Buying at Auction

RichyRich

Whats the crack with finance?

When buying in a traditional way, you go to the estate agents, look at houses, approach a mortgage broker, find out what you can borrow, make an offer, see if its accepted etc, I can just about cope with that.

But at auction, you're committed to buying the house as soon as the hammer falls. How does that work? Obviously you'd need to approach a mortgage broker before the sale, but would you need to get a survey done on the house before the auction starts, and supply some kind of letter from the lender at the auction to say you'd be able to bid?

I'd be grateful for some kind of idiots guide but if anyone could point me in the right direction that would be fantastic too.

Thanks :-)

pawpurrs

http://www.home.co.uk/guides/buying/auction_steps.htm

There you go, you need to have your finance sorted, most buying at auction are cash, as there is a lot that can go wrong with a mortgage, although doable, you take a risk, as you exchange contracts on the day of the auction, so would be liable if you didnt follow through due to some issue with your mortgage (which in this day could easily happen)
Any surveys, mortgage valuations etc, would need to be done prior to the auction, and you need to complete within 28 days.
The worry about needing a mortgage is, if there are any issues you will A) lose your deposit, which is paid as the hammer falls, and can be sued for the rest of the money.

m_13

At a traditional UK auction (not REDC) you can bid without proving you have any money at all. However, when the hammer falls you have to pay over 10% plus the admin fee immediately by cheque. You then have 28 days, or 6 weeks in some cases, to complete. You can resort to bridging finance if your mortgage has not come through but you have to be very, very clear with your broker or mortgagee that they are going to have to pull the stops out!

We asked our broker whose mortgages were completing fastest and used that information as part of the criteria for who we chose. He told us that larger institutions that use online and automated processes were quickest and he was right. We went with the Woolwich. Applied on 30th January, offer on 2nd February, fund released 20th February. All very smooth and no issues with the mortgage, buying repossession through the auctions another matter!

Wig

pawpurrs wrote: »

http://www.home.co.uk/guides/buying/auction_steps.htm

The worry about needing a mortgage is, if there are any issues you will A) lose your deposit, which is paid as the hammer falls, and can be sued for the rest of the money.

You will not necessarily lose your deposit, the house will be resold at a future auction, and if it achieves a similar price, costs will be deducted from your deposit and the remainder returned to you. These costs must be real and not imaginary or made up.

If it does not reach the same value, the difference in value achieved will be added to the costs incurred and taken from your deposit and if the difference in value is severe, you will owe whatever amount is outstanding.

Wig

RichyRich wrote: »

Whats the crack with finance?

You need to have it all sorted prior to auction and able to pay up (guaranteed not just think it will be ok) and complete by the completion date which is usually between 14 and 28 days usually depending on whether it is a big nationwide auction house or a smaller local auctioneer.

Richard_Webster

You should have a formal mortgage offer before the auction takes place.

Mortgage offers are always subject to the lender's solicitor certifying the title and and all the associated legal stuff is acceptable for lending purposes. If you haven't had a solcitor look at the legal pack before the auction there might be a problem such that he could not certify the title, and therefore you would not get the mortgage money to use on completion. You really should have the legal pack checked.

This is the problem with auctions. You pay out for a survey and valuation. You pay out for having the legal pack checked and then you are not successful in bidding.