The Psychology Of Purchasing

Property At Auction

When looking to purchasing property at an auction, it is not just the actual process that you need to understand but also the psychology of buying property this way if you are to be successful. Property auctions can be a very emotional and daunting

environment for the inexperienced. There are many stories where people have bought property at an auction and have over paid, the property is in a worse state than they thought and even bid on the wrong property! This can have a disastrous effect on your finances and what I want to explain is how many of the common mistakes people make can be avoided if they took the time to really understand the

psychology behind it all and not just the theory. Preparation is the key – you are venturing into an environment that is probably alien to you in purchasing property.

The traditional way of acquiring property for many is through an estate agent.

There is no sense of urgency and you can visit the property several times, ask questions, do your due diligence checks and the estate agent acts as the middle man when it comes to price you want to pay.

David Humphreys

www.david-humphreys.com

By David Humphreys

The UK’s Leading Property Auction Expert

David Humphreys

www.david-humphreys.com

All this takes time and typically it could be 3 or 4 months before you actually complete on the property – more so if there is a chain involved on the vendor’s part.

When it comes to purchasing property through an auction, it is a whole different ball game from day 1 when the property auction catalogue is released to the actual sale 28 days later – the clock is ticking away. You must learn how to adapt to this faster pace in fact you should use it to your advantage!

Be totally organised so nothing is left to chance. If you are not ready then you must not buy.

There are 3 key areas that you need to master: 1. Experience 2. Due Diligence 3. Confidence

Exper ience comes though actually going through the whole process of buying at auction. You need to conquer the fear of going to an auction itself. A simple way is to firstly go to a property auction with no intention of buying.

Go through the motions of obtaining the catalogue, conducting the due diligence and viewings – all in the time scales set by the auctioneers.

The Psychology Of Purchasing Property At Auction

F A M I L I A R I S E

YOURSELF WHERE THE AUCTION IS,

THE CAR PARKING ARRANGEMENTS,

WHERE YOU GO TO REGISTER TO BID AND AFTER YOU HAVE

SUCCESSFULLY BID ON A LOT, IDENTIFY WHO IS WHO AND

EVEN SO FAR AS WHERE YOU CAN GET A CUPPA AND A

SANDWICH!

David Humphreys

www.david-humphreys.com

The next step is to go to a local chattels auction, where you can buy something for a few pounds. The whole point of this is for you to experience the physical and emotional changes when you

actually purchase something. Say you have seen a piece of furniture or ornament listed in their catalogue that you wouldn’t mind having and its guide price is £5. Try and attend the viewing day of the proposed lots and be amongst other viewers, looking at them and seeing who else is interested in your ‘lot’ – people watching can be fun! On the sale day, sit in the auction room knowing that you are

actually going to buy something and feel how your pulse rate rises as you are waiting for your lot to come up. If you make a mistake at this type of auction, maybe by over bidding and getting carried away, then at most you have lost a few pounds – make the same mistake at a property auction then we are talking thousands of pounds. Try and attend a few of these chattels auctions and you will notice that each time you will begin

to feel more and more comfortable in the auction environment. You will soon recognise who are the retailers – the man in the street – and who are traders and even syndicates where a group of people are working together. You will also get used to the auctioneer’s patter, the language spoken, how bids are made and received, and you can start to get a feel for the body language of other bidders. It is very easy to

spot the novice who usually sits at the front of the room, especially when they start to get excited as their waited lot comes up and how they bid. Whereas the traders and professionals will be stood against the back wall or side of the room and it can be quite difficult to the inexperienced to see how they are actually making a bid! You need to learn this.

The Psychology Of Purchasing Property At Auction

David Humphreys

www.david-humphreys.com

Purchasing property at auction is not something to be rushed into. It takes a lot of preparation and time if you are to do this right and get it right when you are eventually ready to purchase.

All auctions are very similar – whether they are selling cars, antiques or even livestock. The people and the process is fundamentally the same – from obtaining the catalogue, registering to bid, how the auctioneer goes through the lots and the subsequent paperwork involved.

