how can I minimise pre auction costs ?

pricedout_1

I am a FTB looking into auction purchase as a way of avoiding the ridiculously inflated prices in West London. The two major costs pre auction are legal and survey. As most of you will be aware the problem with auctions is that some !!!!!! can turn up on the day and outbid you. It's almost as if you are setting yourself up to be gazumped on the day of purchase! So, the question I have is how to minimise these pre auction costs so that I will be less p'd off if that happens ...

Do I really need to get a survey done on every time I bid ? ( As far as I'm aware most purchasers buying flats on the open market don't bother with a survey. I want a flat rather than a house) Can I do a DIY survey ? (I've heard you can buy damp checking hardware for not that much. And this is probably be more than would be done than if you were to pay for a survey)

When buying at auction the legal pack contains searches and title deeds. I've taken a look at samples and it isn't really rocket science. There are some terms you need to brush up on but apart from that I should be able to check these myself although I haven't done this for real yet. In any case the sellers solicitor should be able to answer any questions ? So this cuts out the pre auction legal costs ?

Any advice .......

cattie

Remember most auction properties state a guide price, which can bear little relation to the actual sold price, especially on properties in popular areas. Most decent properties in can go for a price well in excess of the guide price.

You say in your post that you don't believe the majority of flat purchasers bother to have a survey carried out. I've owned flats in the past & have always had a survey carried out & would never buy a property without having this done. I've never known any of my friends or collegues to buy a property without a survey either.

To think a survery is a waste of money would be fool-hardy, for in trying to save £300-£400 in this way,you could end up facing a bill of thousands in the future for a property that has serious issues undetected by the unqualified eye.

As far as the legals go, there is a heck of a lot of stuff solicitors need to check out on leasehold properties & again, unless you are experienced in this area you could end up buying yourself a bit of a liability.

Silly to try to cost cut in these areas when making one of the biggest purchases of your life.

Debt_Free_Chick

hughgallagher wrote:

Do I really need to get a survey done on every time I bid ?

Entirely up to you. But if you don't get a survey, you don't really know what problems you are buying. You would then be liable for all sorts of repair costs, without knowing this when you bid.

( As far as I'm aware most purchasers buying flats on the open market don't bother with a survey. I want a flat rather than a house)

Most people don't bother with a "survey" when they buy a second-hand car - but then they often end up with a bum deal

Can I do a DIY survey ?

If you know what you're doing. Do you have sufficient knowledge to assess the quality of the fabric of the building? Can you assess what cracks - internally & externally - might mean?

(I've heard you can buy damp checking hardware for not that much. And this is probably be more than would be done than if you were to pay for a survey)

A survey doesn't just look at damp. I would guess that any DIY "damp checking hardware" might indicate whether there were damp or not - but it wouldn't tell you what the cause might be.

When buying at auction the legal pack contains searches and title deeds. I've taken a look at samples and it isn't really rocket science. There are some terms you need to brush up on but apart from that I should be able to check these myself although I haven't done this for real yet. In any case the sellers solicitor should be able to answer any questions ? So this cuts out the pre auction legal costs ?

Any advice .......

If the property is registered at the land registry, then each document would cost £3 e.g. £3 for the title and £3 for the siteplan. Any other documents e.g. covenants might well cost extra. You would need to do a search on the land registry. If the property is not registered, then you have no other way of obtaining the title documents (deeds). Without them, you really don't know what it is you're buying.

Searches - you can do in person at the local authority. But it's time consuming and you still have to pay a fee. Also, there are some specific questions you need to ask - if you know what they are, then you should be fine. If not, then you need someone (solicitor?) to ask those questions for you.

Finally, buying at auction is not a sure way of

avoiding the ridiculously inflated prices in West London

You could still end up with a "dog" at a premium price

pricedout_1

Thanks for the replies.

Can I ask ... have either of you bought at auction ?

cattie

I've never bought at auction Hugh, was trying to back in the mid to late 90's but even then most properties went for a much higher price than we'd anticipated.

