Preparing to buy an investment property at auction

Buying an investment property at auction can be an effective way to expand your real estate portfolio. Preparation is the key to success, so here are some tips to help you increase your chances of a successful purchase.

Before the auction

Research thoroughly in advance

• Understand the auction process and rules well before the event.
• Research the properties available and shortlist those that align with your investment goals.

Set a budget and stick to it

• Determine your maximum bid based on your financial capacity and investment strategy.
• Factor in additional costs such as auction fees, taxes and potential renovations.

Inspect the property

• Attend any pre-auction open houses or property inspections.
• Assess the property’s condition, potential for improvement and any issues that might affect its value.
• Consider having a survey done on the property by an RICS-registered building surveyor.

Review the legal pack

• The legal pack includes everything from local searches and title deeds to an inventory with fixtures.
• Instruct a solicitor to go through the legal pack and contracts of sale.

Get pre-approved for financing

• Arrange your financing in advance and obtain pre-approval for a mortgage or loan if necessary. A commercial finance broker can assist with this process.
• Having financing in place gives you a competitive edge and means you’ll be able to complete on the purchase. If you’re the successful bidder, you’ll only have a short window (usually 28 days) to complete the purchase.

Understand auction terms and conditions

• Familiarise yourself with the auction terms, conditions and any special requirements.
• Determine the deposit amount and payment terms.

Attend other auctions as an observer

• If you’ve not bid at an auction before, it can be helpful to attend a few property auctions as an observer to understand the dynamics and get a feel for the process.
• Observe bidding strategies and tactics used by experienced buyers.

Arrange insurance

• If your bid is successful, the property will become your responsibility from the day of the auction sale, so you’ll require buildings insurance.
• Get an insurance quote ready for the policy to start on the day of the sale.

On the auction day

Bring necessary documents

• Bring ID and proof of deposit funds.

Stay disciplined during bidding

• Stick to your predetermined budget.
• Avoid getting carried away and bidding beyond your means or the property’s financial viability.

Have a contingency plan

• Prepare for the possibility that you may not win the auction.
• Have alternative properties or investment strategies in mind.

Auctions can be fast-paced, so being well-informed and having a clear strategy is crucial for making sound investment decisions. If you want to find out more or need help arranging finance for an auction purchase, please get in touch.

Top tips for buying an investment property at auction