On auction day itself it can be quite over whelming especially when the actual bidding starts – most lots are sold in minutes so you have to be 100% confident in what you are doing otherwise you may freeze and miss your lot! I often compare this to driving a car – at first you don’t even know what pedal to press or even how much pressure to apply, let alone

what the dials and switches do and where they are. When learning to drive you cannot jump straight into a car and drive at 40mph along a busy dual carriageway – you have lessons. The principle is the same. This is one of the reasons why on my Property Auction Expert Masterclass, which is laid out over a month, we do not just sit in a classroom learning the theory.

I consider it essential that I take my students out into the field and we visit several different types of auctions and do viewings on properties – they need to immerse themselves in the whole environment and understand the psychological aspects as well.

The Psychology Of Purchasing Property At Auction

David Humphreys

www.david-humphreys.com

On one such trip at a local chattels auction, one of my students bought 5 brand new vacuum cleaners still in their boxes at a bargain price.

She had been very nervous but she had paid attention to all the things I had taught her and was so pleased that she had actually bought something at auction all by herself. A great result, which would stand her in good stead- the next time she wont be as anxious. Luckily she did have a need for all those vacuum cleaners!

Due diligence is critical and should never be done haphazardly. You must not succumb to the pressure of the short time frame that you have otherwise you may miss something, which could affect whether you are to purchase that property or not. It is important to know where you get the information you need and how to get it quickly so you can make the informed decision on whether to pursue it further.

Ostensibly you have 28 days from the day the property auction catalogue comes out to the auction day itself but in reality you have a lot less time. At the very most you could have 14 days to come to a decision but realistically it is more like 7 days. Do you register to have the catalogue emailed to you, available to download from the Auction website or do you have it posted to you? Each day matters – remember you are not the only one that

is looking to buy property at that auction. Do you need to visit the property? Are you available to go when the viewing day and times are set by the auction house? Who is going with you? What if you cannot make it on that date?

The Psychology Of Purchasing Property At Auction

David Humphreys

www.david-humphreys.com

So what is the best way of doing your due diligence efficiently? I recommend that you have everything all lined up in advance and all this can be done on the internet.

You need to have identified the sources of information that you need beforehand, which websites to go to and where on the sites that information is. With practice your due diligence on each property should take around 30 minutes – certainly no more than an hour to start with. Remember you will probably be looking at 30 or 40+ lots initially

to get down to a more practical list of 10 - 15 to pursue further. One of the reference websites I use is www.rightmove.com where you can find a whole host of information.

Here is some of the basic information that

you need to ascertain Has the property been sold recently and at what price? What have other similar properties in the street sold for in the

last 6 months? Are similar properties in the street also up for sale? At what

price? Are they being sold all fixed up or are they in need of repair?

Are there any similar properties being rented in the street? At what rent?

What is the Local Housing Allowance?

I love the Essential Information Group website www.eigroup.co.uk which is one of the leading names in UK property auctions and I am constantly on that site.

The Psychology Of Purchasing Property At Auction

David Humphreys

www.david-humphreys.com

All the data that you find must be accurately recorded for each

property. I use a checklist template, which I have refined over the years leaving nothing to chance and this is what I share with my students. Once you have done your pre-viewing due diligence you will begin

to see from the spreadsheet on each property when you are likely to get your money back, what are you going to have to spend to make a profit, what you are going to be able to rent it out for, any positive cash flow and so on. So you have done your number crunching and finally got a short list of potential properties. What do you do next?

That all depends on your strategy – are you looking to flip the property after doing it up or rent it out? My personal strategy and one that I advocate to my students is to look for properties that in need of a major uplift as that is where the maximum profit can be made. I am not talking about a lick of paint here and there, and a new carpet or two but ones that needs a new central heating system,

new windows, kitchen or bathroom. Again all these costs need to be factored into your calculations.

The Psychology Of Purchasing Property At Auction

David Humphreys

www.david-humphreys.com

The worse state the property is in, the more profit can be made. This strategy has been done for hundreds of years – find an old, tired or distressed house, do it up, then sell it.

So many of these types of properties are available at auctions but you must do your sums. If you are looking to rent it out then you may not even have to visit it or even go inside on the official viewing day. Consider using the various tools on the internet like Google Earth.

