Why The Summer Is A Good Time To Buy At Auction!

Want to profit from property? It's easy to do. All you have to do is buy low, sell high - and pocket the difference! You'll buy low at a property auction. And August's the time when you've the best chance of paying the lowest-ever prices. This is the lowdown...

1. Understand how property auctions work. There are about 100 property auctioneers across the country who auction off anything from a dozen to 200 or so properties on a regular monthly to quarterly basis. Some estate agents also run auctions of one or two properties now and again. Properties are usually auctioned because they need to be sold quickly - they may have been repossessed, are in need of renovation etc. You can source auctions by talking to local estate agents who tend to know what's happening locally. Or check Yellow Pages! Most auctioneers will provide basic advice on buying and bidding at auction. The auction buying process is much the same as the conventional process, except that you view, arrange finance, do (most of) the legal paperwork and have the survey carried out before rather than after bidding. Bid up to your maximum amount and (if you win) the property's yours with completion in 28 days!             

2. Know why you should be buying in August. This is the quietest time of the year in the auction industry. Buyers and sellers are off on holiday - so business can wait until the autumn! This means that there are fewer auctions held - about a dozen instead of the usual 60-ish. There should be fewer bidders in attendance. If a property comes up for auction now, you know it needs to sell super-fast - otherwise the seller would wait for better-attended autumn auctions. These properties may have lower reserves (minimum selling prices). Fewer bidders normally means lower prices too. There's also a 'doom and gloom' mood in the property market now, persuading some sellers to take what they can rather than waiting to see what happens later in the year. Some would-be buyers are uncertain too, and are holding back. Yet the underlying factors for modest property prices - supply and demand, interest rates, employment levels etc - remain positive.           

3. Pick the right property to buy. The basics of buying at auction can be picked up easily. What you need to know is which property to go for! If you're aiming to buy low, sell high and pocket those profits, look at what's available in the auction catalogue. Visit the localities, talk to estate agents, and see which properties are in-demand and not in-demand. Check if the property for auction is likely to re-sell fast - and what it would be worth. View the property itself, check its appeal and its condition. Discover what's next door, just up the street and around the corner - neat and tidy properties or the neighbours from hell, a parade of useful shops or wasteland that attracts travellers etc? Bring in tradespeople to quote for repairs etc. Look at comparable properties and reach your own conclusions regarding values. Bottom line? View properties through would-be buyers' eyes!                   

4. Make sure you profit from the proposed property deal. You need to start by deciding what that property is worth to you. To do this, you simply take the property's open market value, as quoted by local estate agents. Get three valuations for increased accuracy. Deduct your costs - the usual buying costs (survey, legal paperwork etc) and any repair and renovation costs (from redecorating to rebuilding). Get quotes from builders etc - again, three quotes and allow an extra 10% for any extras that are uncovered. You then need to budget in your target profits on this deal - most would-be property entrepreneurs target profits that keep them within their annual capital gains tax allowance - £7,700 in this year. Take the open market value, deduct your costs and your target profits - and you've got a figure you're prepared to pay; your 'maximum bidding figure' at the auction.   

5. Know how to get a property bargain in August - consider making a pre-auction offer. It's a little-known fact that many properties in the auction catalogue never make it to the auction room. Anything from 10% to 50% are 'sold prior'. Expect a higher percentage to sell pre-auction in August - some sellers are twitchy and would rather do a dead-cert deal upfront than take their chances at auction. Check how the auctioneer likes pre-auction offers to be made - then offer anything up to your maximum bidding figure. Other advice? If an August auction is cancelled (due to a lack of entries, usually), ask the auctioneer what's happening to the properties that were entered - the sellers may be open to offers. If a property is withdrawn during the auction (because the reserve's not reached, normally), approach the auctioneer - the seller may be open to a post-auction offer!