In this article, property auctions expert David Sandeman, Managing Director of EIG reviews 5 key strategies for making money when buying at auctions.
Auctions have always been seen as the place where great deals can be purchased, but how do you maximise your chance of getting one of them?
1. Look for lots being offered by an auction house well outside their area
Especially if they are a regional auctioneer, as they may have a big following in that area, but if they don't you will have less competition bidding on the lot.
2. Look for unusual lots being offered by an auction house
If they are predominately a commercial auctioneer and they have a residential lot (outside their area is even better), they might have less interest in the lot than a residential auctioneer located in the town.
3. Try an offer prior to auction
If you see a property you like the look of, try an offer prior to auction. It will normally have to be at least 'guide plus', and if accepted you will be under pressure to attend the auctioneer's office to exchange contracts. You will need to be completely comfortable with the legal and physical condition of the property before exchange of contracts and whilst doing this due diligence, the vendor could change their mind for whatever reason. The benefit of buying prior is that if you are successful you would have carried out your due diligence and secured the property at a price that is good for you with the certainty of not being outbid at the auction.
4. Register your interest on withdrawn lots
On average about 8% of all lots are withdrawn, this could be because the vendor no longer needs to sell it or the legal documents are not available. Or it was offered vacant and the tenant has not left, or a million and one other reasons. If you see a property you like (and our site will advise you of them) and it is withdrawn, then ask the auctioneer why and register your interest. It may be that the reason it was withdrawn will be tidied soon, but not before the auction and the auctioneer may well call you when the issue is resolved to offer it to you without the competition of a later auction.
5. Make an offer on unsold lots
Currently 25% of all lots don't sell at auctions. In some cases, these could be considered orphans, with no home to go to. Let's consider the vendors position. He put it to auction so is probably a motivated vendor. He didn't sell it prior, and he didn't sell it in the room, so where is he going to go? He will definitely want to have a discussion with you via the auctioneer about you buying it. Try an offer based on the reserve and you can always go up.
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By Beth Fox