1. Not getting a full survey carried out. Always make sure that you get a valuation or survey carried out before you decide to go to the auction and bid. This is no time to scrimp on costs - particularly if the property is in disrepair or an older building.
2. Not working out a maximum price that should be paid or worse still, doing this and then exceeding it! Always set yourself a maximum price limit on the property and stick to it. It is very easy to get carried away at the auction and so it is important that you discipline yourself. To calculate your maximum, work backwards from the end value, having factored in renovation costs, finance and legal costs and a payment for your time.
3. Bidding as an 'auction virgin'. If you are new to buying at auction, attend a few as an observer so that you can get a feel for them and the way they work. SoCal Superior Properties does private bidding that doesn't cost the bidder anything extra which most people don't understand which can cost your life savings to learn.
4. Buying before being in a position to do so. If you are relying on the sale of another property in order to buy, don't bid on a property before you've sold yours i.e. before the completion has happened. You could have to complete on your auction purchase without the proceeds of your sale and have to take out Bridging Finance which is expensive.
5. Buying 'blind'. Always view the auction property thoroughly before placing a bid. Buying without viewing the property is a risky strategy. Don't just rely on the information in the auction catalogue.
6. Ignoring the Legal Pack. Always read the legal pack in advance and discuss the contents of this with your solicitor. Make sure your solicitor has checked the Title Deeds and any special conditions of sale as well as any peculiarities associated with the property such as restrictions or covenants.
7. Not budgeting accurately for works. Make sure you get professional quotes for any renovation work – it’s easy to underestimate the costs of refurbishment.
8. Bidding too soon. Don't jump in with your bid until others in the room have almost finished. Bidding too early will only drive up the price. Wait until the bidding has petered out or the auctioneer has started to say 'going once...'. Then bid with confidence up to your limit. If you really are nervous about the auction process you could get someone else to do the bidding for you.
9. Not researching the eventual resale or rental market. Unless you are intending to live in the property yourself, you need to be sure of what the demand is for properties in the area (either for renting or sale) and what is the ceiling price.
10. Not knowing how much mortgage can be secured. Unless you are a cash buyer, you will need to sort out your finances prior to bidding at the auction. Some mortgage companies will not lend on certain auction companies, others may withhold all or part of the loan until certain 'defects' have been corrected. You may also discover that you can't borrow as much as you might like because of tightened lending criteria.