Ten things to check before bidding
1. What is your budget?
It's very easy to get carried away on the day, so sit down prior to the auction and carefully work out your maximum price. Then stick to it.
2. What is the history of the property?
Is it a repossessed house, or has someone simply moved out and decided to sell at auction? Knowing who, if anyone, lived there before can prepare you for what you might find in the property.
3. What is the planning status of the property?
Knowing the planning status of your potential property is particularly important if you're considering any major alterations. Find out if any planning permission has been granted on the property and if so, when. If there is no planning permission in place, and you intend to alter the property, you need to find out whether or not you'll be granted permission.
4. How much will repairs and decorating cost?
From a cosmetic 'touch up' to major alterations, you need to know how much any necessary building work is going to cost you so that you can budget accordingly.
5. If you're buying as an investment, how much can you sell for?
If you are buying for an investment, you'll need to find out what the eventual sales valuation might be, once the work you plan to do has been carried out. From here you can work backwards (on the basis that you know how much the work itself is going to cost) to arrive at what should be the maximum bid that you put up for the property. Spend too much on buying the house at auction, and you could find that all your profit disappears!
6. What is the demand for this type of property once you have done the work?
This could be resale demand or rental. How many similar properties are there in the area that are up for sale or rental? If you want a good return on your investment, then you need to know that you can sell or rent the property once you've renovated it.
7. What type of person is going to want to live in this property?
This should influence your plans for alterations and your choice of fixtures, fittings and décor.
8. What is the legal status of the property?
Your solicitor can advise you on this once they have looked through the Legal Pack. You should be aware of any special covenants or restrictions in place which could impact on your use or development plans for the property.
9. Is the property mortgageable?
You may find that you will need to approach specialist lenders if the property you want to buy is in very poor condition, or prepare yourself for the fact that you won’t be able to secure a mortgage on it. In any event, unless you are a cash buyer, you need to have your finances in place (pre-approved) before you bid.
10. How long will the work take?
You will need to have a project plan for the works to be done, and any professional tradespeople lined up and ready to go soon after the auction, if you don't want your project to overrun. Remember, if you have borrowed money to finance the purchase, you will be paying interest, so it's just as important to keep the timescale under control as it is to keep costs in check.