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If you’ve ever invested in property you’ll appreciate the importance of ‘due diligence’, getting this wrong could cost you more than the price of a survey. Researching an auction property is basically the same as for any other property purchase, except you should also research the auction house.
Understand the Area
Firstly, you want to get a general feel for the area you’re thinking of investing in, so look at:
- Relevant public transport connections and their importance for the locals
- Nearby schools and their league table positions
- Local amenities, both public and retail
- Crime rates and types
- Risk of flooding
- Price bands for house and motor insurance
Once you’ve done this start researching the recent performance of property market in this area. A good resource to help with the most of the above points is www.upmystreet.com.
Next, think about future developments or any trends you can identify that could have a positive or negative effect on house prices. Examples might be:
- Inward migration to the area which could push prices higher with the increased demand, or outward migration which could help prices fall
- Age groups attracted to your area and whether your plans will help meet their needs
- Plans for big named companies and/or retail outlets to set up in the area
- Council plans for house clearances or redevelopments
- Planned transport links
- Large-scale events planned, such as the 2012 Olympics in East London
Choose your Auction
Obviously if you're investing in London there will be plenty of auction houses to choose from, but if you’re looking for something more local you can find details in the phone book, on the internet, or in local newspapers. Don’t write off London auctioneers though as they sell property all round the country, so get hold of their latest catalogue, or check out their website.
This will probably give you a few suitable auction houses to work with, but it’s important to do a bit of investigation first. Find out how reputable they are, especially the smaller, more regional ones. Think about:
- The auction’s location – A large, elaborate setting can push the prices up
- Popularity - Go to a few auctions as an observer and see how many people turn up. This will also give you a useful insight into to the 'buzz' of the auction room
- Success rate - How many lots are generally sold on the day?
Once you've decided which auction houses you’re interested in you’ll need to get on their catalogue list, you’ll usually have the option of receiving it by mail or email and you may have to pay for the privilege.
You should be sent the catalogues as soon as they’re released which will give you plenty of time to check out the featured properties before the day, plus you should also receive updates and changes to the lots prior to auction. This is particularly important if an update involves one of the properties you’re interested in, especially if it’s been withdrawn from sale or is actually leasehold when it had been listed as freehold, etc. Having access to this kind of information can help you to be completely prepared come auction day.
Research the Property
So you’ve researched your target area, decided which auction to attend, received and examined the catalogues, and found at least one suitable property so all that remains is to undertake your due diligence.
The main things to focus on are:
- Location, Location, Location
- Ownership - freehold, leasehold, ex local authority, etc
- Price and how it compares with the area
- Rental amounts and details of tenants and their lease if applicable.
- Any repair work that needs doing
Please note that if the property you want to bid on is tenanted you might not be able to gain access to it before the sale, this is absolutely normal.
The other slight oddity that you might come across is that of group viewings. If the property is vacant the auctioneers will provide everyone interested with a time and a date, and you simply turn up and look around. This can feel a bit strange at first, but it’s normal practice and gives you a chance to check out the competition too. Also, bear in mind that there might be more than one group viewing.
Once you’ve had a look around and decided that you are definitely interested in making a bid you need get a survey done. Even if the results aren’t great you can at least decide whether you’d be willing to undertake any necessary work if the purchase price was right. This can be a good way to make large profits on a property if you can buy it below market value.
Resources
Nowadays there are many online resources, such as…
We wish you well with your search!
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