Property auctions are incredibly exciting places to be, watching the action unfold can be tense and interesting. But, what is a property auction and how do they work?
For those eager enthusiasts looking to go from fan to investor themselves, what can you expect to achieve at a property auction anyway? There are many risks associated with buying properties in this format, but with high risk comes a high reward if you know what you’re doing.
So what does a beginner need to know about investing at a property auction?
The different types of auction.
There are at least five different types of auctions, including Absolute Auction, Minimum Bid Auction, Reserve Auction, Sealed Bid Auction, and TwoStep Auction. They all vary from one another in regards to the seller. For example, absolute Auction means the highest bid wins, regardless of price, while Minimum Bid Auctions begin at a minimum price established by the seller.
The auctioneer and their role.
The role of an auctioneer is to ensure each item sells for the best price. This can be done in advance by publicising the listing and on the day when coming to sell the property.
Selling and buying at auction.
Selling will have you working with the auction to achieve a price that you find suitable. So do research beforehand and sell at the right time.
Buying is a completely different beast entirely. You need to understand your limit and only take risks when you are 100% certain it is worthwhile.
Preparing the auction lot.
Auctions will prepare in advance by releasing the catalogue, allowing you to arrange viewings of the properties on sale. A description will give you all the necessary information such as dimensions, room numbers, area of land attached etc. This gives you the opportunity to do your due diligence thoroughly.
Offers and prices.
Offering is as simple as holding up your bidding paddle when called upon by the auctioneer, but you will need to be clear that you are doing so. You will be given plenty of time to make up your mind, and if you meet the reserve price, you’re successful.
Unsold lots and what to do with them.
If your property has not been sold at auction, then speak to the auctioneer afterwards. If you are the buyer, don’t worry, as you still may be able to secure the property. It’s entirely possible for you to increase your bid or come to an arrangement with the vendor.
What happens if a buyer doesn’t complete?
If a buyer fails to complete, you can pursue various remedies, such as a court order for specific performance or sale in the county or high court. If the buyer is unable to complete due to death or other factors, the seller may not wish to rescind the contract. If the sale occurs, the seller can claim against the buyer for damages, such as rearranging removals and storage costs.
What happens at an auction?
Participants interested in various properties compete against one another by bidding highest in order to secure the lot they desire. It involves offering up for bid, taking bids and selling items.
Different types of opportunities.
For property investors, auctions can be a great source of buying cheap and selling high. Plenty of properties go for under their market value, presenting opportunities that are too good to pass up on – especially if you’ve done your due diligence beforehand. For example, purchasing a £100k property for £90k can increase your returns by 5.5% per annum during a 25-year investment.
Where to find deals.
You can either visit your local property auction dealers in-person to ensure full visibility of the proceedings, go online or bid via your phone if you are not in the area at the time of the auction.
Book in for my auction seminars and buy my auction book!
You may have just missed my ‘How To Buy And Sell Property At Auction’ Seminar, but you can still book your place for December. This will go live soon, so stay tuned and check back here.
My property seminars are created to help people begin their property journey and if you’d like further assistance my property consultancy service is available. Here, I share my 30+ years experience and provide you with guidance on both. property development and investment.
I have also written a handy in-depth book – John Howard’s Inside Guide to Buying & Selling Property At Auction – which you can buy at my store or on Amazon for more information.
If you would like more information on how to begin your property journey, please don’t hesitate to get in touch.
Send your queries to email@example.com, and we will reply as soon as humanly possible. We hope to hear from you in due course and greatly welcome your interest!