Top 10 Things You Should Know Before Bidding on a Property at Auction

  • Your budget – The single most important thing since it is very easy to get carried away on the day and spend more than you should. Sit down prior to the auction and carefully work out what is the maximum price you can afford and don’t bid over it.

  • The history of the property – Is this a repossessed house or has someone simply moved out and decided to sell at auction. Knowing who, if anyone lived there before can prepare you for what you might find in the property.

  • What the planning status is – This is particularly important if you are planning any major alterations or converting the property. You need to know if planning permission has been granted and if so, when. If there is no planning permission in place and you intend to alter the property or convert it, what is the likelihood of you being granted planning permission.

  • What costs are associated with all the works you intend to carry out – From just a cosmetic ‘touch up’ to major alterations, you need to know how much it is going to cost you so that you can budget accordingly.

  • If you are buying for an investment – what the eventual sales valuation might be once the work you plan to do has been carried out. From here you can work backwards (on the basis that you know how much the work itself is gong to cost) to arrive at what should be the maximum bid that you put up for the property. Spend too much on buying the house at auction and you could find that all your profit disappears.

  • If you don’t intend to live in the property yourself, what the demand is for a property of this type once you have done the work – This could be resale demand or rental. How many similar properties are there in the area that are up for sale or rental? If you are about getting a return on your investment, then you need to know that you can sell or rent the property in the end.

  • What type of person is going to want to live in this property – This should influence your plans for alterations and your choice of fixtures, fittings and décor.

  • What the legal status of the property is – Your solicitor can advise you on this once they have looked through the Legal Pack. Yo8u should be aware of any special covenants or restrictions in place which could impact on your use or development plans for the property.

  • If the property is mortgageable – You may find that you will need to approach specialist lenders if the property is in very poor condition or prepare yourself for the fact that you won’t be able to secure a mortgage on the property. In any event, unless you are a cash buyer, you need to have your finances in place (approved) before you bid.

  • What is the likely timescale for completing the work – You will need to have a project plan for the works to be done and any professional tradespeople lined up and ready to go soon after the auction if you don’t want your project to overun. Remember, if you have borrowed money to finance the purchase, you will be paying interest so its just as important to keep the timescale under control as it is to keep costs in check.