How to Buy UK Property from AUCTION | Samuel Leeds
Hey, Samuel Leeds here, and in this video
I wanted to give you the pros and the cons of buying properties from auction. So if you’re
interested or considering buying properties from auction, then stay tuned. So overall
I would probably not advise buying from auction specially if you’re just starting out. And
if you’re going to buy from auction, then definitely watched the whole of this video
because I’m going to give you some tips at the end about how to buy from auction if you
do. So the pros, the first pro to buy from auction is usually if someone’s selling their
house in an auction they’re normally quitting motivated and we know that the best deals
are from motivated sellers. So just put your house on an auction, you’re probably quite
motivated, so it is possible to pick a bargain properties from auctions because you’re dealing
with motivated sellers. Second pro is there’s no messing around. You’re
not going to get into a bidding war that drags on later. You’re going to go down to the auction.
You’re going to put your best offer forward. If it’s not accepted, fine. If it’s accepted,
then you’ve got a certain short time period to complete. You’re not going to get gazumped.
No messing around straight to the point which you know is quite an attractive aspect of
buying from auction. And then thirdly is it’s quite fun. Going down to an auction, there’s
a lot of excitement. It’s quite satisfying when you win an auction. They’re the three
pros. The cons are in auction, it’s usually flooded with properties, not always, but properties
that have got something wrong with them. Now that’s okay if you’re experienced and you
can figure out what’s wrong with the property and you can then add value, but if you’re
just starting out and you’re not that wise to property, you can get burned by buying
a property. You can’t just pull out, you can’t go, oh
actually the property has got something wrong with it, so I want to pull out. If you do,
you’re going to get fined badly. So problem properties is definitely a con if you don’t
know what you’re doing. Second con is even if you win at the auction, you’re still the
loser. In fact, the winner of an auction is usually the biggest loser of them all because
imagine “Who here is the loser, who’s prepared to pay the most money for this pillow?” That
could be if there’s 200 people in a room and you’re the person who is prepared to pay the
most, then you’re the loser. So the winners are the losers, and the losers are the winners
in a way from auction. So that’s another con. You’re the person who’s about to pay the most.
So again, unless you’re really wise and you know that you’re going to pay that amount
because you’re going to have to add serious value. That’s another con. The third con, and possibly the biggest con
and the reason why I advise against auctions the most for people that start now. The whole
purpose of an auction and the way it’s wired is it’s all about emotions. And what they’ll
do is they’ll tap into emotions. They’ll play you off against other people to try and manipulate
you into paying the absolute maximum price you will for that property. I really believe
that when emotions are high and you’re excited and your emotions are high, intelligence is
low and that’s exactly what they want to happen. I mean yeah you’ve probably heard in my videos
before, I say buy with formulas, not feelings, auctions often all about feelings. They trap
you because what happens is because on the day, if you buy it, you’ve got to go ahead.
Then what happens is before you go, you’re going to do your research. You’re going to do a survey on the property.
You’re going to probably invest time and money researching the property which means that
you’re now invested. So when you go to the auction, you’re now invested your energy and
your money’s invested and you really want that house. You’ll end up paying over the
odds for it because you’re already emotionally attached. What happens at auction is a lot
of people break the rules of not being emotionally attached, of using formulas, not feelings.
So the key is be very, very careful if you’re buying from auction. Often people think, oh,
you know, you buy bargain properties. Do you buy from auction then? Which is a bit of a
myth, a bit of a misconception. I’ve actually got friends and what they do is they buy properties
that are run down and need a lot of work doing and they buy them straight from high street
agents or from right move. They do nothing to them at all. They’re rundown
houses apart from board up the windows and mud them up a bit and make them even worse.
They then put them on an auction and they sell them for more at an auction that they
paid for them from the high street. So getting bargains from auctions is actually a little
bit, can be a little bit of a myth. So I’m going to give you a few tips if you are buying
from auction, on how to do and what to do. Firstly, the castle that we own, we bought
from an auction. But if you’re going to go into an auction, have the maximum price that
you’re prepared to pay for that property in mind before you go and do not go a pounds
above that price that you’ve said. Do not go a pound above it. Decide in the cold light
of day, what you’re going to pay and then do not go a pound above it and that way you’ve
got to be super disciplined. That’s the first tip or piece of advice. Second, which is really important is by pre
or post auction, not actually in the room. And why would you do that? Well if there’s
a property that’s going to auction, workout what you’ve prepared to offer it and then
just put that forward to the agent. Just say, “I’m happy to buy this before it goes to auction.
This is what I’m prepared to pay for it.” That’s a very good way to pick up properties.
Post auction is even better because if you imagine how someone would feel if they put
their property on auction and they’re just desperate to just get rid of it in one foul
swoop, there was 200 people in the room, let’s say, and it didn’t sell. It didn’t even hit
the reserve price. That seller is going to have gone from motivated to almost desperate,
very, very motivated which is a good time to then come in. Find properties that are
not sold at the auction, then come in post auction. That’s another really good way to
buy properties. And then a final little tip around auctions
that I’ve got is if you’re not looking to buy properties but you’re looking to package
and sell properties ’cause maybe you’ve got no money. A little tip that came from my friend
Kenneth Hahn, he said that” If you’re looking for people to sell properties to, the best
place to find them is from an auction. Because if you go to an auction, everyone went to
an auction because they’ve got money, because they are wanting to invest in or to buy a
property.” There’s only one winner per property obviously but most people at the end of the
auction have not bought anything and they’re probably feeling very disappointed that they
didn’t buy anything, that they missed out. So you’re in a room filled with people who
want to buy property, who are really keen and have the money. Who are now really disappointed
because they weren’t able to ’cause they got gazumped by someone else. What a perfect opportunity to go up to them
and say, “Hey, sorry you missed out. I’ve actually got a deal. If you’re interested,
I can drop you an email if you’ve got a card.” What an opportunity to find investors to sell
them your deal? So there’s a little golden nugget as well for you guys. Anyway, hope
that’s been helpful. Please do share this video if you’ve enjoyed it. Don’t forget to
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