We’ve already discussed how the popularity of buying property at auction is increasing as investors go in search of a good deal and what you should know before making your first bid.
But, there are also some unknown secrets in the auction world that could help you bag the best bargain and give you an edge over the competition.
If you’re looking for ways to maximise your profit, then you should consider the following strategies when looking for auction lots:
Lots out of area
Take the following example: If you’ve got a house to sell in Plymouth, do you think you’ll get more interest from people if you used a local auctioneer or smaller one based in Aberdeen? Of course there’d be more people likely to bid at a local auction. However, although uncommon, it can be the case that some auctioneers offer lots for sale from outside the area which often means that fewer people will go after the property.
Lots out of ‘type’ or ‘character’
Certain auction houses will specialise in a particular type of property and as with the previous example, you should always keep an eye out for lots that seem misplaced in a catalogue. If you’re after a residential property, don’t discount the chance that a commercial auctioneer may have one on offer and vice versa.
Withdrawn lots
Up to 10% of lots are withdrawn for several reasons. The property may have failed to reach the reserve price; it might have been being sold as vacant when in fact the tenants haven’t moved out; it could be because the legal pack isn’t ready or that the vendor wanted to hike the reserve price at the last minute. If a property is withdrawn and it’s a property that you want to buy, it’s always worth asking the auctioneer why, and if you’re interested, telling them so. You may be given the chance to buy it before it comes back on without competition.
Unsold lots
As with withdrawn lots, you could get yourself a bargain if a property doesn’t sell at auction – this is usually around 30%. The vendor is probably at last chance saloon and therefore more willing to entertain offers. You could try and do a deal in the room after the auction is over or call the auction house and make a bid. What do you have to lose?
Lots with a high guide price
If a property is priced particularly high, it is likely that everybody else will walk away from it. Sometimes they start high and get dropped through the marketing period, but often the moment has passed. Stay alert in these situations as you could make a lower offer.
The key in all situations is to try and outsmart the competition from other bidders wherever possible!
