What Happens at an Auction?

What Happens At An Auction?

If you've got your mortgage sorted out and you've determined your spending limit and you know exactly what you want to buy, you're probably impatient for the start of your first property auction. But what can you expect from the auction itself, and how should you prepare yourself to participate? Things in an auction house can move very fast so you'll have to be ready to make good decisions at speed, keeping pace with the auctioneer. How does bidding work and how can you prepare yourself to compete with more experienced participants?

Before You Begin

The real trick to auction house success is knowing what you're doing before you begin, so that those quick decisions can be made on the basis of clear facts you've established beforehand. Make sure you've visited every property you consider bidding on. Make sure you know exactly how much you can spend and also what each property is worth in real market terms - you don't want to snap up what looks like a bargain only to find out later that you could have purchased it more cheaply through an estate agent. Find out about planning issues and local development initiatives which may affect the properties you're interested in.

Once you're armed with all this information and resultant strategy, trust yourself. Many people panic at auctions because everything seems overwhelming. If you know what you're doing, there's no need for that. Remember that, if you don't break your pre-set rules, you have nothing to lose. Don't let yourself feel compelled to make some kind of deal. If no suitable opportunities arise, walk away - there will always be more auctions.

Taking Part

These days, many people approaching a live auction for the first time have some prior experience from bidding in auctions online. The basic processes of a live auction are similar, but the auctioneer's skill is focused on building up a sense of pressure and urgency. This can be entertaining to listen to, but when it comes to making decisions you need to resist it as much as possible. Remind yourself that the pressure is just an illusion and that what's really happening is much the same as what you've experienced online.

Because of the value of transactions in property auctions, you will be asked to register before you can bid, and you will usually be asked to put down a deposit or provide alternative means of proving that you have sufficient funds. You will then be given an auction paddle or other marker which you should raise when you wish to bid. Take a seat and listen to the auctioneer. Remember that you don't need to bid immediately as they will take their time before closing the sale. Let other people put in the first few bids and wait until you have an idea what sort of price the property you want is going to sell for.

If you find yourself bidding against just one person, try to put your bids in quickly, though only up to your established bidding ceiling. Doing this can undermine the confidence of an opponent who is less well prepared. You may also find that property developers drop out of bidding wars some time before you reach your limit - as business owners, they'll have taxes and overheads to pay which you don't have to worry about, effectively giving you more buying power and the option of securing better deals.

Closing An Auction

Once you have made a winning bid at auction, you will be required to close the deal immediately. This means that you will have to provide identification (normally your passport or driving license) and a cheque for ten percent of the final price of the property you're purchasing. You will be required to pay the rest of the money within twenty eight days. The auction house will take care of the paperwork for you, making the whole process very quick and simple.

Bidding at a live auction can be nerve-racking, but it's much simpler than most people anticipate. As long as you're sensible and remember your limits, it's a great way to get yourself a bargain deal.