House auctions; does your heart rate start to rise just thinking about them? Does the thought of bidding against hardened professionals in a packed room fill you with dread and panic? Does the feeling of losing all of your money on a worthless property provoke a sense of terror? Then join us as we safely guide you through some logical steps that will help to alleviate your fears and give you the confidence to find great deals at auction.
Why buy at house auctions?
House auctions can be daunting as they are bound by rules and legal processes that are fixed and inflexible. Some people feel nervous at the thought of buying through auction because of the pressure of bidding in an auction room, immediately exchanging contracts and being committed to the purchase there and then. So why go to an auction?
People buy and sell at house auctions principally for speed. A sale can be guaranteed in a single day and the sale completed within 28 days. For investors looking to move quickly and sellers seeking a quick resolution, the advantages are clear. The thought that will be in most buyers minds however, will be grab-a-bargain.
Good deals can be found at auctions with properties that have struggled to sell through estate agents, due to structural problems, legal issues etc. Also banks, local authorities and housing associations will sell housing stock cheaply through auctions because they do not have the resources or time to sell elsewhere.
Fear often grows in the absence of knowledge, thus fear of the unknown should be expected when walking into your first auction. Walking into any situation without the necessary information will always raise doubts in your mind. By following the these 8 simple steps however, we hope your confidence will begin to grow.
It may sound obvious but investing in knowledge will help you to understand the process and know what to expect. You will benefit greatly from learning how house auctions work, what to watch out for and your responsibilities. Taking the time to gain the knowledge cannot be overvalued as it will form the foundations for each step in the process and give you confidence in yourself.
Auction sales place the responsibility on the buyer to make their own enquiries into the property. A legal pack will be supplied for each lot that will outline the conditions of the auction, details about the property and on occasion specific conditions that may apply to the property. Feel assured that you have done your due diligence. Have your solicitor do thorough investigations and leave no stone unturned.
- Your Power Team
Your solicitor will be a key player in the team you will need before, during and after a property auction to abate your concerns. Surveyors, architects and contractors will help you to calculate your potential costs and highlight any issues in advance. At the point of sale you will need an insurance broker to get the property covered asap. In addition a good mortgage broker will advise you on your finance options before the auction.
Most house auctions will require a 10% deposit on the day with the remainder due within the following 28 days. Failure to complete the sale can get costly. Having a clear and confident understanding of how you will fund not just the purchase but also any renovation work will help you to bid with confidence. Your main options may be through mortgage lending, bridging loans or angel finance, depending on your strategy.
- Know your strategy
Being clear in your own mind about your investment strategy will help to diminish any self-doubt. Be confident in your chosen investment area, the style of property and what you will do with the property. Carefully calculating the numbers and doing your research will be essential to your success and allow you to be objective in your decision making.
- Be objective
Many emotions will come and go during your first property auction. Allowing emotions to control your thought processes may lead to a decision that you will regret later on. Staying objective and sticking to your plan, including not going over your maximum bid, will help you to stay more relaxed and think clearly.
It is well documented that short, shallow breaths initiate the fight-or-flight stress response that inhibits rational thought. Breathing slowly through the nose, both on the in-breath and out-breath, can have dramatic effects that will help you to think clearly, calmly and logically. Practice the next time you feel under pressure.
The more we do something the easier it gets. Visiting auctions without bidding will help you to become accustomed to the environment and desensitised to the stresses. Take the time to observe others, where do they position themselves, how do they act? On the day when you turn up to bid the entire process will be much more familiar and less scary.
Let us help you
The majority of what we have discussed has focussed on the preparation stages before a house auction. The more you can do beforehand, the fewer fears and more confidence you will have. As with any aspect of property investing, learning the knowledge is the first step and implementing the knowledge is the second step.
If house auctions appeal to you, we want you to succeed and not be held back in any way. We have developed a unique Auction Course as part of our Advanced Training Programme that is designed to give you a very real perspective on auctions from start to finish. Speak to us to see how we can help you to build both knowledge and confidence in order to vanquish any fears you may have.