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Property Auction

Property auctions are not for everyone, but they have become more and more popular for property investors. Early in 2000 I remember going to auctions and sitting in a near empty rooms, seeing the same old faces again and again. These days (2006) things are a bit different, and lots of new property investors are queuing to get in, and the few professionals scattered around the room are easily picked out by the auctioneers who can tell the serious buyers by their actions.

Some investors sit in the property auction with their catalogue written all over - looking like they are serious or know what they are doing - but are just observing and learning - very wise to do before you get into it properly. There are lots of bidding tricks the auctioneers use, and they are all different. By watching you can learn little tricks.

The term property auction is the third most searched property term on the search engines after investment property and the word property on its own. This is hardly surprising when the media is flooded with property programs about making money by doing property up. What lots of people probably don't hear about is that property auctions are usually full of property that has problems - like severe structural damage that can't be mortgaged, bad sitting tenants or very poor yields in seriously declining areas. You can also get unusual properties that would not normally sell well through agents like old barns, old churches, windmills, odd pieces of trapped land with no access and ground rents.

The best way to find out where Property Auctions are is to register with EIG. They are a specialist Property Auction information service that can register you for catalogues or you can set yourself up with them for email alerts on certain areas or types of property you are interested in. They also show auction results online and have an online search facility. I love them!

I attending a property auction involves a lot of preparation. Let's go through the order of what you need to do:

1 - Finances. Make sure you have a deposit of 10% available. You have to place a deposit right away as the gavel falls. If you can not get 10% together, you can't buy in auction. You may also want to get pre- approval in principal with a lender that can complete within 28 days (if they are the auction terms). You may be able to get bridging finance for auction purchases for around 75% LTV.

2 - Viewing. View the property if possible (some property has sitting tenants and you may have viewing restrictions). If you can't view it officially, try unofficially, drop a note through the door saying you would like to discuss improvements to the property and would like to see what they need, works most times.

3 - Survey. Instruct your surveyor. Usually your lender will do this - but you need to act VERY fast with auction property. It may be in your interest, if the valuer is busy to slip him a bit of pocket money to do your property sooner.

4 - Solicitor. Get hold of the pre-auction pack / solicitor pack ASAP and get it to your solicitor to be checked over.

5 - Terms. Read all the auction terms and conditions - this is a serious must!!!!! You don't want to have the gavel fall and have to complete in 7 days ..

5 - Finance. Tie up loose ends in your finance. If you are taking a bankers draft for the deposit, get it ready. Check with your lender that everything is in, like accountant letters, valuer report and that things are ready to go.

6 - Auction Day. Get to the auction after setting a firm bidding ceiling, and happy bidding.

If you need tips on bidding or want any tips and tricks on how auctioneers work a room etc, check out the rest of the property auction section on the site.

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