Liverpool, UK Property Auctions: Pre-Viewing, Solicitors & The Neighbours
FREE PDF Download: Get the Tricks of Buying & Selling at Property Auctions
House Auction Tricks of the Trade
This excerpt is from a chapter in the book, THE TRUTH ABOUT PROPERTY, written by NRLA trainer, Henry Davis, www.henrydavisproperty.com.
The first thing you need is the right solicitor. I always advise clients I mentor to use a solicitor who regularly deals with auction transactions as those solicitors will understand the dynamics of an auction legal pack and are therefore better equipped with knowledge on the auction process. I recommend searching keywords such as, ‘Auction Conveyancing’ or ‘Auction Solicitor’, or have a look at the adverts in any auction catalogue. Never try to save money on a bargain price solicitor; they are over-burdened with too many clients, and a total disaster in my experience. When you pay for solicitors, you definitely get the service you pay for. This is obviously true for most services, and in the legal profession, more so than any other industry, the fee payable seems to have such a direct correlation to the service levels received.
With regards to allowing yourself more time to do your research, the clock starts ticking once the catalogue has been released. Giving yourself more time will give you a strategic advantage, and I start my research before I attend a viewing by doing my own unofficial viewing.
I start by checking sales price history on the Land Registry and the usual places online, but first, on EIG Auction Data. The other key issue here is that I am using previous auction sales as my sales history data, rather than using data from a conventional sale.
I then check that it’s not an Article 4 Direction (a governed rule that will restrict planning permission for structural refurbishment, for example, turning the property into an HMO), or not listed, and then have a look at my local LPA (Local Planning Authority) Planning Portal, to see any planning history, including any floor plans from previous planning applications. I also check the EPC Register (Energy Performance Certificate) for floor plans, although they are not guaranteed to be accurate.
Once I’ve done my background data research, it’s time to think about viewings. But, why would you wait for the official viewing, when you can do your own?
Personally, I don’t like the rushed feeling of the official auction house viewings. Although we’re spending considerable sums, we’re all herded in quickly with no time to really understand the dynamics or structural problems inherent with the property. It’s not in the auction houses’ interest to give you enough time to find issues, as this reduces bidding demand.
I like plenty of time to complete my due diligence before the official viewing. I prefer to do my own (unofficial) outside-only viewing and I do this for the following reasons:
- To give myself time to speak to the tenants and the neighbours.
- To allow myself time to uncover any outside structural issues or Japanese Knotweed
This will help me get ahead of the competition and enable me to make better buying decisions. To start my due diligence process, I will drive to the property and walk around outside, taking quality photos of the external area and structure. I spend plenty of time looking closely for any faults, including cracks, bendy lentils over the windows or bulges in walls, dodgy roofs, and any leaning buildings which may suggest subsidence. Without the rush of an official viewing, by doing this I am able to find any obvious faults in the structure and the grounds, such as signs of recently cut branches hiding Japanese Knotweed in the garden areas.
One of the most important parts of my due diligence is trying to find out the reasons as to why it’s been sold in the auction. To find out this information before the official viewing, my unofficial preview is also my chance to talk to the neighbour or tenants in situ as they will often know the full history about the property, and in many cases, the reason as to why it’s been put into the auction. The neighbours, too, often know the full history, and if you have a problem knocking on a stranger’s door asking for help, then I respectfully suggest buying at auction just isn’t for you! Another simple idea is to knock and introduce yourself as the potential future buyer and speak to the tenants. Sitting tenants are a valuable source of information and more likely to be in when you make your unofficial viewing, as they are often out during the official auction viewing.
The idea here is to do as much due diligence as soon as the property is listed, making it unrushed unlike the auction houses’ organised viewing. I view the building as soon as possible after catalogue launch so that I have more time than the competition to work through my options, and this will give me extra time to bring in further professional help, like a structural engineer, at the earliest possible stage. The whole process is weighted against you carrying out due diligence in a timely manner, so speed of your work is vital.
Learning from my previous mistakes over the years, I believe the faster I needed to make a buying decision, the higher the chances became that I made a ‘bad’ decision.
Once back in the office, I do a viewing debrief, and then blow up the photos on my computer to have a closer look at anything which appears suspect. I have a good look overhead on ‘Birds Eye View’ and look closer at quality photos of all walls and the roof, zooming in on any areas which I feel may need further investigation.
Then, if anything is a potential problem, I will send these photos to my structural surveyor for comment. As mentioned before, it’s key to be ahead of the competition and start as early as possible. More time gets you a better assessment on the potential risks, rewards and costs associated with remedial work, so you don’t feel rushed into making decisions without all the information.
I repeat again as it’s so important, and will help improve your valuation knowledge, watch live local auctions in full, so you can see what’s hot and what’s not. Record the level of interest and number of bids on each lot, then review this data to establish bidding, price and yield trends. This is more effective than reading the sales history data on a screen after the live auction has ended.
Henry is the CEO of We Buy Any House and Genii Developments Ltd and a developer for over 32 years. He is also an accredited Property trainer for the National Residential Landlords Association.
Copyright, Henry Davis. www.henrydavisproperty.com