Week 39: An Introduction to Auctions
‘If you always do what you've always done, you'll always get what you've always got’…... Henry Ford
Hi there! I wanted to start this week's blog diving straight into a quote. I must say Mr Ford nailed it with the above as it is so true to life and holds a lot of significance in what I'm about to discuss. In our day to day lives we are inundated with quotes and sayings but how often do we take heed and pay attention? And I mean real attention, not just face value and you then share this without giving it a moment's thought before it is lost into the abyss of social media? I reviewed what I was doing and wasn't happy with the results or lack of shall I say. So I tried something different and bingo; the penny dropped. At first you might be a little cautious, somewhat apprehensive but things will make sense if you just allow it. For me it was auctions, these power houses have had a lot of bad rap over the years and I think we really ought to cut them some slack. Just a snapshot of what is often said:
Stay away from auctions, they are no good
They are dangerous
If you make the wrong choice, it's a money pit
You’re just asking for trouble
Never buy just sell
It's always overpriced anyway (not always)
You get my drift? These guys are not the bad guys but I am sorry to say if you don't do your research then you are the bad one, not them. There is plenty of opportunity to familiarise yourself with the auction catalogue which is made available several weeks in advance. Here's the bit that everyone keeps missing, which does require a little bit of work on your side. You can shortlist some desirable properties and then make arrangements to view them.
Tip: never bid on anything unless you (or a business partner) have physically seen it.
After a few viewings you can now short list even further by narrowing it down to two/three favourites and guess what, this is the stage you take your builder so he/she can give you a rough guide into the costings (unless of course you are a builder yourself) then in that case it's my bad. This way you are de-risking your future purchase by having an expert on hand. You may have to pay a small fee, (please don't be stingy) it'll be cheaper than buying the wrong property. Investing is going to cost you along the way, even when you haven't received a payout and it will be a while before you do (projects are not an overnight thing). So stop hoarding your cash and just get on with it. Now it's homework time, bring out those spreadsheets and get formulating.
Tip: I hate calculating the cost but love counting the profit
This should hopefully get you through the dreaded excel phase. Honestly, it does get a lot easier after your 5th plus spreadsheet. You want to get all this done before auction day. You may find that after your analysis you are not happy to proceed in which case; do not! As numbers don’t lie, plenty of property out there. Have your upper limit and don't go over your planned purchase price, no matter how badly you want this property. Learn to detach yourself, if someone over bids you at your final price then just sit there like a pudding and don't you move! It's similar to gambling, (not that I am a gambler by any means hahaha) but just follow the accomplished gamblers and walk away no matter how hot the table is or in our case the auction house. At this point you may or may not get the house. If you do great, if you don't then the cycle repeats until you successfully bid on your chosen property.
Tip: don't play Monopoly with real property
Oh just one more thing prior to the auction day make sure you request the legal pack from the auctioneers, have a good read of it and send one copy to a solicitor. This should mitigate any risks as anything you don't like you can get that cleared by a legal executive. Don’t skip this bit, I learnt that the hard way and was stung with £200 for a last minute check-up. Hope you are better organised than I. Auction day, get up nice and early to make sure you have all your notes to hand, registered at their site and signed IDs submitted which by the way has to be verified by a solicitor. Another cost to add to that ever-growing list. On the auction day (mine was on-line by the way) get yourself logged in, look out for your lot number and press the big fat green button on the screen. You can't miss it, it's huge and has ‘bid now’ written on it. What happens after you hit that button will be discussed in next week's blog, till then au revoir.