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  • FIRST POST
    • newfoundglory
    • By newfoundglory 5th Feb 10, 8:47 PM
    • 1,798Posts
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    newfoundglory
    How do property auctions work?
    • #1
    • 5th Feb 10, 8:47 PM
    How do property auctions work? 5th Feb 10 at 8:47 PM
    I have a seen a house advertised, in the right area at a seriously reduced auction guide price (about 80 to 90 grand less than the area!). Until I can call the number tomorrow, I am assuming this is a repossession. I am also assuming it requires updating and/or cosmetic work.

    What things do you need to do to buy a property at auction? Do you usually view the property and have it surveyed? What do I need to do... can someone point me in the right direction?
Page 1
  • clutton
    • #2
    • 5th Feb 10, 9:07 PM
    • #2
    • 5th Feb 10, 9:07 PM
    i fyou download the terms and conditions of the auction house you are going to it will tell you almost everything yhou need to know....

    in brief

    once your bid is accepted and the hammer goes down you have bought the property for better or worse and you will have to pay 10% deposit there and then....

    normally you have 28 days to complete... if you fail .. the auction house keeps your 10%

    if it is tenanted you may not be able to get inside to look before the auction

    you have to have funds/mortage approved in advance of bidding

    you have to have bought the property legal pack and had it assessed by your own competent solicitor before you go to the auction

    if it a repo you will probably also pay the vendors sales costs and legal fees

    it is not for the faint hearted......

    auction guide prices mean nothing... they are pitched deliberately low to get you to the auction.....
    • newfoundglory
    • By newfoundglory 5th Feb 10, 9:47 PM
    • 1,798 Posts
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    newfoundglory
    • #3
    • 5th Feb 10, 9:47 PM
    • #3
    • 5th Feb 10, 9:47 PM
    So I should:

    Call and try to get a viewing. I am assuming that if I speak to the right person I might be given some idea of the REAL amount it will sell for?

    If happy, get a copy of the "legal pack" and find a solicitor to look it over. You say that they usually charge to get a copy of the legal pack?

    Then, get a survey (and valuation) done.

    Arrange a mortgage for the maximum amount I am prepared to pay.

    Go to the auction with a 10% deposit available.
  • JQ.
    • #4
    • 5th Feb 10, 9:57 PM
    • #4
    • 5th Feb 10, 9:57 PM
    Make sure you read the Legal Pack, some Repo's can be 10 or 14 day completions - not enough time for a mortgage, so you would need to have the full amount in cash. There did used to be lenders who would mortgage in that time, not sure if they're still doing it.

    The houses generally need some work doing to them. Sometimes it's just decorative, other times it's full structural work. Good way to pick up a bargain, but the main thing is research, research, research and don't overpay.
    • PasturesNew
    • By PasturesNew 5th Feb 10, 10:21 PM
    • 54,774 Posts
    • 313,408 Thanks
    PasturesNew
    • #5
    • 5th Feb 10, 10:21 PM
    • #5
    • 5th Feb 10, 10:21 PM
    The legal pack's REALLY important. As has been pointed out, they can require completion in 10-14 days, or there might be other things in there such as that you will pay the seller's fees too, or even pick up an "unknown amount of debt" with the house. All odd stuff is in there.

    If you are buying on a mortgage you need to have all the legal work and survey done up front and the mortgage approval in your hand. EVERYBODY (solicitor/mortgage etc) NEED to know that if you win it at auction you HAVE to MOVE FAST!

    People with more money, huge deposit or cash buyers, might not do this because they know they'll be able to mortgage it, so they take out an expensive bridging loan to meet the tight payment deadlines, then probably do the house up really quick, get it revalued and then get a mortgage on it.

    When you go to the auction, you'll need to have ID with you - and the 10% deposit is payable ON THE DAY.

    Many properties at auction are priced attractively to attract as many potential buyers as possible, hoping that there'll be a bit of a bidding war in the room as people refuse to let it go to somebody else. So set your limit and STICK to it.
  • clutton
    • #6
    • 5th Feb 10, 10:40 PM
    • #6
    • 5th Feb 10, 10:40 PM
    i once arranged a phone bid at an auction because i could not get there.. (arranging a phone bid took ages and lots of jumping through hoops in its own right) - i was still researching the legalities 45 minutes before the auction started and discovered that some of the land attached to the house (which i thought i might develope onto) was not only owned by the local authority but also classified as recreational use rather than residential.. and that i would have to spend thousands to get a change of category so that i could build.... i pulled my bid just in the nick of time...
    • G_M
    • By G_M 5th Feb 10, 11:22 PM
    • 35,115 Posts
    • 37,956 Thanks
    G_M
    • #7
    • 5th Feb 10, 11:22 PM
    • #7
    • 5th Feb 10, 11:22 PM
    Try google. A quick search turns up

    this

    and this

    and this
    • theGrinch
    • By theGrinch 6th Feb 10, 10:18 AM
    • 2,652 Posts
    • 640 Thanks
    theGrinch
    • #8
    • 6th Feb 10, 10:18 AM
    • #8
    • 6th Feb 10, 10:18 AM
    auctioneers lowball prices to pull people into the auction room and hope once their emotion will take over. you should see the results of recent past auctions for the auctioneers and see if there is value there.
    "enough is a feast"...old Buddist proverb
  • ghostbusters
    • #9
    • 6th Feb 10, 10:48 AM
    • #9
    • 6th Feb 10, 10:48 AM
    auctioneers lowball prices to pull people into the auction room and hope once their emotion will take over. you should see the results of recent past auctions for the auctioneers and see if there is value there.
    Originally posted by theGrinch
    I would agree looking at the results recently .. would suggest a significant number of buyers are not looking at rental investment opportunities.
    sold price + 'doing up cost ' seems to be approximately equal to what the price would be through estate agents at the moment.

    i always treated auctions on the basis that property ends up there which is unsaleable through normal channels ..

    +

    I personally start from a basis of suspicionas to why it hasnt sold thus far..
    • theGrinch
    • By theGrinch 6th Feb 10, 2:20 PM
    • 2,652 Posts
    • 640 Thanks
    theGrinch
    I personally start from a basis of suspicionas to why it hasnt sold thus far..
    Originally posted by ghostbusters
    yes I cant think of a few properties with significant but hidden building faults that have come up for auction.
    "enough is a feast"...old Buddist proverb
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