Many then were repossessions that had been trashed inside so needed considerable work & money spent on them. But because the places we were interested in were in good locations, there were plenty of other people interested & the property developers usually won the day.

Guy_Montag

One method I have heard suggested:

Before the auction approach the EA with an offer subject to survey at or around the level you feel is right (most guide prices I've seen have an upper one for the vendor & a lower one to attract bidders). If the property does not make it's reserve price (quite possible up here), then the EA may get back in touch with you.

Here at my last local auction less than 50% of properties sold.

pricedout_1

Quote from a guardian article on surveys .....

"To get more information about the property you need to commission a homebuyer's report, but according to the Royal Institute of Chartered Surveyors (RICS), four out of five homebuyers don't bother"

I remember when looking to buy around 5 years ago an estate agent said roughly the same thing.

There is risk attached to every property purchase. If I viewed an auction property and there were cracks between the wall and ceiling I would leave well alone. If there were no cracks then a surveyor wouldn't be able to detect subsidence anyway. Even if you pick up a property at auction that has damp for example, you should be able to have it corrected as you should have bought the property below market value.

pricedout_1

Guy .... where did the auction take place ? That is quite a low percentage. Was it a composite auction ?

You could have rick pickings with post auction offers as vendors/auctioneers become more desperate to sell. If they don't sell they have to go through the whole process again ..... and pay for it !!!! I believe the auctoineers have a certain number of weeks after the auction in which to sell ...

chant1l

Auctions hold the fallacy of being cheap very well, I have bought and sold at auction for over 15 years and the assumption of the losers in the room is that if it is at auctionit MUST be cheap. The winners are able to cherry pick by seeing multiple properties and buying the bargains of the day. Pinning your hopes on just the one house that you fancy will see you overdetermined to buy that one house, and by the way auctioneers will know this as they will have met your surveyor and may work the price up in the room.....

clutton_2

i researched two adjoining properties at auction extremely thoroughly, and even bought copies of relevant victorian leases from the council'e legal department. I arranged a phone bid. I pulled the plug hours before the auction, as i discoverd that onen of the the gardens was not owned by anyone, and therefore one property would have no legal access to its own garden. The other property's garden looked as if it was ripe for development (planning had no objection in principle to building new block of 6 flats) - but at the very last minute i discovered that the land was categoriesed as "amenity land" and the local council would have charged me thousands to transfer its status to development land - thus wiping out a big chunk of the profit.

The vendor (a Building society in this case as it was a repo) is under no obligation WHATSOEVER to give you all the necessary legal information - its Caveat Emptor - Buyer Beware - if you get yoru researches wrong and you have not had a lawyer looking over the legal pack, you could well be up the creek without a paddle.

The properties i was interested in did not sell at auction, but were purchased after auction. 18 months later they are still not developed or inhabited ...........

The "lucky" owner will have hens own teeth of a job to sell it on now ........

RE a surveyor - you could visit the property with a friendly builder if you know one. But, he might then want to go and buy it himself !!

Many auction investment houses are also tenanted and you will not be allowed to inspect the inside to the property - so unless you are very skilled in assessing property - don't go down this route.

Buying at auction is definitely not a strategy for the faint-hearted - once the hammer has gone down you then sign the contract and pay your 10% deposit and you have then exchanged contracts. If you cannot get funds within the next 28 days you lose your deposit - and it happens every week of the year.

pricedout_1

chant1l wrote:

Auctions hold the fallacy of being cheap very well, I have bought and sold at auction for over 15 years and the assumption of the losers in the room is that if it is at auctionit MUST be cheap. .....

Surely they are at least a bit cheaper than open market otherwise there wouldn't be auctions needed as the properties could go for market value on the open market ? Are you saying that there are no bargains left at auction ? Have you bought property at auction in London ?

chant1l wrote:

The winners are able to cherry pick by seeing multiple properties and buying the bargains of the day. Pinning your hopes on just the one house that you fancy will see you overdetermined to buy that one house, and by the way auctioneers will know this as they will have met your surveyor and may work the price up in the room.....

Ok, so all the more reason not to have a survey done then ?