times to establish all of the different costs that could be incurred and use local tradesmen to give you at least three estimation of any work needed. If you cannot view the property, do not even think about buying it.
Come the day of the auction you must be 100% prepared to bid. This means that:

  • You are 100% positive that you wish to bid on a particular property.
  • You have registered with the auctioneers beforehand
  • You have arranged for finance
  • You will be able to pay a 10% deposit as well as the auctioneer’s fee including any taxes on the day of the auction.
  • You are ready to meet the costs of any new appliances and refurbishment needed to get the property into a condition ready for rental or if it is your intention for reselling it.

It may sometimes be necessary for you to obtain a bridging loan to cover such expenses, and this is certainly an option that you can consider, should it be necessary. Don’t make the very common mistake of not having done your arithmetic before the auction. It can be very embarrassing to find after the fall of the hammer that you don’t have the necessary funds to conclude the deal. Additional costs of a purchase include attorney’s fees, transfer duty, maintenance and refurbishing, levies, insurance and interest on loans. If you want to make an intelligent investment choice and you want to make a profit on the deal, then you are going to have to purchase the right property that will give you that profit. Knowing your costs when selecting property is imperative.

 
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