These let you ‘walk down’ the actual street and stand in front of the property. What is it like? What are the neighbouring houses like? Think outside the box – if you can’t attend yourself then could someone go and look at it for you and take photos? There is an art to viewing properties. I know that I keep going on

about how much time you spend on things but in all likelihood you may be viewing 10 or 20 properties and you can not afford to waste any time. You have to learn to work efficiently. On my Property Auction Expert Masterclass when we go out on the road on viewings days the first thing is to take notice of is the location, which I define as ½ mile radius from the property. Look at the amenities, shops, schools, what neighbouring streets

are like and so on. What makes the location attractive and equally as important, what makes it unattractive? For example a railway line, pylons nearby, a football ground, which could mean parking issues on match days.

The Psychology Of Purchasing Property At Auction

David Humphreys

www.david-humphreys.com

Then we start to look at the actual neighbourhood – roughly ¼ mile radius. What is that like? What are the other properties like in the street? What about parking?

These sort of things you cannot pick up from an auction catalogue which are vital if you plan on doing an uplift or flipping strategy but not as important if you are just looking to rent the property out. It should also be considered that you may not even be able to get inside the property for various reasons but you mustn’t let that deter you – you will just have to work a bit harder in finding out if

there are any problems with the actual property. Is it structurally safe?

Is it just a case of it being boarded up and that is why access can-not be gained?

What is the internal condition like? Can the auction house offer any further information?

Do the neighbours know anything?

Having the confidence to buy at auction comes from also having done your homework correctly and all the boxes are ticked. My students exude confidence when they have gone through my program and not the classroom mechanics. They know that when they sit down at an property auction for real they know what properties they are going to bid on, what their maximum bid is and feel totally confident and professional.

They are familiar with the surroundings, the rapid pace that the lots are sold at, the auctioneer’s patter and where the trade people are.

The Psychology Of Purchasing Property At Auction

David Humphreys

www.david-humphreys.com

By going through all these steps it should take you to a position where you attend the auction with a list of several properties that you have identified as fit for your purpose, the costs involved and

importantly what your maximum bid is. As an auction progresses through the lots typically the first 25% are properties that the retail are interested in (private buyers) and as the auction carries on these people will gradually leave and so there will be less competition. The latter end of the auction is typically the trade end where the best deals are usually to be had.

The art of bidding is crucial and on my Property Auction Expert Masterclass I teach 12 different methods of bidding. The real beauty of purchasing property at auction is that the deals come to you – I often refer to it as the ‘lazy man’s way to get property deals’.

It is hard work and takes a lot of time doing the conventional advertising for potential deals through leafleting, adverts and visiting estate agents. It can be very slow at producing results. But at property auctions the auctioneer has done the work for you, he has argued with the Vendor to drive the price to a level he knows he can sell it at and prepared the catalogue and legal pack. Your due diligence can be done in the comfort of your home and

you don’t even need to visit the properties if you don't want to. By having potential deals come to you, you can see how more efficiently you can work and acquire property on your terms.

The Psychology Of Purchasing Property At Auction

David Humphreys

www.david-humphreys.com

I love the thrill of purchasing property at auction. It can be good fun as well as extremely rewarding and satisfying.

If you want to find out more how you can learn how to purchase property successfully at auctions please call me on 0800 864 4311 or arrange a call back. Why not take a look at my Property Auction Expert Masterclass? I run this program several times a year and my students have produced great results with their new found skills.

Details are on the next page...

Property Auction Strategies | David Humphreys

David Humphreys

www.david-humphreys.com

If you are looking to buy property at auction, it suggests to me that you may

want to do it as professionally as you possibly can. The opportunities are astounding for those who know the game and play it well.

There are many tricks of the trade and inside information that will enable you

to get the best bargains and make tremendous profit consistently.

Now I am in a position to share all my skills and knowledge with a small band of dedicated students on the most comprehensive educational program I have

ever put together.

Property Auction Expert Masterclass

I have worked hard to create this mastermind program to offer the

very best content, delivered in real world situations.

Not only do you get a 1 FULL Day

workshop, but you also get out in the field with me and my

experienced team. You will attend Auction Viewing Days, going to the

properties themselves where I will show you how to do your due

diligence is situ..

You will also go to the property

auction and experience the atmosphere.

If you are interested then watch the

video and further information at www.PropertyAuctionExpert.com

CALL : 0800 865 4311