How to Decide on a Bidding Plan at Property Auctions

When planning to buy property at auction, it’s helpful to create a bidding plan in order to have the best chance of securing a property you’re interested in, while not blowing your budget.

It’s important to undertake your own due diligence to understand what an appropriate price would be to pay for the property. In this guide, we’ll cover how to create a bidding plan and prepare for a property auction.

Understand guide prices

For starters, you need to understand guide prices. When browsing auction listings, you should see a guide price displayed alongside each lot. Property auction guide prices provide an indication of what experts believe the property is worth. This is decided by the auctioneer or auction house based on their own research.

It can provide prospective buyers with a ballpark amount of where they will likely have to bid in order to secure the property. And it can also help buyers budget and pace themselves throughout the auction. But keep in mind that a guide price is still just a guide.

A property could always sell for more than its guide price. This often depends on whether a lot proves popular enough to provoke a “bidding war”. Alternatively, an auctioneer may reduce the guide price to start the bidding at a lower amount due to little interest.

View the property

If there’s a property you’re interested in, it’s always recommended to view the property before it goes under the hammer. This will give you a better indication of the condition of the property, which impacts property values. It may also be helpful to create a checklist to use when viewing properties at auction.

Research recent sale prices and the local area

You need to take some time to properly evaluate and research recent sales prices in the property’s location. It’s also helpful to understand the ins and outs of the surrounding area and the local property market.

Factor in differences between the property you’re interested in and other properties in the area, and find what similar properties are selling for. This can all help you determine its proper market value.

Arrange a survey and valuation

Getting a survey undertaken can help you find out if there are any bigger problems with the property like structural issues. You can also get an independent valuation to help you further check the property’s value.

Consider taking a builder to the property as they could provide advice or estimations on work that you would need to get done on the property. So, this would also allow you to factor in any renovation costs.

Hire a solicitor

It’s always recommended to hire a conveyancing solicitor to look over the legal pack prior to an auction. This can help you avoid any surprises later on if you end up securing the winning bid. It can also allow you to better understand the property and what could impact your ability to use and sell the property.

Decide on your maximum price

Before an auction or putting a bid in, use all of the information that you gathered to help you decide on a maximum price. You need to set a clear budget and don’t exceed this.

Make sure you also factor in all of the relevant costs in buying the property, in addition to any refurbishments. And if you need to get property auction finance in place for the purchase, make sure you can do so for the amount of your maximum bid.

Get ready for the auction

It may be helpful to attend other property auctions beforehand to see how they work. Whether it’s in person or online, pay close attention to how the auctioneer runs the bidding and what interested buyers are doing.

This can help you build your confidence and allow you to start thinking about how you want to bid and what strategy you should have going into the auction.

Make a bidding plan

Research different bidding methods for property auctions. There are certain techniques that can help give you a better chance of winning. For example, if you have a clear idea of the property’s value and your highest bid sits well above the guide price but not at an unreasonable level, you could go in with that one single figure and see what happens.

Or you may decide to be the first to start the bidding. This could deter other bidders as it shows you clearly have your eye on it. Another technique is to hang around and avoid playing part in a bidding flurry, which tends to happen early on. You instead wait to put a bid in later on to ideally avoid being part of a bidding war.

What works best will depend on how popular the lot appears to be and what you’re most confident and comfortable with, but most importantly, remain calm and rational throughout the auction.

In summary

There are a number of things to do before bidding on a property at auction that can help you determine your strategy and maximum price. Make sure you thoroughly do your research and factor in any professional insights you receive from solicitors, surveyors and tradespeople to make an appropriate bid. And don’t let yourself get carried away!

But also, don’t lose heart if you end up missing out on a property as it’s important to stick to your bidding plan and maximum price. You have to be prepared to walk away if the bidding goes too high. And the more research and due diligence you do, the more confident you can feel going into a property auction.