I’m addicted to buying homes at auction and made £35k in 10 days – my nine must-follow tips for finding a bargain
PROPERTY guru Sam Collett, 49, has made millions from buying and renovating properties. She shares her ultimate guide to buying a property at auction below.
BUYING a property at auction is thrilling, but you need to ensure you don’t bid too much for the wrong place.
Once the hammer falls, you will exchange contracts and complete, usually, 28 days later!
To keep you on the straight and narrow, here are my nine top tips…
A guide price is only a guide
Some auction houses have crazily low prices to tempt bidders in (called a ‘come buy me price’), but a guide will always be set within 10% of the reserve price.
Almost all properties will have a reserve – that is the minimum price a vendor is willing to sell for.
It’s key to do research on the property, the area and what works are required to calculate your bid.
You also need to factor in all fees (e.g. auction house fees, or if the vendor has any special conditions which stipulate additional charges to be paid), in addition to usual stamp duty costs.
A cheap price doesn’t guarantee a bargain
Not every property being sold at auction will cost less than with an estate agent – especially not if several people are bidding.
From the outset, you need to set a maximum price (having factored in all costs) and stick to it!
Bargain properties are usually a challenge
This could be because of the level of work needed on the property, a short lease or possibly already being tenanted.
Most problems can be sorted with time and money, but the key to success is in working out – for you – which properties are worth the effort.
The type of property that IS a bargain
Ex-rental properties pose huge potential for bargains.
This is because landlords are required, by law, to provide regular electrical and gas certificates, and undertake maintenance to ensure properties are in a safe, liveable condition.
There is potential for ex-rentals to require less ‘big’ works and to benefit from cosmetic improvements to add value, such as upgrading kitchens and bathrooms.
Doing the maths is vital
Just because a property requires a lot of work, it doesn’t mean once complete you’ll make money. It’s critical to cost out any works and also the time involved.
While you’re undertaking any renovations, you will be liable for all utility bills and any mortgage payments.
These ongoing costs eat into the bottom line, especially if a project takes a long time to complete.
Be realistic
Be realistic of your own time schedule and skill set. It’s easy to get carried away and think projects can be done in your spare time, but refurbishments can be mentally and financially draining.
Factor in travelling time, how tired you’ll feel after any day job and be realistic with your capacity.
Unless a renovation is your full-time job, it’s likely a project will take longer – so calculate this into your budget.
Using your eyes is important
People buy with their eyes, so be on the lookout for ugly properties which can be ‘prettied up’.
Places which have dated frontages – such as fake brick cladding or pebble dash can put people off.
These once ‘design statements’ present an opportunity to add kerb appeal and value.
Take the time to research the street and see what works in the local area to boost the presentation.
Going back to the original brick, rendering or weather boards can really transform and enhance the appearance of an ugly house, along with painting or changing doors and windows.
Quick wins that can add value
Look for quick wins where you can add value.
This could be anything from lowering a kerb to create off street parking, to landscaping a garden or moving a downstairs bathroom upstairs.
Always research the local market and check with an estate agent your ideas will be worth the outlay.
Don’t spend money on improvements that don’t add value in some way.
Hunt out anomalies
You get the most bang for your buck by spotting the gem that most others overlook.
This could be because you have particular area knowledge, or a specialist skill other people don’t have.
The best way to bag a bargain at auction is by choosing a property most other people don’t want to buy!
Sam Collett is the author of ‘How to Buy Property at Auction’ and ‘Property Investment: The Essential Rules’