Set Yourself a Spending Limit

Have you ever gone clothes shopping and ended up spending a little more than you should? You tell yourself you shouldn’t spend more that £100 on a pair of boots, especially since you’ve not long bought a new pair.

But then you see the most beautiful pair of boots you’ve ever seen. They’re perfect, the problem is they’re £150. For a moment you think “no, I’ll walk away, I don’t need them” but then you think “what the heck? What’s an extra 50 pound?” We’ve all been there haven’t we?

And although it’s reckless and can lead to a lot of trouble if you do it on a regular basis that extra 20 or 30 or 50 pound, as a one off, shouldn’t be that big a problem. Now imagine the same things happens at a property auction. Except it’s not a case of an extra £40 or £50 now, it’s a case of an extra £10,000 or £15,000. It’s a bit more serious isn’t it?

There’s nothing quite like the thrill of an auction. When you know the property you really want is the next lot it’s hard to contain your excitement. Indeed it’s extremely easy to let yourself get carried away. Which is why it’s so important to set yourself a spending limit and – under no circumstances go over it.

What Limit to Set

When setting a spending limit you have to be realistic. There is no point going to a property auction if the limit you set yourself is not going to get you a garden shed let alone a house! It’s all about finding a balance between what you can afford and what is a plausible offer. Remember you have to be able to get finance from a lender so it must be a figure you can get a mortgage to cover.

Work out what type of property you are after. Then seek advice from estate agents on what would be a plausible offer for such a property, in the area you want to buy. If this price is way above what you can realistically afford then it’s probably worth reconsidering either what type of property you want or whether the time is right to buy at all.

The Maximum Bid

Once you have decided what you’re spending limit is work out your bids. What would you like to spend? What is the absolute maximum you could and would go to if the house was perfect. What offer will you start out with? Make a list of all these figures and whatever you do not exceed your maximum bid.

The Binding Offer

It is important to remember that once the hammer has been brought down on your offer you are legally obliged to follow through with the sale. You cannot change your mind then, which is why it is so important to only make bids you are prepared to pay. Auctions are legally binding so there’s no room for a change of heart.