Property auctions are great for those looking for real estate with great value for money, but it takes a different skill set to be able to make successful bids.
Here in the Philippines, property buyers have always relied on sellers’ listings on real estate portals like Lamudi or traditional media like broadsheets for information on new and old properties for sale or lease. While this has proven to be effective in most cases, there are other means to survey the market and score some attractively priced properties. One such way is attending property auctions.
The conventional idea of auctions involves priceless items like rare jewels and artistic masterpieces going “under the hammer” and high net worth individuals vying to get the winning bid. It is basically the same process for property auctions, except one does not need a ridiculously deep pocket to bid successfully. In the Philippines, property auctions are led by banks, financial institutions, and real estate brokers and they often feature properties that are priced below market value. However, one cannot expect all properties in an auction to have an astoundingly cheap price tag or be the property of his dreams.
If one is on the hunt for reasonably priced real estate, a property auction is indeed a good avenue to explore. There is a proper way to go about it, so here are some guidelines to get one ready for his first auction:
Establish the budget
Before everything else, it is best to start by sorting out the finances. One can have a loan pre-approved so he can have the full picture of his budget, and also be ready for possible down payment. Having a clear idea of the budget also sets the much-needed limit on how far a bid can go, making sure one does not go beyond his means. As a rule of thumb, take note of the starting bid or guide price of each of the properties of interest, and expect the rates to go 10 to 30 percent above.
Pick the ideal location
An auction can cover different parts of the metro or even the country, so best to settle on the location of the property on the hunt for.
Do some digging
The auctioneers would usually give out information on the properties on offer in the form of a catalog, so it is up to the bidder to practice due diligence. One can visit the place as many times as possible prior to the auction date in order to thoroughly inspect the property and get his own feelings of it. Have an architect, exterminator, or other professionals tag along to determine how much additional work needs to be done and the cost it entails. In addition, a visit to the area will grant one the chance to see the neighborhood and see if it fits the profile in mind.
To be even more equipped, one can look up or ask around for the prices that have been paid or the asking prices for similar properties in the area.
Attend a few auctions for practice
It is a good idea to expose oneself in the auction environment before doing bids just to study how fellow bidders behave and how the process goes. Like anything, it takes practice to get used to this kind of selling event.
Get there early
On the day of the auction, arrive early in order to choose a seat that is visible to the auctioneer. Use the time to touch base with the people running the show and also get some insider information from them on the property one wishes to have.
Be prepared to miss out
As mentioned, an auction is a competitive place. One cannot expect to be successful in his first go against experienced bidders. In actuality, there are more chances of missing out than actually going home with a successful bid. Nevertheless, one goes home with a better understanding of the auction process and new networks to tap for future real estate sale opportunities. It is important to remember that there are other properties to consider in future auctions.
As with anything, it takes time and practice to masterfully navigate the world of property auctions. Keep these basic guidelines in mind to get started.
Sources: Progressive Property, State Custodians, Campaign Track