Last week I was talking about FOMO and the sense of urgency within the market. One place you can really feel this is buying at auction!
bidding at auction - is it bonkers frustrating or the way to go?
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🥳 AUCTION DAY! 🥳
Tonnes of work, time and effort………..Then excitement, more excitement, (how can you not be excited when buying property) and then here we go – countdown! Not the same level of excitement as ELON MUSK launching SpaceX, but nevertheless a great first JV project!
Bidding starts slowly, increments of £500.00 at a time 🤑, another bid 🤑, another bid 🤑, another bid 🤑! Making an educated guess it is just us and another investor! Now the excitement is turning to frustration, edging closer to our maximum amount! Please no more STOP BIDDING we want it! STOP, STOP, STOP, but no……I take to sitting on my hands, with somewhat of a grumpy face and numb fingers, to see us miss out for the sake of a GRAND! Yep a GRAND! BUT if we had carried on bidding then it could have been more!
BUT a maximum is a maximum, and while I could see the end product, the lovely open plan kitchen diner, beautiful bathrooms, refreshed gardens and repaired roof, I could also see LESS PROFIT! 😞
Don’t let emotion take over, property is a business and numbers win! Just not always in your favour!!
There are some steals to be had at auction, our first purchase was a tenanted property and the process worked well for us! We purchased below our maximum budget and after a back to brick refurbishment we have a lovely tenant and great monthly returns. Happy Days!
A few things to consider:
- You know what you’re getting (if you do your due diligence correctly).
- Guaranteed timeline (if you win) 28 or 56 days.
- Set fees made clear up front
- Plenty of choice and properties dropping into your inbox from auction houses
- Usually need work so give an uplift in value
All sounds great…………..REALITY check…………
- Increased competition by other investors
- Terms once set are very hard to re-negotiate
- Sometimes there are little to no pictures and no floor plan which is an issue if you are a remote investor.
- If there are pictures, they will likely show the “best” bits (which is where our Condition Report Service comes in).
- People assess deals differently
Like I said – BONKERS FRUSTRATING or THE WAY TO GO?
Behind the scenes – we were busy, busy, busy……Plenty of emails and telephone communication with the agent. A long drive (as we are remote investors) with our JV partner to see the property – we really had our eye on this one! Time spent number crunching, assessing the work to be done, researching sold prices and growth data. Establishing end value (tricky as so little sold in the area a super popular) and a 10k margin for error on that!
More discussions on what to bid! 📈💰📉☎️
We let this one go…..don’t rule auctions out, but consider the pro’s and con’s and get stuck in! If you need a hand getting started, please reach out. 😁
