Researching an auction catalogue properly
The work that produces a bargain at auction happens in the three weeks before, not in the room.
An auction catalogue for a large sale may contain a hundred lots, and there is not enough time to research all of them properly. The skill is in filtering quickly to the handful worth investigating in depth, and then doing that investigation thoroughly.
The filtering is done from the catalogue entry and the legal pack. Anything that fails the filter is discarded; anything that passes gets the full treatment.
The initial filter
This can be done in minutes per lot, and it removes most of the catalogue.
- Location: does the property suit your strategy, and do you know the area?
- Guide price: does it leave room for the work, the fees and a margin at a realistic end value?
- Tenure and lease length: is the title acceptable, and is the lease long enough to mortgage?
- Tenancy: is it vacant, or tenanted, and does either suit you?
- Property type and construction: is it something you understand and can sell on?
- The legal pack: is it available, and does it contain anything that changes the picture immediately?
The deep research
For the lots that pass the filter, the work is the same as for any purchase but compressed into a short window. Everything must be done before the auction, because nothing can be made conditional afterwards.
- Order the title register and read the charges register carefully
- Read the legal pack in full, including the special conditions
- Establish sold comparables from Land Registry data and work out the end value
- View the property, and take a builder or surveyor if the work is significant
- Cost the work with real quotes, and add a contingency
- Establish the total cost of acquisition, including the buyer's premium and the finance
- Set your maximum bid in writing before the auction, and do not exceed it
The lots other people skip
The lots that produce the best returns are frequently the ones that look least attractive on the catalogue page: poor photographs, an unusual tenancy, a legal condition that is standard for the auction house but unfamiliar, or a lot that failed to sell previously.
Each of those reduces the number of bidders, and a reduced number of bidders is the mechanism that produces a discount. The research is what lets you bid confidently on a lot that others have skipped, because you have established that the obstacle is manageable and they have not.
Common questions
- How do I research an auction property?
- Filter the catalogue quickly on location, guide price, tenure, tenancy and property type, then research the survivors in full: the title register, the legal pack including special conditions, sold comparables, a viewing, and real quotes for any work. Set your maximum bid in writing before the auction and do not exceed it.
- Which auction lots are the best value?
- Usually the ones that look least attractive in the catalogue — poor photographs, an unusual tenancy, an unfamiliar legal condition, or a lot that failed to sell before. Each reduces the number of bidders, and fewer bidders is what produces a discount. The advantage comes from having researched what others skipped.