FAQ 96 What preparation do I need before attending an auction?

There are quite a few steps needed to be completed before being ready to attend an auction.

1. Written Investment Plan
   This needs to be complete as it will identify the type of investment needed for the next deal in order to fulfill the requirement to
   strengthen the weakest of the investor financial attributes. The plan will identify either an INCOME deal or an EQUITY deal (Chunk) as the next deal needed to progress the investor forward. If your plan includes a manufactured growth strategy then you will need to take into account the strategy costs ie. Cosmetic renovation costs of 9%
2. Property Viewing
   Organize to view the property. Take along a builder to check over the property to note down obvious issues. Addressing property defects will cost additional spending and this will be reflected in the maximum bid price
3. Due diligence on the auction property
   This step involves gathering the numbers and information about the property to assess what it potentially can deliver by way of either EQUITY or INCOME. Because the purchase price is not known at this stage, the numbers will have to be worked out on a range of \’ball park\’ prices. It will become apparent which purchase price works to deliver the desired plan outcome.
4. Feasibility Study
   Using the figures obtained from step 2 that work , complete a feasibility study to include any manufactured strategy.
5. Terms of the Auction
   If all of the above are given the green light then contact the auctioneers to enquire about the terms of auction ie. deposits, settlement, bidding registration
6. Maximum Bid Price
   At this stage you will have ascertained your maximum bid price in order for the purchase to deliver the required portfolio outcome.
7. Funding and structures in place
   Make sure that the buying entity in in place and ready to go ( Market Ready as per FAQ 27). Note that pre-approval from a lender
   is dependant on valuation, property type and location and lender LVR rules. DO NOT DEPEND ON A PRE APPROVAL FROM A LENDER TO SUPPLY ALL OF THE PLANNED FUNDS
8. Use a buyers agent or not
   Decide whether a buyers agent is to bid or not and make arrangements if choosing a buyers agent. Instruct the buyers agent on your maximum bid price