Property in Auction

starM

Hi,

Need some advice basically. My brother seen a property in Auction and they require a bankers draft for a deposit which should be 10%. He has not bought a property through auction previously so does not know how it works. Couple of question:-

1. If he bid on the property and wons it how long does it have to arrange a mortgage?
2. He's pretty sure that mortgage will go through without a problems but by chance if he fails to get a mortgage what will happen to the 10% deposit he has paid?

Thanks
SM

JustJewels

Hi starM,

Buying a property at auction is not for an inexperienced person

If you really want the property and are prepared to bid on the property, you will need to have done all surveys etc BEFORE the auction. As there is a chance that the price goes above your ceiling (max price you will pay) then you have wasted all survey fees, mortgage fees etc.

If your brother wins, he will have to complete within 28 days - not an easy task for any bank's mortgage dept...
If he wins the bid and then fails to get finance, he'll lose the deposit. Which is why he'll need to get finance approval in principle at the very least before even thinking of bidding...

Usually, whoever is auctioning the property will be able to send copies of the contract/legal papers to people interested in bidding BEFORE the auction. If so, you need to run it by your solicitor, which is an additional cost.

I hate auctions - all the advantage is with the seller.

Hope that helps

JJ