below market value Archives - Dr Javaid Kiyani

Before you buy any property from auction, you need to do some serious research. Here, we will discuss some useful tips any auction property purchaser should use when considering an auction property.

For a much more detailed discussion and the mechanics of buying from auction, be sure to read Your Property Bible.

Prior to the auction, you need to secure a copy or catalogue of the property lots that will be auctioned in that particular auction house. It may be worthwhile to obtain several catalogues from local auction houses so that you can compare property specifics. A lot of the auction houses charge a small fee if you wish to be sent catalogues periodically. However, you may not need to pay for your catalogue if you ring the auction house and request a catalogue every time you wish to attend.

Once you have the auction catalogues to hand, you should scan them for properties that suit your preference both in terms of guide price and the location of the property. You should always visit an auction property prior to bidding as I’ve seen some properties which look ok from the outside but have been completely trashed on the inside.

On the day of the auction, you need to acquaint yourself with the mechanics of that auction. Usually, there is a need for prior registration if you wish to participate in the bidding. Be sure to take in any identification documents with you. You will not be allowed to bid without proof of ID. You will also need to take in a cheque book or bankers draft for any deposits that may be required.

Never arrive late. This is very important because you will need time to familiarize with the auction room and the mannerisms of the auctioneer. On arrival, always check the list of properties for any changes or alterations. It is not uncommon for properties to be removed from auction proceedings prior to the auction.

If you are interested in bidding for any particular property, you should check any legal paperwork the auction house may hold for that property. If there are any conditions of sale that you are not sure about, it is imperative you speak to the legal team dealing with that property sale – you should be able to speak to them prior to bidding for your lot.

Double check any terms and conditions of the contract governing the schedule of payments. It is extremely important to make sure that you have available funds to purchase any one property in accordance with the terms and conditions of that lot – some lots may require completion within 14 days; I’ve been to auctions, where the conditions of sale have changed in between the catalogue being printed and the date of the auction; in such event the auctioneer will let you know before you’re asked to bid for that property.

If you feel that there maybe a need for a mortgage, it is important that you arrange this before attending the auction. Otherwise, you will risk losing any deposit you put forward for a property that you are subsequently not able to raise finance for. The mortgage will obviously be dependent on a satisfactory survey of the property – you will need to pay for this understanding of course that you will lose this fee if you don’t get the sale.

If there are any properties that you are interested in, it is important to remember that an offer can be made before the auction. The seller will consider the offer and get back to you if he wants to proceed on that basis. In the event of your offer being accepted, the property will be removed from the auction process and you will be obliged to complete on the purchase.

If you are to bid, make your bid clear so as to prevent confusion on the part of the auctioneer. Whenever bidding at auction always have your maximum possible bid in mind and don’t ever deter from this amount. Your maximum bid will take into account any works that you feel need doing to the property and also any profit levels you need to clear.

If a property fails to sell at auction due to the reservation price not being met, you should consider making a bid directly after the bidding has stopped.

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Auctions are still a popular form of obtaining (below market value) bmv property, however, you need some basic knowledge of auctions and the way they operate before you should ever consider buying property from auction. Learn more about buying from auction here:

One of the most important jobs of a property investor is to source below market value property. A below market value property is a property that you have bought for less than its value if it was to sell on the open market.

For example if you were to purchase a £100,000 property for £80,000 you will have bought it at 20% below market value. This property will have £20,000 of equity which is yours to keep. Furthermore, since the property is below market value, there’s a strong likelihood that you will be able to buy it with no money down.

In other words, without requiring a deposit. Theoretically, you can buy as many properties as you desire without ever using any of your own money whatsoever! If you are able to do this repeatedly, your business will experience phenomenal growth.

In contrast, if you were to buy a market value property, the traditional routes of property purchase would demand a deposit of anything from 5-10%. As a Property Investor, if you were only to buy property at market value, you would soon run out of money and your business would come to a stand still.

This is why it is so important for a Property Investor to invest as much as possible in below market value properties.

So, how do I find below market value properties?

Regardless of what people say, I find estate agents to be a valuable resource when it comes to buying below market value property.

By being persistent, and proving to an estate agent that you are a serious investor, you will have them ringing your phone of the hook with potential deals. Initially, an estate agent may pass you deals that are not below market value.

If this was to happen, thank the agent for calling you and let him know that the margins don’t work for you. However, you are still looking to buy several properties that month and he should contact you again if he receives anything.

At all times, remain polite and check with the agent at least once a week. Over time, a relationship will develop with your estate agent and he will start passing on good property leads which meet your investment criteria.

Once you have completed on a couple of deals with your specified agent, you will find that he places you on his preferred list of contacts. This is where you need to be to receive the great deals.

Ideally, you should be a preferred contact for several agents in your area. This way, you will ensure that you will hear about any potential property deal first.