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Top 10 Mistakes when Bidding for a Property at Auction By Martin Roberts- TV Property Expert, Author and presenter of ‘Homes under the Hammer’ offers advice and guidance on all things property relatedMartin’s Top Tips: Top 10 mistakes people make when buying a property at auction Buying at auction is an incredibly exciting and potentially profitably way of buying property. But don't be like the proverbial 'Bull in a China Shop'. Read here the 10 most common mistakes people make when buying at auction. 1. Not getting a full survey carried out. Always make sure that you get a valuation or survey carried out before you decide to go to the auction and bid. This is no time to scrimp on costs - particularly if the property is in disrepair or an older building. 2. Not working out a maximum price that should be paid or worse still, doing this and then exceeding it! Always set yourself a maximum price limit on the property and stick to it. It is very easy to get carried away at the auction and so it is important that you discipline yourself. To calculate your maximum, work backwards from the end value, having factored in renovation costs, finance and legal costs and a payment for your time. 3. Bidding as an 'auction virgin'. If you are new to buying at auction, attend a few as an observer so that you can get a feel for them and the way they work. 4. Buying before being in a position to do so. If you are relying on the sale of another property in order to buy, don't bid on a property before you've sold yours i.e. before the completion has happened. You could have to complete on your auction purchase without the proceeds of your sale and have to take out Bridging Finance which is expensive. 5. Buying 'blind'. Always view the auction property thoroughly before placing a bid. Buying without viewing the property is a risky strategy. Don't just rely on the information in the auction catalogue. 6. Ignoring the Legal Pack. Always read the legal pack in advance and discuss the contents of this with your solicitor. Make sure your solicitor has checked the Title Deeds and any special conditions of sale as well as any peculiarities associated with the property such as restrictions or covenants. 7. Not budgeting accurately for works. Make sure you get professional quotes for any renovation work – it’s easy to underestimate the costs of refurbishment. 8. Bidding too soon. Don't jump in with your bid until others in the room have almost finished. Bidding too early will only drive up the price. Wait until the bidding has petered out or the auctioneer has started to say 'going once...'. Then bid with confidence up to your limit. If you really are nervous about the auction process you could get someone else to do the bidding for you. 9. Not researching the eventual resale or rental market. Unless you are intending to live in the property yourself, you need to be sure of what the demand is for properties in the area (either for renting or sale) and what is the ceiling price. 10. Not knowing how much mortgage can be secured. Unless you are a cash buyer, you will need to sort out your finances prior to bidding at the auction. Some mortgage companies will not lend on certain auction companies, others may withhold all or part of the loan until certain 'defects' have been corrected. You may also discover that you can't borrow as much as you might like because of tightened lending criteria. From the set: Martin’s TV Travels – Madness in Manchester I was in Manchester this week, where I met a man who had made a classic mistake when buying property at auction- and was just realising what he had done! He’d seen a house for sale with a guide price of £5,000 - £10,000, and won the auction with a bid of £10,000. He hadn’t seen the house, and only decided to bid DURING the auction. But he thought ‘For that money, how can I loose?’ It turned out that the house was in a very run down area, and had been severely fire damaged. Worse, it was attached to another derelict property. The considerable money he would have to spend restoring the house would be ‘down the drain’ until the house next door was also restores- which could be never! Before he bought, our buyer should have visited the property- no matter how cheap it was. He should have talked to the neighbours about the area, and done research on who owned the neighbouring property. Finally, he should have kept his hand in his pockets and not made a bid- no matter how cheap the property was! Ask Martin- Your chance to put a question to our Property Guru Jane Davis asks; “Are student lets a good investment?” I personally love letting houses out to students, and done right, a student let can be a very profitable venture. Rents of around £60 - £80 per room per week are easily achievable, which would bring in around £14,000 - £19,000 a year for a 5 bed house- minus costs, tax and bills. However, there are things you need to consider before you buy a house with this end in mind; Is it in a popular student area? Does it meet the requirements of the university or college accommodation office? (They will advertise it to their students for you if it does)? Does it meet safety and HMO (House of Multiple occupancy) standards- with things like fire doors and alarms and a Gas Safety Certificate? How am I going to maintain the house and resolve any maintenance issues? If you have a problem or confusion from the property world, Email your questions to askmartin@martinroberts.co.uk . Individual questions may not be answered personally, but could appear in this column. To find out more about Martin Roberts and for property advice visit www.martinroberts.co.uk |
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