You can secure a good deal at property auction; however, like any investment, you take a lot of pre caution.
The year 2017 is predicted to be a great year of mortgage sales. Perhaps, you have decided to go to your first property auction, get approval for a loan, and have a cheque in hand. Nonetheless, prior to bidding on property, you will have to consider numerous things. You should be aware that property on auction will not always yield a good deal. In many cases, you will find reasons what the property is listed in a property auction.A good investment will be The Prospex.
1. Avoid the auction if viewing is not available, and participate only when you are prepared to bear renovation expenses
In many cases, you can view properties 1-2 weeks before the auction takes place. If possible, you should always go for the inspection. If property inspection is not available, or viewing is available for a short time – only three days for example – you should see it as are red flag.
Usually, in order to attract buyers, sellers are eager to show their property, but why is this seller hesitant? This could be because the property is not good, or needs massive repairing. Possibly, the owner could not pay the mortgage, or could not afford repairing or maintenance.
You will have to rethink on buying the property that you haven’t viewed if you do not have money for renovation.
2. Check the URA Master Plan for the property location
For the property you’re buying, it’s a good idea to check Urban Redevelopment Authority’s (URA) Master Plan. You will have to check what’s on the card for this location. Crossing your fingers and expecting the value of property rising does not happen always.
Perhaps, a market is being built and soon parking space will vanish. Maybe the nearby lots are being rezoned to make rooms for more residential units. If you are a landlord, this will mean a tough competition.
Checking the current price or transaction history is not enough, you will have to look back and forth.
3. “Fixer” houses are not for all
Sometimes, you will find abandoned properties or properties in dilapidated conditions. Some buyers are interested in the land more than the property.
Some people find purchasing an old building and remolding it is very attractive, however, this option is strictly reserved for people who can take pains for renovation. Unless you have experience in remolding old houses or are a contractor yourself, do not bid on the houses that need repairing.
If you have an approved loan, that’s the all money you have. You cannot live in the house you have bought because it needs a massive restructuring could be an expensive mistake.
4. Learn about the conventional discounts for expensive properties such as the commercial property,
If you’re new to real estate market, here is what you have to understand. Normally, units that are priced up to $3 million cost 5-10 percent less than the actual valuation. On the other hand you will get more discounts on properties that cost more.
Calculate how much you will be paying per square foot. In this case, your phone’s calculator will come handy. You can easily get caught up on the bidding process, and miss a great bargain that you may get.
5. Even when properties do not sell, the negotiation will not stop
It is can be an utter disappointment when the property is pulled from the property auction because expected price is not met. In that case, a newbie can fall back. This is a common mistake newbie commits. Here’s the truth: even after the auction, aggressive bidding continues.
You will have to engage on private negotiations with the seller because this is what most of the participants of the auction will do. The bidders cluster around the auctioneer and continue to approach for the bid. Therefore, you will have to get in touch with the auctioneer and keep on trying.
6. Find someone, or your partner, who can bid on your behalf and deliver the cheque for you
This has dual purposes. Firstly, it reminds you to stick to your planned budget and not to get carried away during the bidding. Secondly, if you have to leave, there will be someone to continue bidding for you. At times when you have to leave the auction in the middle for nature call or home emergency, your representative will be a great help. You should never fail with bidding because of mundane incidents.
Likewise, sometimes you may think if you could be in two different places at the same time. For example, you may wish for private negotiations, and also check the details of the next property at the same time. When you have an assistant, you can handle other issues as well keep track of the auction.
7. The auctioneers are not those who are selling property
In case you are looking for a good deal in the market, you should remember, auctioneers are not the people who are selling properties. If you look around, you will find the attendees are property agents or property investors themselves, who are trying to analyze the market. Possibly, some people who are attending the property auction may also have their own properties to sell.
Networking and talking to them is very helpful. Sometimes buyers get a good deal at a property auction, not from the auctioneer but from the attending people.
You should never rush to make a deal. This is what you have to remember while going for a property auction.
Never think the property auction as your main and the only option. You should also consider walking away. If the property auction is frustrating you or making you nervous, back off and go to the conventional method of buying property.
Never hurry to buy property. A bad decision will take just 3 seconds, but the regrets can last for years.