Help! - How to buy a house at auction?

catt_2

Help! We want to buy a house which is going to auction and we have no experience of that.
The house was advertised jointly by the auctioneer and EA in our local paper. We hadn't come across it before with any local EAs. So we drove past and have now seen it from the outside both by day and by night.
Next, I telephoned the EA to find out more. It is freehold with vacant possession on completion. That's what we want. I asked the EA why it wasn't marketed in the usual way by EA and was told that it must go to auction for legal reasons. Could that mean it is a mortgage repossession or a bankruptcy or a probate sale?
The owners are still living here and there are a couple of open viewing dates. We can't make the first but are thinking of sending a relative and then we'll go to the second viewing.
The guide price is reasonable and is less than the present owner paid for it 2 years ago! We are thinking of offering before the auction to secure it. What do you think?

PoorDave

Guide prices can be exceeded massively in the actual auction if it gets competitive! The guide price is not the same as a reserve price.

If you have a good price in mind to offer before it goes to auction, then try your luck! You never know until you try.

azjh77

I think I read somewhere that you have to have a conveyancer/solicitor ready, when you buy at auction,some places won't let you in unless you provide details. What about a survey? If not for compulsory mortgage purposes, then for your own peace of mind?

imoneyop

Nearly everything that you would normally do between offer and exchange with a normal purchase has to be done before the auction. So you will need to get the mortgage agreed (so therefore need a survey done).

Once the hammer falls at the auction the winning bidder has in effect exchanged contracts and will have to pay a 10% deposit there and then, so you need the cash ready.

Completion can be as little as 7 or 14 days after that, so you will also need a solicitor who is on the ball (a number that specialise in auction sales usually advertise in the auction catalogue).

You might be able to buy yourself a bit of time by using bridging finance, but there is a risk if the property is unmortgagable.

imoneyop

Also, it is very unlikely to be a reposession as by the time it comes up for sale the lender will have already taken posession and evicted the previous owner.

How long have you got until the auction to sort all of this out?

Wings

imoneyop wrote: »

Also, it is very unlikely to be a reposession as by the time it comes up for sale the lender will have already taken posession and evicted the previous owner.

How long have you got until the auction to sort all of this out?

It is usually the lender who has repossess the property that places the property up for auction, and once the hammer has fallen, the purchaser is usually allowed up to 4 weeks to complete the same.

Guide prices are usually set very low to encourage strong interest, and prior to auction an intended bidder should obtain from the AE a legal pack, which may contain local searches, office copy from the Land Registry and possibly a survey carried out on the property. Finance should of course be arranged by the intended purchaser prior to the auction, and I have both purchased and completed the conveyancing of auctioned properties myself.

catt_2

Thanks for all the advice so far.

And yes, if the guide price is much exceeded then we can't afford it and it won't be worth it either as there are lots of other properties on the market. Can we find out from the auctioneers what the reserve price is? We would like to try an offer before rather than bid at auction, so we are thinking about that. Maybe we can gauge the level of interest by possible bidders by seeing how many people attend the viewing.

We do have our solicitor who sold our house and could take their business card with us to the auction. We had thought that since the property last changed hands only 2 years ago and was purchased with a mortgage, we would forgo the full survey and just have the valuation survey from our lender. We think this could be done between auction and completion and we are making enquiries.

Yes we have the deposit cash as we have sold our last place. The auctioneer states 28 days for completion but we are checking the catalogue thoroughly. I suppose with bridging finance involved, the deal becomes less of a bargain. We will do a thorough costing.

We were also surprised to learn that the owners are still living there. The auction catalogue doesn't mention it is being sold on behalf of mortgagees in possession. Nor on the Order of the High Court for that matter so probably not a bankrupcy either. Yet the EA claims it must be sold at auction for legal reasons....Could it be a divorce? Are the auctioneers obliged to disclose the reason or can they be discrete? The vendor would be listed in the conveyancing. We are a bit puzzled to say the least. Oh, and the auction is on the 19 April. Not much time really!

imoneyop

Wings wrote: »

It is usually the lender who has repossess the property that places the property up for auction, and once the hammer has fallen, the purchaser is usually allowed up to 4 weeks to complete the same.

Very rarely as much as 4 weeks - the repos I've bought at auction have all been 14 day completion and I've seen others with as little as 7 days!

catt_2

Wings, Thanks for your advice also. Didn't see it until I'd posted, as I was busy posting.

I strongly suspect it is not a repo. as it's not mentioned in the catalogue. I have done more delving and found the house was listed with the AE very briefly at a lower price than the auction guide price so that is surprising!

We are obtaining an office copy and plan from the Land Registry but will get the legal pack too but the auctioneer doesn't yet have it ready.

imoneyop

If it really is 28 days then you will have that period in which to get your mortgage fully sorted. It would probably be a good idea (if you haven't already) to get in touch with a financial advisor and see if you can get the ball rolling - you might be able to get the valuation done before the auction and have your mortgage offer in place so that you can bid with confidence. Just tell your advisor the maximum you can afford to bid and get him to sort you a mortgage on that basis

catt_2

imoneyop

Lots to do in very little time then! Will sort out finance as a priority.