How To Get The Best Price At A Property Auction
You have probably heard all the wonderful stories about people buying property at an auction for almost a third of the actual value. Yes, there are some pretty good deals to be had at an auction, but this entire process is not for everyone. Like everything good and lucrative, there are a lot of moving parts that run in the background. So, how exactly do you get the best price at a property auction?
Research and preparation
For starters, it is the amount of preparation and research that is required from your side. If you want to get the best potential deals, you need to research auctions in your areas of interest. Suffice it to say that every auction is run slightly differently and unless you familiarise yourself with all the nitty-gritty of every auction you visit, you might miss out on great deals due to ignorance.
If you’ve been a follower of my blog, you may have come across my recommendations to attend Property Networking events. And while I do admit that I can sound like a broken record sometimes, these events are always good places to fish for information, which is great.
Granted, sometimes, you’ll get to talk to people who will bid themselves, which can be awkward if they find out that you are a potential competitor. To avoid such encounters, I don’t say anything about actually bidding. I usually come in like a person inquiring about the process and let the other investor do all the talking. And when they start sharing, they eventually mention something useful to take note of.
Over here, the most common networking events are the PIN Meetings of Simon Zutshi and the We Buy Houses Community Meetup of Rick Otton as these events are held regularly each month in different locations.
Have money on the ready
Most auctions charge a fee for the service and you may even be faced with a penalty should you bid, win and then fail to pay. The best way to get things done at an auction is to make sure that you have the necessary money, or at the very least, a way to get it within 72 hours or so. By having ready cash, you will be free to bid up to your limit with confidence.
Get rid of your tells
In many auctions, bidders play a form of poker with one another. No one wants to show just how badly they want a piece of property for fear of facing undue bidding competition. One thing you should know is that, although it is frowned upon, there are still auctions that have secret bidders embedded within the buyers for one single purpose: to drive up the prices.
If these people, or anyone else for that matter, see how much you want something, they may start a bidding war just to increase the overall purchase price. The best way to avoid this is to bid with confidence, use an even and temperamental voice tempo and wear some form of disguise. This is not to keep your identity secret, but to mask any facial tells that you might have thus giving away your true purpose.
Bid on the fixer-uppers
At auction, there is a plethora of houses for sale at virtually throwaway prices. That, however, does not mean that there aren’t some homes worth every penny and more. As human beings, we like shiny, newer and better-looking things. We are just vain like that. These items, however, tend to get lots of bids from the participant. That is because everybody is already envisioning themselves in the house.
One trick to end up buying amazing properties at throwaway prices is to go for the seemingly run-down ones. These one need quite a bit of fixing and renovation but even if you put that cost together with what it cost you to get it, you will find that you still have a decent sized investment that brings in more money.
In closing, you should never buy property that isn’t in a first lien position. Anything above that could still foreclose and wipe out your entire investment. Buying property at an auction will involve quite a bit of running around trying to find the best possible deals. But once you do, you have an opportunity at an amazing investment for a fraction of the actual value.