On this week’s mentoring Monday, Samuel explains the good and bad when it comes to buying from auction.
Auctions allow people the chance to make purchases by offering bids. The general thinking for buyers is that they will be able to get a bargain deal. Sellers believe that they can’t miss at an auction and whatever they are selling will be sold.
First things first Samuel believes that auctions should only be attended by experienced property buyers. People that are new to property investment should stay clear and venture into more traditional methods of buying.
The Pros:
- Motivated Sellers. Chances are if people are selling at auction there motivated to sell. We all know that motivated sellers make for the best deals.
- Straight to Business. Auctions allow the process of buying property to be simple and straight forward. Once it’s sold its sold which means no moving the goal post after you’ve already agreed on a price.
- Fun. The experience of being in an auction room is one of a jovial mood. The atmosphere is fun and for the most part, people have a great time shouting bids out.
The Cons:
- Problem Properties. A common trait with auctions is that a lot of the properties are in really poor condition. Once a deal is concluded it cannot be retracted, so make sure you are certain before the place you offers and have an understanding of what you are buying.
- Nobody Wins. Just because you won the auction doesn’t actually mean you won.
- Emotions/Feelings. Being live in the auction can be extremely tense. Emotions tend to run high especially if it’s a property you really want to buy. Sometimes these emotions can be used to manipulate you so remember to purchase with formulas not feelings.
To avoid any disappoint or bad buys like most things you must enter with a plan. Know exactly how much you are willing to spend and don’t go over it.
Look into buying pre-auction or post auction to avoid getting caught up in the mind games that come with auction buying. Use the opportunity at the auction not only to make purchases but to network with investors around.
