Auction due diligence
Question from Jeremy updated on 24th December 2013:
It’s been almost ten years since I bought my personal home and I’m only now starting on the property investment journey. Back then I had the time (buyers’ market) to do due diligence on the house before putting up an offer. Even then I could still place a conditional offer just to be really sure. These days with auctions needing to be unconditional offers, I'm struggling to find out how buyers/ bidders do due diligence before committing. So far I am aware that one can easily get the LIM and Title documentation from the real estate agent but I rely heavily on the building inspection report before I make a decision. It's not practical to do one for each place since the chances are high of losing the house in the bidding process, especially when my budget is a little lower. So what is the best way for me to approach this in today's environment (sellers market) in order to minimise as much risk as possible?
Our expert Ollie Mitch responded:
Auctions are not great for investors. Firstly, as you point out a lot of time and money can be wasted on properties that you can easily lose out on. Secondly, because you can have no idea what sort of return the property offers until the property is sold and the final price established. Our firm has a policy to always provide an asking price for investors. As hard as it is in this market you are best to avoid bidding at auctions. You could focus on properties being sold by other methods, negotiate on properties that fail at auction or even consider using the services of a professional property finder/buyer.Ollie Mitch is head of sales at Iconicity, leading apartment investment specialists and the largest private buyer and seller of apartments in Auckland City. Phone 09 300 5073, email firstname.lastname@example.org or visit www.iconicity.co.nz