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By Nitin Aggarwal

Founder & CEO, Property Deals Insights


Here’s How NOT To Buy An Investment Property At Auction

Daytime TV programmes often feature amazing property bargains that can be won at auction - and there are fantastic bargains to be had, but it’s just as easy to lose your shirt.

The inexperienced enter the auction room full of excitement, optimism and belief that they can snag a bargain, fix it up and make a massive profit.  The problem is that people who haven’t much (or any) auction experience often fail to do their preparation and end up paying more than they should.  

When the property owner is looking for a quick, guaranteed sale putting it up for auction ensures the sale is made quickly and without all the faff of viewings, offers that fall through and a long drawn-out sales process.


The vendor may be moving for work reasons, need to sell due to a divorce or realise the cash in a probate property to distribute between the beneficiaries of a will.  Whatever the reason, an auction room is a good way to get the property off their hands and the sales process all sorted out within a month.

In addition, mortgage lenders often put repossessed properties up for auction and owners of any property that is considered unmortgageable often have very few other options.

Even if you’ve done your homework, the auction room has an exciting vibe and it’s easy to get sucked into a bidding war.  There are plenty of people who have more money than sense and will keep bidding far beyond the actual value of a property under the hammer. 

If you get caught up in the action that could be you!  Keep your head and stop bidding when you reach the limit you’ve calculated.  Every pound over your limit is a pound less in profit - and there is a point at which buying will put you into a negative equity situation.  Perhaps take a level-headed friend who will restrain you from bidding over the odds!

Remember you’ll need to pay 10 per cent on a final successful bid right away.  If you don’t complete in 28 days - you lose that 10 cent.  

A final word - Is it worth it? Auctions are fun and exciting.  There are definitely bargains to be bagged and there are investors whose investment strategy is buying at auction.  So, providing you do your research and preparation thoroughly, yes, auctions can be very profitable for a smart investor.

Below - find my do’s and don’ts list for auctions.

The property investor’s auction dos and don’ts



Turn up on auction day hoping to find a good deal

Check out the lots beforehand and research similar property values, the catchment area, rental potential, etc. and arrive armed with solid information on each lot you’re interested in

Don’t check out anything beforehand - you’ll know a good bargain when you see one

Ensure you’ve got the legal pack for each property you intend to bid on.  This will contain all the property’s relevant legal documentation including planning permission agreements, lease information and special conditions of sale. Ideally, get your solicitor to give them a once-over beforehand.

Bid up to the limit of your bank balance

Do your sums beforehand, find out what the done up value of the property is and work out the costs of doing it up.  Add your profit and know the most you can afford to pay before you start eroding your profits

Don’t worry about getting a mortgage, you’re sure you can get one when needed

Know that when you win a bid on a property you’ll need to pay 10% immediately and must complete in 28 days (for most auctions - some are less). You need to either have approval in principal for a mortgage of some other means of paying the remaining 90% quickly  

Assume your solicitor will understand the urgency of completing fast

Have a solicitor experienced in auction transactions lined up and ready to go

Bid on properties in poor condition because they’re bound to go for well under market value

Bid on properties in poor condition because you know nobody will get a mortgage on them and you can either pay cash or have bridging finance in place

Nitin Aggarwal is Founder & CEO of Property Deals Insights www.propertydealsinsight.com

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    And beware the auctioneer, or a plant in the room, running the bidding up, going back to the 90s I was bidding on a repossessed corner shop, I dropped out at 30k, the bidding went onto 39k when the auctioneer withdrew the property saying that was not enough, after the auction I wrote to the solicitors acting for the bank selling the property offering 30k, I bought the property for that offer. Never trust an auctioneer, estate agent or a solicitor in an auction room, worse than back street secondhand car dealers

    Trevor Cooper

    The auctioneer was given a reserve price on the day.
    Do you honestly think the auctioneer preferred to withdraw the property, having done the work and got nothing for his efforts, or sell it to you for a reasonable price and earn his commission?
    You need to stay away from auctions!


    Sore point Trevor ?? I've bought more properties from auction than you've had hot diners boy

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    I bought some at Auction can be different situations. There was one where they were taking offers prior so I gave them an offer in writing, a letter came back from Auctioneer saying that I wasn’t successful
    but if I attended the Auction I might get it. I felt they trying us all out first and I didn’t attend it went for £7k less which was significant at the time. Looks like they lost £7k for being too clever although if I had gone I don’t know where the other guy would have stopped, just knew that was my limit.


    The first property I purchased at auction (1981) I would have paid 25k for, didn't tell the girl in the estate agent's office , she was too quick to tell me they weren't taking pre auction offers, I paid 22k on the day, but I do think whether buying or selling at auction they should be bought or sold in the room, and that applies to ebay as well , few yrs ago I put my HiLux truck on ebay, within moments I had people wanting to give me 5.5k for it, which I would have been happy with, but to be fair to all interested parties I did not accept, it sold for very nearly 7k at the end of the listing to a very happy guy.

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    I was saving and minded to buy in North London in ’64, However work situation with my employer taken me to other Towns for better wages so not until I returned to London but this time to West London did I purchase but felt existing houses were too expensive and poor quality for the money so I bought a Site in 1972 in Ealing W5 and build my own first house Detached 4 bed, Kitchen/diner, large L shape lounge, down stairs toilet / cloakroom, main bathroom,
    ensuite bathroom to master bedroom, double garage + double off Street parking etc, no Grant, no Bank & Mam & Dad, no schemes, incidentally I still have it, but now I have to put up with know all digital academics teaching me how to suck eggs or I’ll be in line for a fine, penalty or confiscation Order.


    Micheal, 1964, I was just starting at Hellesdon Secondary Modern, 11 yrs old, sh*t school, Hippocrate headmaster, mostly useless teachers, 1972, still an apprentice HGV fitter 18/19 yrs old, but yes you are right still in the 80s no bank of mum & dad, no schemes and no grants, but 9 out of 10 of us done it, we stood on our own 2 feet, worked hard, and done it, how times have changed, pri*ks wet behind the ears with useless degrees that know it all and know F all telling us how to suck eggs, I feel sorry for them, will they ever stand on their own 2 feet ? very unlikely


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