Property auctions are a great avenue by which to score great investment opportunities. They are high intensity and competitive public sales that involve aggressive bidding but despite its seemingly intimidating concept, it has allowed many investors to acquire assets at amazing deals with some at a price lower than the asset’s current market value. But because it deals with a lot of external factors, any investors must be well prepared before even participating in one. Part of such preparation is knowing what it is to avoid and what not to do during property auctions. That said, the following list might be of interest.
Bidding Without Doing Your Homework
Before you bid, see to it that you attend a few auctions first just to observe. Learn the ropes beforehand and don’t jump out of the plane without a parachute. It’s fatal. In connection, make sure to understand and be well aware of the processes and requirements that go in property auctions. You have to prepare yourself by reading up and gaining knowledge. Get to know the seller and auctioneers. Check out and understand the terms, policies and procedures.
Failure to Establish a Maximum Spending Limit
Before heading out to the auction, establish the maximum amount that you should spend. Don’t feel overwhelmed and bid on sheer abandon of logic. You’ll lose by default. Before stepping into the field, see to it that you have assessed your capabilities and set a spending limit. Never go overboard and see to it that you have such amount on hand.
Lack of Property Validation and Survey
After receiving the newsletter or brochure, run a check and create a shortlist of assets that fit your criteria. Learn about everything you can on these properties. Have it surveyed by a professional. Pay it a visit yourself. It is also important to keep abreast as to how similar assets are currently valued in the market. This should help establish not only your maximum bid amount but also whether or not a certain asset is worthwhile.
Unprepared Finances and Resources
Keep in mind that you cannot just bid. You must first have your finances and resources available and at the ready before you head out to any property auction or risk having to scratch your head in defeat. Prepare your finances beforehand and make sure that they come ready on time for the property auctions. We all know how long it takes to pool resources.
Commercial property auctions serve as a great avenue for investors and sellers alike. Although competitive in nature, it’s possible to score a sweet deal. In fact, many buyers are able to sweep assets for lesser than what they would have been sold for had they been traded in the usual course of things.
But auctions aren’t that simple. It’s not enough to make the highest bid. There’s a lot more that goes with it and being the highest doesn’t always mean winning. But if success is what you seek, the following reminders should do you good.
Understand the procedures and requirements involved. – Don’t go blindfolded. You can’t feel your way through without prior knowledge otherwise you’ll see yourself at the losing end.
Acknowledge that not all auction houses are the same. – Procedures and requirements can vary so be sure to check every time you plan to participate in one. Don’t assume that they’re all the same because they aren’t.
Prepare your financing ahead of time. – You are likely going to be asked an upfront security deposit and down payment upon winning a bid. You need to be prepared otherwise the battle you fought would be futile.
Run a background check on the properties you’re interested in. – Research about them and even pay them a visit. You cannot acquire or bid for something that you haven’t checked up on. That’s just ridiculous.
Have a chartered surveyor validate and uncover facts. – Call in a professional to help you assess and examine the property. Brochures and newsletters are likely to be handed out weeks before the auction so you have all the time to do this.
Play your cards as close to your chest as possible. – Never divulge your interests to anyone. Not to the sellers and brokers and most especially not to other bidders. They can use the information against you.
Set a spending limit so you don’t go overboard. – Offering to buy an asset for far higher than its current market value puts you at a loss. Don’t let your emotions get the better of you. To avoid engaging in a useless bidding war, set a spending limit for yourself beforehand.
Don’t bid on your first auction. – This may sound ironic to you but it has its merits. Experts suggest for you to observe rather than participate during your very first auction. It helps you understand and learn at a personal and interactive point of view. Commercial property auctions are in a way a battlefield. Think of this as benchmarking.