Discipline, Not Emotion, Wins At Property Auctions

"Discipline, Not Emotion, Wins At Property Auctions" Dominic Farrell

One of the most important skills you can develop as a distressed assets investor at property auctions is knowing when to walk away. Arguably, this is one of the defining traits of consistently successful operators in this space.

This comes down to mindset, not the high-energy, hype-driven excitement often associated with auctions, but a disciplined, methodical, and analytical approach to property investment.

That is the real key.

Almost every week, I see amateur investors lose tens of thousands of pounds because they get caught up in the moment. They fail to stick to the fundamental principles of buying at auction, which centre around thorough due diligence. This includes analysing comparable sales, reviewing the legal pack, assessing the structure and condition of the building, estimating refurbishment costs, and calculating total acquisition costs, such as stamp duty, auction fees, and legal fees for both sides.

In addition, many fail to properly review the special conditions of sale, missing hidden charges. Even more concerning, some do not instruct a solicitor to review the legal pack before bidding. These are critical mistakes that often lead to significant financial losses.

On a recent car journey to London, I spent most of the time speaking with various mentees, advising them on why they should not proceed with properties they had already invested time and energy into researching and viewing. This highlights another common challenge with property auctions, once people have committed time and effort, they become emotionally attached and reluctant to walk away.

Fortunately, my mentees do take advice, and that disciplined approach consistently pays off.

At present, we are reviewing two properties. On the surface, they appear very similar, located in the same general area, of similar construction, both unsold auction lots, with comparable pricing and rental potential.

However, one has a significant issue that the other does not. Identifying this requires rigorous due diligence and, in many ways, becoming a “Sherlock Holmes” of property auctions.

Next week, I will be viewing the more promising property with one mentee, while another, who I spoke to at 0700hrs this morning, is already analysing early lots for the next auction.

That is the level of discipline and forward planning required to succeed in property auctions.