Help! - How to buy a house at auction?

Tiger_greeneyes

You won't be told what the reserve price is, but you could try making an offer, if it's also being advertised by an EA then it's on the market. Tbh, it doesn't matter why it's being sold, so don't waste time puzzling that question!

Have you applied for a legal pack from the auctioneers yet? That should be done asap if you're serious, and you need to get it off to your solicitor without delay so they can start working on it. Remember that not all solicitors will touch auction properties so you may need to shop around for one that will.

You also need to apply for a mortgage and have a survey done prior to the auction. I know you'll be racking up solicitors fees and survey fees and mortgage booking fees - but that's what buying in auction is all about... you need to do your homework because nobody else will do it for you. Once the hammer has gone down, then you're on your own. It's worth nothing that some sellers have it written into the legal pack that the buyer pays all their legal/selling costs :eek:

You may have as many as 28 days to complete but that will be indicated in the legal pack. In the nicest possible way, I think you're being naive if you think that you can do all the conveyancing and apply for a mortgage from scratch after the auction has ended. For instance, what if the surveyor finds a major fault and the lender withholds your mortgage funds? Do you have the cash sitting in the bank to buy the property outright? Would you still want to buy the property if it needed, say, £30,000 worth of work doing on it? You'll need a back-up plan if you're doing it that way around because once you've won the auction you've committed yourself to buying, come what may. There's no backing out and if you come across insurmountable problems then you're looking at far reaching financial implications - including losing your deposit.

I don't mean to rain on your fireworks - auctions can be a brilliant means of getting a bargain - and they look great fun on the tv - but in reality they can also be a minefield. It's 90% preparation, 10% fun!

All (!) you need to do is get everything in place prior to the auction - get the go ahead from your solicitor, surveyor and mortgage lender and then with any luck you'll be successful in the auction

firesidemaid

you say you might not have a full survwy done as the house was only bought 2 years ago. what if they never had a survey done and have since found out major works need doing? could be why it didn't sell/is going to auction.

Tiger_greeneyes

Sazzacat has a very good point.

There are many reasons why a property would be put into auction - structural defects is just one of them - and probably the most worrying for the purchaser.

catt_2

Thanks Tiger and Sazzacat.

We've applied to the auctioneers for the vendor's legal pack. Prompted by you Tiger, I spoke to our solicitor who wants the legal pack asap. So I will deliver it by hand. Also spoke to our surveyor who is willing to inspect at short notice but warned it sounds like non-standard construction and could prove expensive to insure. We need to find out who the vendor's insurers are. Tried our insurance co. and they won't insure it. We are sorting out finances this weekend. With interest rate increases looking ever more probable, we don't want to over extend ourselves.

Richard_Webster

catt wrote: »

sounds like non-standard construction

Might also be unmortgageable! Many lenders are unhappy with non-standard construction, depending on how non-standard!

You must have a firm mortgage offer (not just a decision in principle) prior to the auction and your solicitor must be happy with the legal pack.

As a conveyancing solicitor I believe the information given in the post to be useful but I accept no liability except to fee-paying clients.

Wig

You either have the money in the bank to pay your top bid price, or you are not IMO suitable for buying at auction. Auctions and mortgages DO NOT MIX.

Bridging loans - fair enough
personal bank loans up to 25K arranged before auction - fair enough

Arranging a mortgage after auction hammer, NOT a good idea.

The legal pack will contain all documents of title, and charges searches, coal searches, and other stuff, so there is no need for your solicitor to do these for you. Some vendors do not provide legal pack until the day of the auction (walk away).

If you are unable to survey a house yourself competently, then arrange a survey to be done, in one of the viewing periods - can work out to be very costly if you are not the winning bidder. You should only be interested in this property if you are prepared to pay "guide price" + 30%

The conditions of auction should (unless specified otherwise for this particular LOT) stipulate that vacant possession will be given on day of completion. You need to ask the auctioneer if vacant possession will be given.... it may be the vendor is the occupier and they are selling it whilst retaining a long term lease of 20 years, or until they die. Anything is possible at auction.

You could also look into solicitors who are used to handling auction properties, some may be advertised in the auction catalogue or here are a couple who advertise with Barnard Marcus

http://www.barnardmarcusauctions.co.uk/PDFs/PDFAds/Legal/ThomasGuiseAd.pdf

http://www.barnardmarcusauctions.co.uk/PDFs/PDFAds/Legal/PreuveneersAd.pdf

Wings

imoneyop wrote: »

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!

All mine have been for completion in 4 weeks, but that is not to say that 7 days or even 14 days may not be imposed at other auctions.

Wings

There is nothing to stop you knocking on neighbour's doors and having a gossip on the history of the property and why the property is on the market. Also a search of the Land Registry will indicate both prices of other neighbouring properties, so giving you a guide on prices, and whether the has been subjected to a mortgage.

I don't altogether agree with the previous poster's concerns with buying at auctions, for I have had no problems with doing the same, even arranging a mortgage after the hammer has fallen. My only advice to a first timer would be to set in your mind a maximum price for the property, and then not to allow the atmosphere of the auction to lead to you going beyond that price.

lindsayg_2

I'm thinking of buying a second property at auction and my first bit of research was to go to an auction. And I'm very glad I did.

It's an odd experience, and not at all what I was expecting. Most of the properties went at much higher than the listed guide price - although the bidding always started much lower - and the other buyers there had really done their homework. I chatted to a few of the people stood near me (it was standing room only!) and they all knew a surprising amount about many of the properties listed.

I would urge you to try one as a disinterested party first. Even if you miss this particular property, there'll be another one along another time. What I learned mostly that day was that, while there are, as folk say, bargains to be grabbed - it would be very easy to get it wrong.

just my 2p...

Lara

interesting thread and something I have been wanting to do. Too much TV obivously! Where do you look for Auctions? I have not seen any advertised near me or in EA's?