Sticking To A Budget At Auction
One of the biggest learnings people have about property auctions - often through bitter experience - is the importance of sticking to a budget.
No matter how disciplined the individual, many people have succumbed to the temptation to bid just that little bit more (and then a little bit more, and then a bit more again...) when going after a property at auction.
How can you stop this happening to you?
One way is to write down on a piece of paper before you attend the auction the absolute maximum figure you are prepared to pay. Alongside that figure write the deposit you will need to pay there and then, and also work out how large a mortgage you will need to pay that price. Look down at that paper all the time during the auction - it will help keep the cost tangible to you during the auction and hopefully stop you getting carried away.
If you are not very disciplined when it comes to matters financial, then consider taking someone along with you: someone who can have a word in your ear if you get tempted to go above your budget, and physically pull your hand down if necessary if you are getting carried away!
Of course, hopefully the property you are after will not attract much attention and so this will just be a hypothetical. Although it is tempting to bid straightaway on a property, sometimes people respond merely to the interest of others, so try not to start bidding until relatively late in the process (though obviously before the hammer comes down!) - there's nothing wrong with being a relatively late 'new bidder' into the process.
If you get tempted to spend more money, also try to keep in your mind what that means: a higher deposit needed, a higher mortgage within 28 days, more tax in the form of stamp duty to pay, less budget available to redecorate or make more significant changes to the property, more value you will need to add to the property to make a profit yourself in turn, and so forth. Keeping the cold, hard facts front and centre of your mind during the bidding process can all help you to keep your cool and not exceed what you think is a reasonable price for said property.
Good luck, and remember to stay cool and collected at the auction. One other thing to say, as well as sticking to a budget, is to remember to stick to bidding only on the properties that you have been to see and done enough research on to feel confident about (eg had a survey done). One of the other things about property auctions that can also lead to a lot of regret is when people are disappointed they didn't get the property they really wanted, so get a little reckless and start bidding on other properties, sometimes just on a whim, in order to feel that they haven't had a wasted journey to the auction. Of course, this is absolutely not something you should do as it is so incredibly risky buying a property on a whim without having properly researched it - as you never know what will confront you when you open the door, and it could lead to a lot of regret!Last update: 04 May 2015
More first-time house buying articles:
- Things to Note when Buying at Auction
- Pros and Cons of Living in a Flat
- Give Your Home New Life
- What is a buy to let mortgage?
- How Does Interest on a Mortgage Work?