Auction advice needed

cwspud

Hi,
Im currently being messed about by the agents for a house that i want to purchase.
The house has been put up for auction with an £80000 guide price. I was told that if i offered them £81000 it would be accepted but with the possibility of being outbid at any point and them wanting completion before the auction date.
The auction is in 2-3 weeks and im just wondering if im better waiting until then and going to bid on it there, as i also doubt that all the legal work could be completed in 12 working days.
The morgage i have in principal covers the cost of the purchase at £81 with a few thousand left over ( property has damp issue ) for immediate repairs.
Also ive heard that the bank may withhold some of the mortgage until the repair work is done, is this true.
Hope someone can shed a little light on the matter..
Thanks

G_M

Depends who is selling. A bank on a repossession?
Either way, chances are that the seller will accept higher offers right up to Exchange of Contracts, so the faster you get there the more certain you are of the price.
They'll want Exchange at least, if not Completion, by auction date, so that if you drop out they can still place it in the auction.
Legal work CAN be done in days if rushed, and you skip formal searches etc (do a personal search). But mortgage lenders won't accept this.
Rush jobs like this are for cash buyers, not mortgage applicants.
Is you mortgage offer based on you, or on you AND the property? ie have they valued it? They may well either refuse to lend on the property, lend less than you want, or withold a % for repairs. Again - cash buyers........

If bidding at auction, you need all the finance confirmed too ie formal mortgage application, valuation etc complete, as well as legals, as if anything goes wrong with the mortgage/legals after you bid, you are stuffed. Commited to buy but no money..... again. Cash buyers have the edge.

cwspud

Thanks G_M,
From what youve said im kind of stuffed either way
If i get it now, i can be outbid and lose all my solicitor fees, if i get it at auction the bank could refuse to lend me the money. Do you think its best i steer clear of the property then.
The guide price is £80000 and my mortgage in principal + deposit (15%) is £89950. Ive been quoted for £2000 for a full damp course and all the other work i could undertake myself.
Im at a loss what to do..

G_M

Depends how much you want it, and whether you're prepared to risk losing money.

Speak to your mortgage provider. Can they guarantee to value/approve (or otherwise!) your mortgage on this property in the 2-3 week timescale required? If not, forget it. If yes, well, it's a gamble.

They might let you down and go slower than they say. They might reject the mortgage etc. And you'll have paid on on mortgage application fee, solicitors fee etc etc.

Or wait for the auction. Who knows - it might go for less than the guide price? But you still have a problem in that you need the mortgage approved before you bid unless you have a plan B (loan from your family etc) to fall back on.

And even if you do, you have to do legals before the auction, which costs money - with no guarantee your bid will be the highest.

This is why most people don't buy at auction!

GDB2222

You can't buy at auction unless you have all your legals completed, the valuation in place, and a firm mortgage offer on this particular property. As that can't be done in time, you would be taking a ridiculous risk bidding.

PasturesNew

Buying at auction's never been something for people without a Plan B and Plan C. You need to be 200% sure you're absolutely able to get the money and you need to be using superfast solicitors and mortgage companies to ensure the buying process isn't c0cked up/delayed.

Many people at auction will KNOW they'll be advanced the money - they then arrange a (very expensive) bridging loan then they apply for a mortgage to repay that.

Jeffrey_Shaw

Of course, OP can exchange contracts (if possible) before the auction date.