If you're into bargains, you just might find a house auction an excellent place to start. There's no guarantee that you'll be making a killing. However, if you set about it the right way, you could well wind up with a home at a significantly reduced price, or a nice little rental property that will turn a considerable profit once it has been fully smartened up.
An auction is often the first place that most people turn to when they are looking for affordable properties. While there are numerous reasons why a property is put up for sale at an auction, the most common reasons are:
* The seller wants to quickly move to a new place
* The previous owner of the home has accumulated debts, or went through a bankruptcy or a repossession
* A housing association has decided to get rid of a property by selling it through auction
Compared to the usual method of acquiring property, buying at auction is a proposition that's somewhat different. Once the hammer goes down you have already made a deal. Backing out is a no-no. Right there and then, you will be required to sign a contract, fork out a ten per cent deposit and complete the payment within 28 days of signing.
Therefore, before you go to auction and make a bid, you first need to get your act together and amass as much data as you can on the property you are interested in. You have to sort out your finances beforehand, as well as perform local searches and a survey. When you are sure about your property choice, instruct your surveyor and solicitor to discuss matters with your lender. You should also have a definite idea of the maximum price you are willing to go. Settle on a price limit, and make sure that you do not exceed it. After you have done these, you are ready to make a bid.
If you are going to an auction with the objective of finding a property that you could turn into an earner, there are some important things you need to take note of. When choosing a location, here are the things you need to take into account:
* What to look for: transport links, schools, hospitals, sports facilities, shops, restaurants
* What to note: social mix, local crime rate, parking, garbage collection, council tax rate
* Signs of growth: opening of new restaurants, bars or other business establishments
* The type of people moving in
An attractive property located in an area that's preferred by many will ensure property investors strong rental demand and therefore continuous tenancy. If you want to take advantage of as much capital growth as possible, the first rule is to purchase property in a growth area. Experts sometimes consider suburbs situated up to 10 kilometers from a city's main business district a growth area.
As the benefits of obtaining property at auction become public knowledge, more and more people are getting in on the action. The public's attraction to auctions makes sense as it is always a good decision to acquire a property at bargain price. For property investors, going to auctions and obtaining property there may also be the initial step they can take if they want to build a property portfolio that would eventually provide them with a secure financial future.
By:Parmdeep Vadesha
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