It’s easy to get caught up in the excitement of buying property at online auctions. It’s similar to attending an auction house, minus the obvious part of doing it behind a computer.
Think of it like bidding for an item on eBay.
You see something online. Chuck a bid in. And the item goes to the winner – usually the highest bidder.
But online auctions can be a risky game, and there are a few things you should know and do before throwing bids on properties.
Like any auction, if your bid is the highest when the hammer comes down, the property is yours. There’s are a fair few pros and cons with online auctions, and we covered it pretty extensively in podcast episode 83. While that seems like AGES ago, the principles still stand today.
The obvious positive is that it’s a quick process. There’s no lengthy waiting to see if your offer is accepted or you’ve been gazumped. Plus, there’s no risk of the seller pulling out.
However, one of the downsides is getting wrapped up in the frenzy. While you can get a great property for below market value at auction, you could also end up paying over the odds for one.
And while you do find auctions being the preferred sales route for some vendors wanting a quick exit, unfortunately many properties end up at auction because they’ve failed to sell elsewhere – and that could be anything from it needing a quick renovation to it having some serious defects that’ll cost a substantial amount to put right.
Funds are another thing to be aware of. Auction properties will require a quick completion, so you’ll usually need to have the funds up front. If you don’t, there could be both financial and legal implications.
And finally, you need to consider the chances of getting outbid. If you’ve trawled through the auction catalogue and spent time, effort and done a lot of research on your chosen property, there’s a chance you might get outbid on the day. So try not to get emotionally invested.
As you can see already, investing through online auctions and auction houses isn’t for the faint hearted.
So we’ve rounded up our top tips for you to make it that bit easier.
Make sure you go to a property auction without the intentions of buying anything, so you can get an idea and feel for them. Even an online auction; join one and observe.
It’s easy to let the excitement get to you, and that’s quite often where mistakes happen. So attending an online auction as a spectator will help you regain control.
Always make sure that you actually go and view the property you’re planning on buying. Too many people act on the limited information they’re given. It’s very easy to make a property look appealing via pictures online.
Following on from the last point, it might be worth taking a surveyor with you to view the property. Especially if you’re not confident on what you’re looking for.
Having a professional opinion will allow you to bid more confidently and know when it’s worth walking away from a property or going up to the top end of your budget.
This is probably the biggest tip to take on board. You need to make sure that you have your finances arranged before you go to auction. If you’re not buying in cash you may have to consider bridging finance which is short term lending that’s fairly easy and quick to set up.
Rob D has a whole guide on bridging finance for you to get stuck into. He covers the basics, why you should use it, how much you can borrow plus loads more.
Always make sure that you check the legal packs that come with a property, even have a solicitor check it over for you.
Because if you don’t have a trained eye you could miss something crucial.
You could miss leasehold issues, or title issues. And both of those could be costly to rectify. Not to mention the fact that you could stumble across problems that could affect your ability to refinance in the future too.
Before you even step foot inside an auction house or attend an online auction, make sure you know what your bidding limit is and stick to it!
Don’t feel disheartened if you don’t win the bid just because you’ve put time and money into researching the property. That’s just one of the risks that comes with buying a property at auction.
But it’s much better than having legal action taken on you because you can no longer afford to go ahead with the purchase.
Before you jump on your computer into an online property auction (or you head to an auction house), you need to have all your ducks in a row. You need to be 100% sure that buying property at auction is the right for you.
Remember, that most auction properties need work and this is a hands-on strategy. And unless you’re willing to take on most of the work yourself, hiring tradesmen to do the work will heavily eat into your profits.
Do you want to flip the property? Or maybe you want to use the buy, refurbish, refinance strategy? These are all things you need to know the answers to before even starting your property search.
To get started, maybe give this podcast episode a listen where Rob & Rob interviewed a HMO expert. Some of the pointers he shares may cross over and help you when buying through online auctions.