The 5 big hurdles that everyone could face in an auction room
Posted by tungstenmg Last updated 27th January 2020 reading time
Every first time buyer, competent buyer and investor will faces different challenges. Whether it’s finding below market value properties or sourcing properties through other non-traditional channels, it can be difficult to achieve success.
However, when it’s done right, you can achieve results that can make your mark on the property world.
The best in the game prepare for these same issues and achieve the results through efficient planning and preparation.
They say always be prepared – and here is no different! Let’s look under the hood at the biggest challenges faced by others both here and across the globe.
ensuring you do not get carried away in the sales room
having the funds and solicitors ready for the purchase
knowing what the auction will be like
knowing where the auctions are
knowing what you should do before an auction
Ensuring you do not get carried away in the sales room
The biggest downfall of anyone buying at auction is getting carried away with the atmosphere of the sales room. You can imagine the excitement when your lot comes up next and you are in the middle of a hot bidding war, when do you know its time to step back? There is a very fine line in bidding to take away a BMV property or a property that becomes a lability in your portfolio.
Having a set budget is key to your success, and you need the constraint (or take someone with you who does) so that you pull out of the bidding process when you need to. This is very tough as you would have done a lot of research prior to the auction such as site visits, builders quotes, demand research and also parted with some money on construction reports and getting help with the legal pack.
JUST STAY CALM!
Having the funds and solicitors ready for the purchase
One of the benefits of an auction is the speed of ownership. Once the hammer falls you have bound by the auction houses T&C’s to purchase the property in 20 working days after placing a 10% deposit down on the day of the auction. You will exchange on the auction day too!
There are high fees if you miss the deadline dates so make sure you have all your ducks in a row, and if you cannot complete at all you will lose the deposit and have to pay the vendors costs – this will be a very unwanted sting into purse.
Before the day you will have read the legal pack and know what is required from you if your bid is a success so please make sure you have all your documents ready, such as 2 forms of ID. Plus you will have to pay for the usual fees such as stamp duty, legal fees, solicitor fees etc so ensure that you have worked these costs into your budget.
Knowing what the auction will be like
This is a question for all newbies to auctions and there are two simple approaches to solve this issue.
The first approach is to visit an auction day but leave your purse at home! This is the safest way to make sure that you do not get carried away with the buzz and come home with a property you do not want, yet worse have not done your due diligence nor checked the legal pack. Those who run the auctions will be happy for you to visit without buying a property and of those I have spoken to will be happy to answer your questions too. At least you can get a feel for what the day is like so when you return with the intention of purchasing a property you can remain calm and collected.
The second approach is to attend the auction via an online portal. Through a portal you can watch a particular properties bidding process without being in the auction room and therefore reducing the chance of you being caught up in the moment
Knowing where the auctions are
There are auctions all over the UK everyday for all types of properties and I find the Auction House website the best location tool
Knowing what you should do before an auction
There are a number of things you need to carry our prior to an auction. Like with all purchases you need to do your due diligence before you say 1,2,3 lets go …
You will carry out searches and conveyancing steps, local demand research and checking the property information. Depending on your experience you may need to visit the property yourself or with a builder and you may need to get assistance with the legal pack. This may not be your normal solicitor as working with a solicitor who has experience with auction purchases may help with unforeseen delays. Remember auction benefits are the speed of a sale so you need those around you who add to the speed.
Are you facing any of these problems?
Do these problems resonate with you? Have you faced similar challenges? Why not leave a comment below and join the discussion – we’d love to hear from you!