Before the auctionImportant points and considerations to be aware of in the run-up to a property auction:
1. The properties set to go under the hammerIt is essential that you carry out research to determine whether any of the properties set to be sold are right for you. Remember to consider the location of the property with just as much priority as its price, condition and specifications.
2. Organise viewings as early as possibleThere is a good chance you will not be the only person considering purchasing the property you are interested in, so it is a good idea to organise viewings as early as possible. This will give you plenty of time to ask as many questions as you need to make an informed decision.
3. Consider bridging loan criteriaThis means determining whether you would be considered eligible based on the bridging finance lending criteria, along with how much you can afford to borrow and when you would be able to repay the loan. Doing this in advance is important as you may only have a matter of days to pay for the property you buy if yours is the winning bid.
4. Set a realistic budgetUnder no circumstances should you get carried away in the excitement of the auction and spend more than you intended to. This is particularly commonplace when determined investors find themselves in ‘bidding wars’ with the other prospective buyers. Set your budget and stick to it, without exception.
5. Check the small printPrior to bidding on any property at auction, ensure you fully understand all applicable terms and conditions. This will include the conditions of the sale, how much you will need to pay when it needs to be paid and details of additional fees and commissions. Never bid before making sure you know what you are getting yourself into.
During the auctionWhen the big day rolls around, you will have a much better time at the auction house by following the simple guidelines outlined below:
1. Don’t be lateArriving late means denying yourself the opportunity to consider any additional information or changes to any of the lots going under the hammer, which may be announced by the auctioneer before the auction starts.
2. Be aware of reserve pricesIt is also important to remember that being the highest bidder for any given lot at auction does not guarantee its sale. Your bid may be the winning bid, but it may not exceed the ‘reserve’ price placed on the property. In which case, the seller is under no obligation to go ahead with the sale.
3. Bid with clarity and confidenceDo not run the risk of your intention to bid being overlooked by the auctioneer. This is not something that happens particularly often but can nonetheless pose an issue in large and competitive auction rooms. If you are going to bid, ensure you bid clearly and confidently.
4. Ensure funding is availableUnder no circumstances should you bid on a property at auction, unless you are 100% happy that you have the required auction finance in place. Establishing whether you are eligible for a bridging loan ahead of time is essential – not to be left until after the auction.
5. You can always make a private offerLastly, just because a property does not sell successfully at auction does not mean you cannot still buy it. Stick around until the end of the auction, speak to the auctioneer and consider making a private offer to the seller of the property. You may find they are willing to be flexible, given that their property did not sell for the price they expected. Call anytime to learn more about the benefits and applications of bridging finance, or to discuss your eligibility for a bridging loan as a form of auction finance.
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