Property Auctions: The Place to Look for a Bargain Property
Parmdeep Vadesha
September 25, 2008
Are you a first-time property investor struggling to get your foot on the property ladder? Or are you a seasoned investor set to expand your property portfolio with more bargain finds? Prime properties at prices well below market value are easily available – if you just know where to look. And a good place to start your search is by checking out a property auction.
Currently, tens of thousands of properties are sold at auctions each year with many sold for up to 40% less than their market value. Why so cheap, you may ask. Most of the properties are repossessions and distressed sales. It means that these properties were previously owned by homeowners who defaulted on their home mortgage payments.
With the credit crunch, continued interest rate hike and escalating rise in the prices of petrol and basic commodities, many homeowners unfortunately can no longer keep up with the monthly mortgage payments on their homes. Thus, many of their homes end up being repossessed by the banks and financial institutions.
Since these lending houses are not in the business of property investment, they would rather get these properties off their hands to convert and recoup their investment back to cash. A sizeable amount of these properties are sold at auctions. Thus, heading to your nearest auction house might just be your best bet to purchasing your next bargain property investment.
Auctions can be a heady and exhilarating experience. For many first timers, however, the auction process can be quite daunting. An auction is not a gamble or a game, it is an investment. That is why you should keep in mind that your goal at an auction is to come out with a property bought at a price low enough to be able to resell for a profit. Here are more tips to keep in mind before heading out to your nearest auction:
Make sure you are absolutely sure of your ceiling price before you make your bid. Keep in mind that if you are the last person to offer the highest bid and the reserve has been reached, the property is yours. Once the hammer falls, the sale is final so make sure you know what you are getting yourself into.
Remember that there are some costs that you have to pay right away upon securing the winning bid. You need to pay 10% of the property´s price on the auction date itself and the balance usually 28 days after.
It is advisable to go to at least one auction before actually participating in one. That way, you will find out how an auction works and the next auction will not be so daunting.
Even before you go to the auction house, set a maximum price for yourself and do not go beyond – at whatever cost. Remember that your ultimate goal at the auction is to walk away with a bargain property, not to buy the property at whatever cost.
Currently, tens of thousands of properties are sold at auctions each year with many sold for up to 40% less than their market value. Why so cheap, you may ask. Most of the properties are repossessions and distressed sales. It means that these properties were previously owned by homeowners who defaulted on their home mortgage payments.
With the credit crunch, continued interest rate hike and escalating rise in the prices of petrol and basic commodities, many homeowners unfortunately can no longer keep up with the monthly mortgage payments on their homes. Thus, many of their homes end up being repossessed by the banks and financial institutions.
Since these lending houses are not in the business of property investment, they would rather get these properties off their hands to convert and recoup their investment back to cash. A sizeable amount of these properties are sold at auctions. Thus, heading to your nearest auction house might just be your best bet to purchasing your next bargain property investment.
Auctions can be a heady and exhilarating experience. For many first timers, however, the auction process can be quite daunting. An auction is not a gamble or a game, it is an investment. That is why you should keep in mind that your goal at an auction is to come out with a property bought at a price low enough to be able to resell for a profit. Here are more tips to keep in mind before heading out to your nearest auction:
Make sure you are absolutely sure of your ceiling price before you make your bid. Keep in mind that if you are the last person to offer the highest bid and the reserve has been reached, the property is yours. Once the hammer falls, the sale is final so make sure you know what you are getting yourself into.
Remember that there are some costs that you have to pay right away upon securing the winning bid. You need to pay 10% of the property´s price on the auction date itself and the balance usually 28 days after.
It is advisable to go to at least one auction before actually participating in one. That way, you will find out how an auction works and the next auction will not be so daunting.
Even before you go to the auction house, set a maximum price for yourself and do not go beyond – at whatever cost. Remember that your ultimate goal at the auction is to walk away with a bargain property, not to buy the property at whatever cost.
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