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Property Auction Advice: A Guide to Profiting at Auction

by

Paul K. Carder

Selling your property at a property auction rather than holding on to it and waiting for prices to rise is a very real way investors can make money. It s becoming an increasingly popular and profitable exit strategy.

Although Buy-to-Let is a great long term strategy, today it carries several elements of risk and many people are turning to a way of thinking where you can realize real money in the short term.

The most effective way to do this is to buy houses and sell them at auction for profit. This goes against the majority of people s perception that property sold at auction achieves below market value, and that it s where people go to buy cheap and sell on for profit. In fact, many properties sold at auction achieve 10% more in auction than on the open market with an estate agent.

However, there are a couple of basic principles you have to follow in order to maximize your profit if you are going to use this strategy. You also need to understand how buyers work, what appeals to them, and the psychology of selling at auction.

It s hard to believe, but the more distressed a property looks and the more potential people feel it has, the more it will achieve at auction. Buyers want properties that need repair, modernization or refurbishment. A property that is cleaned and cleared without looking too nice, even boarded up, will appeal to the type of buyer that has money to spend.

Besides looking run down and with potential, the property also needs to have a low guide price. This is where the psychology of buying at auction comes in. Properties that have a low guide price not only gain a lot more interest from potential buyers, they also sell for a lot more money. Even professional property investors can t help but get emotional when it comes to property. At an auction where there is a lot of interest in a particular property it s easy for buyers to get carried away and spend more than they would if they had the time to negotiate via an agent.

Auctions are often frequented by amateur investors, acting on the so-called Sarah Beeny effect. These buyers have watched television programmes where people have bought cheap, refurbished and sold on for profit. These are the people at auctions who think that if everyone is bidding on a property, it must be a bargain.

So where do you look for properties to sell on at auction for a profit? You can find property the same way that everyone else does the Internet, estate agents, networking and local press.

The key here is to ignore the price when looking for property some property will still sell for 50% below asking price and property will only ever sell for what someone is willing to pay for it. In addition, when making an offer consider the price you want to pay and then take off a further 10%. Finally, never rely on what you are told. If an agent tells you there is a problem with a property, do your research and come to your own conclusions.

If you apply these tactics, just imagine what you can achieve.

How do you sell your property? Do you buy it and wait for prices to rise or are you quick, like me, and try to sell it as soon as possible? Please let me know in your comments!

Paul RibbonsProperty investment expertAuthor of Hustle your way to Property Successhttp://paulribbons.comhttp://www.paulribbons.com/the-book/

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