#16 The Flip to Auction Win-Win Situation

In today’s episode, David discusses how you too, can be in a win-win situation, when buying houses at auction. Being very experienced in the property industry and in auction houses, David shares us his secrets to success and what you need to know before an auction? Find out, what to look into when buying in an auction? And what do you do when you talk to an auctioneer? There are a lot of things to know to master the art of buying and selling at auction and in today’s episode, David shows you exactly what to do. KEY TAKEAWAYS Pre-auction. So you have a property. And you will want to sell it with an auction house. What do you need to do first? You have to think in the buyer’s perspective. Does your property have cracks? Is it worth checking? If you are a buyer, would you consider buying this property? How much does it cost if I buy this property? Is it neglected or a run-down? These are just examples of the things that you might want to consider before placing your house in an auction. What you want is to do a minimum amount of work with a maximum amount of profit in less time. Getting in the side of the Auction House. The auction house will have a representative that will talk to you. The first meeting will be casual. However, if they see an opportunity to earn money, they will work with you. David discussed here how to say the right things to the auction house representative. Firstly, you should talk regarding value. But you have to listen more than you talk. Always remember that the auction house is an expert on these things. They have a lot of knowledge of the place, what works and what does not work. So you have to listen closely to their advice, and take it if it benefits both of you. It is very important for your relationship to move forward with the Auction house. Respect. The Guide Price. This is the price that appears to be intended to give to the prospective purchaser of the property. It is a rough guide to what the property will sell for. However, the guide price has a very different purpose. The guide price is to generate interest in the lot, to generate interest in the lot. Guide price has to be low. The Reserve Price. The reserve price is processed by the vendor. And this price below which they do not wish to sell the house. It is bidding. If it does not reach the reserve price, the Auction house will not sell the house. It is accepted that the reserve price should not be more than 10% higher than the guide price. First 15 lots in the auction. Now, on building your relationship and credibility with the auction agent, you need to ask for their help. Why? You need to be in the right place in the auction catalogue. It is very important. Ideally, you need to be in the first 15 lots in the auction. Why? Because you need your property offered when the room is full and bouncing with property investors. It will make you more money. The auction house also knows that the busiest time of the auction is doing the first 30 lots. So their vote of confidence and they put you in the first 15 to 30 lots is what we need to confirm and expectations for the sale. Buying the house before the auction. The auction house cannot put your house in the catalogue until you have exchanged contracts on the purchase. The exchange will proceed once you've exchanged. Then you can push on quickly. Not because then you have a legal interest in the property. You need to work with joint venture Finance if you have the money yourself. Find a joint venture partner who can help you. Find the bridger. Bridging company will take about 20% off the profit. So it might be cheaper for you to work with a good Bridger. Monitor the viewing and downloading of the legal packs. What is a legal pack? It is the total disclosure of the condition of the house, total transparency. Be friends with the admin team at the auction house. Hope that they will talk to you about the viewing and downloads of the legal packs. It will tell you it is good news or bad news. It will allow you to decide whether or not you have to pull out your property from the auction. The ability to withdraw from the auction. As given above, there will be times that you will need to withdraw your property from the auction. You have to have a term in the contract that you signed with regard to withdrawing your property in the auction. The terms and cost are stated in the contract. You will have to discuss that with the auction house representative before they print the contract. You will need to have a say in the cost of the deal because sometimes they charge too high. All you need is to tell them about it so they can consider the deal. BEST MOMENTS“Earn your margin but do not do any work and cut the time down to a tenth.”“The thing is you have to leave a profit in the deal at the end.”“Make sure you listen more than you speak.”“I understand, Mr Auctioneer. You will have done some administrative work. You will have printed the catalogue and probably done some viewings. My property would be in the catalogue. You would have gone to my property but I can’t afford to pay you 2000 pound + VAT to pull my house out of the auction. I acknowledge you done some work. I think we need to amend that figure. In those circumstances, I'm happy to pay you 500 pound plus VAT at maximum. How do you feel? So if you try that, there’s a script for you.” ABOUT THE HOST David is a property expert with over 25 years’ experience and his own portfolio of 26 units. His current rent roll is in excess of £10k per month. He is also a partner in a Deal Sourcing and Packaging business in the North West of England and has sourced over 250 properties for investors since 2004. In recent years he has, by necessity, had to develop an expertise in LHA strategies. This area is increasingly becoming a niche for him and he enjoys empowering other landlords by sharing the knowledge he has gained. The ultimate purpose when sourcing properties in this sector for investors is to minimise risk while maximising profit. He has had to find answers to the challenges of Tenant Find, Management, ensuring rents are paid and the transition to Universal Credit. These are strategies he uses in his own business and also on behalf of investors. His investor clients regularly achieve annual gross yields of over 20% with high occupancy rates and voids resolved, sometimes within hours. CONTACT METHOD David’s LinkedIn David’s Facebook