Preparing for your First Property Auction

One of the biggest mistakes new buy to let landlords make when buying their first property through a property auction is to go along on auction day completely unprepared. They may have gotten the auction catalogue in advance, checked through the properties for sale and settled on one or two that interest them. They may even have gone to a few property auction days and just watched, simply so they can get a feel for the process and the atmosphere. 

What they fail to do however is the important stuff, and it’s the things they forget to do that leads to problems.

Preparation – the Bare Minimum

If as a new buy to let landlord, you do nothing else in terms of preparation for your property auction you must at least visit the properties you’re interested in buying. It’s a known fact that some landlords buy properties without checking their condition first, and while this can save time and money it can also lead to disaster.

It’s a much safer bet to visit the property you want to buy two or three times (week day, weekend, and during the evening if possible) to check it is not only decent in terms of condition but suitable for use as a buy to let property. Take a builder or surveyor with you during the day and let them roam around the property. They will quickly pick up on potential costly problems that won’t have been disclosed in the property auction catalogue. You should also make a note of the neighbourhood noise levels, parking congestion etc. at different times so that you don’t inadvertently buy a property you’ll later find difficult to rent out.

Preparing your Finances

Another important point that some new buy to let landlords forgets to prepare a mortgage in principal before auction day, and especially if they are late getting the property auction catalogue. They have their deposit ready to pay on the day and they know in their own minds that they will gain approval for a buy to let mortgage based on their circumstances, but leaving the actual application to the day after the auction means they will rarely get the funds within the 28 day deadline set by the auction house.

Property auction deposits are non-refundable which means you lose them if you don’t complete the purchase within the given timeframe i.e. normally 28 days but it can be less than this for some auction houses. You won’t be able to argue your case saying that the money is on its way or ask for an extension of the deadline – you either pay the remaining 90% of the purchase price or you lose your 10% deposit.

For this reason it is vital that you arrange a buy to let mortgage in principal before the day of the property auction. If delays occur in the completion of the mortgage through no fault of your own then a ‘mortgage promise’ dated prior to auction day may buy you a bit more time.

Remember that when it comes to a property auction the gavel going down means you have committed to buy the property you won, so make whatever preparations you need to before the day and rest assured that your purchase won’t come back to haunt you.