How to Win Real Estate Auctions
The most obvious answer to the question how can you win a real estate auction is that you win by being the person with the deepest pockets who makes the highest bid – but of course in that case you may win the auction but lose out overall by not getting the bargain you were hoping for and even paying over the odds for a property.
Although the term ‘real estate’ is more familiar to USA property buyers than those of us in the UK, we have got to know the term through the media. This article is written particularly with reference to property auctions in the UK because having purchased several properties this way in Britain, it is where my experience is based upon. However many of the points should be just as valid in other countries.
Essential Preparation for Winning a Real Estate Auction
Whether you are buying at auction to get a bargain or because the house you desperately want is being sold that way there are some essential steps to take if you want to win the property.
1) Read the sale terms and conditions for the auction house and specific to the property. Auction terms and conditions vary between auction houses and even between properties at the same auction for example; although it is usual to have 28 days to complete the sale after the ‘fall of the hammer’ for some properties you may have only 14 or 21 days to complete.
2) Where possible view the property. Even if it’s tenanted and the conditions state ‘no internal viewing allowed, it is worth walking around the outside of the house to get some idea of the condition.
3) Make sure that you have finance agreed before you go to auction (unless you already have access to the maximum amount you are prepared to pay. When the hammer falls you will be required to pay a deposit – usually 10% but this can vary. If you fail to complete on the sale because you can’t arrange finance you will lose your deposit.
4) Choose a solicitor who has plenty of experience of doing the conveyance for auction properties. Because of the short time between exchange of contracts at the fall of the hammer and completion, a solicitor who is only familiar with the conveyance of properties through estate agents may struggle to complete on time. You will have to pay financial penalties for every day you fail to complete and may lose the property as a result if the vender loses patience.
5) Before the auction ask your solicitor to read through the legal documents usually available on line or by request through the post. He or she should be able to highlight any areas for concern.
6) It’s usually advisable to get the property professionally surveyed so that you can avoid paying for what seems like a bargain only to discover there is an expensive subsidence problem to rectify. A surveyor should be able to give you a good idea of the cost of any work needed.
Additional Steps to Take if You Want to Bag a Bargain
- Do your research. Find out how much properties in the same area are being offered at via estate agents and check the price which properties have recently sold for or even the price which the property you are interested in last sold for at ourproperty.co.uk
- Our Property gives free house prices from Land Registry data - OurProperty.co.uk
Gives house price information, only site to use Land Registry and full ROS price data free of charge
Tip for Sticking with Your Intended Maximum Price
If you are an impetuous person who might bid above your carefully decided maximum price in the heat of the moment, consider leaving a proxy bid instead. This just means you fill out and send a form with your maximum price on and a cheque for the deposit to the auction house and they will put your bid on for you. If you are watching an auctioneer and he says ‘the bid is with me’ it means he has a proxy bid in front of him. If the property goes for less than your maximum price then of course you pay less.
- If you are planning to rent the property out find out what the demand for rental properties is in the area and what rent the property could command. This is easily done by looking at similar properties offered by local letting agents.
- Factor in the likely costs of repairs before deciding on a maximum price you are prepared to pay for the house.
- MOST IMPORTANT OF ALL: It is crucial that you decide the maximum price you are prepared to pay and stick with this. Write down all the reasons why this is your maximum to reinforce it in your mind.
The Day of the Auction
- If you are going to the auction to bid in person make sure you leave plenty of time to get there. In my experience auctions always start on time and move very quickly. If you get lost or stuck in traffic you could lose the property.
- Consider arranging in advance to bid by telephone in case you don't arrive in time. This means the auction house will call you on your mobile when the lot you are interested in is called. If you arrive on time you can then cancel that arrangement.
- When you arrive at the auction you usually have to register as a bidder and be given a numbered paddle so that you can be identified easily when you win the property.
- Don't divulge the property you are interested in to other people before the auction starts. If it's the property that they want too they may well try to put you off!
In summary, you can be successful at auction if you put in the leg work before the day by researching thoroughly and getting everything you need in place.
ORGANISE YOURSELF INTO A POSITION WHERE GOOD LUCK IS MORE LIKELY AND ENJOY THE PROCESS!
Some Links For American Readers
- Kansas Real Estate Auctions | Atchison KS Auction Company
Kansas Auction House
- Fisher Auction Company | Fisher Auction | Innovative, Accelerated Real Estate Marketing
American Auction House
- Sheldon Good & Company - America's Real Estate Auctioneer
Racebrook Marketing Concepts LLC and our captive auction firm - Sheldon Good & Company – have extensive experience in momentum-building auction-marketing. As the nation’s leading provider of strategic and structured accelerated sales solutions, t