How to buy a house at auction: 12 tips
1. Subscribe to auction house mailing lists
You’ve got to be in it to win it! Auction houses keep in touch with interested parties via email. Search for auction houses in your area of interest and add your details to their mailing lists. That way, you will receive their latest auction catalogues and be the first to hear about upcoming auctions.
2. Attend a few auctions as an observer
Every auction house has a unique atmosphere and bidding procedure. Likewise, every auctioneer will have his or her own style and temperament. By attending a couple of different ones as an observer, you will gain valuable insight into how to buy a house at auction.
3. Check your sums and set a budget
Before even thinking about how to buy a house at auction, you need to be absolutely sure that the maths work out. A few thousand pounds can make all the difference between an asset that will make you a handsome profit and one which will become a money pit.
4. Dig into the detail
Request a copy of the particulars of any property you intend to bid on and look carefully through all Ts and Cs. Note down the deposit you will need (payable on the day) and how long you can expect to wait until completion (usually two to six weeks). Take the particulars to a trusted solicitor to check for anything you need to be concerned about.
5. Stay in the loop
Auctions can be very fluid environments. You could turn up on the day only to find that the details about the property you had your mind set on have changed. Worse still, it might have been sold already.
When you find a property you’re interested in, contact the auctioneer and ask them if it’s likely to be sold before auction and to keep you updated with any changes.
6. Visit outside of viewing times
Occupants know to be on their best behaviour during official viewings which are often strategically scheduled for quiet periods. Dropping by unannounced outside of the advertised viewing times can give you a more accurate idea of the state of a property and the neighbourhood.
7. Consider proxy or telephone bids
If you are unable to make an auction in person, you may be able to place bids by telephone or to instruct someone else to bid on your behalf. The availability and processes regarding telephone and proxy bidding vary between auction houses, so contact them for specific details.
8. Arrive early – and fully prepared
Arriving at the auction house early is not just good manners, it makes business sense too. Updates or additional information about lots are often introduced on the day. By receiving them as they come in, you will have more time to decide how they might affect your bidding strategy.
Make sure you bring your deposit and be prepared to arrange insurance. The winner of a bid is fully responsible for the property from the moment the gavel falls.
9. Be clear when bidding
You can avoid mistakes and potential embarrassment by using clear, unambiguous signals to indicate a bid. Follow any in-house instructions about how to indicate a bid, and sit on your hands when you’ve reached your maximum bid.
10. Stick to your maximum bid
If you have done your sums properly (see Tip 3!), you will know exactly how much you are willing to buy a property for to get the returns you want. In the excitement of the auction, it is easy to get carried away and accept a lower return to win the bid. Be disciplined. Set a maximum bid at the offset and stick to it.
11. Avoid the auction house bar
Some auction houses include a licensed bar. It should go without saying that bidding and drinking can leave you with more than a hangover the next morning. Steer well clear (at least until your lot has finished).
12. Have fun
Property auctions are a great place to meet like-minded people and engage in some networking. Bidding on a property is a serious business, but you can still enjoy meeting new people and having a laugh.
Learn how to buy a house at auction (and much more) with Fielding Financial
We have a range of in-person, online and home study property investment courses, but many new property investors find it helpful to attend one of our free property investing seminars. You can see what dates and locations are available on our dedicated seminar page. We look forward to hearing about your property plans and giving you some in-depth advice about how to buy a house at auction.