First time buyer. Buying at auction with a mortgage.

lissie7777

Hello, I am a first time buyer and I've seen a property that I love which is going to auction next week. I have had a valuers survey done with the bank free to ensure the price of the house. They state it is worth 85000 as is but say there is some old movement and something in the loft space which needs investigation and under the floorboards (I think to do with the timber) in the back room so are holding £2000 back until I get it investigated by the expert. This has made me slightly nervous-is this a normal thing? Also, is it worth me getting a pre auction conveyance report and forking out just in case there is a problem with the title (not sure what that is)? The solicitor and i spoke yesterday and he said that if there are any issues I would lose my deposit so I should get it done beforehand... Is this just him just touting for business? Help!


Thanks

Senior_Paper_Monitor

In my opinion auctions are generally for big boys' - those who can take a risk with a few grand.


This means paying for some advance research in advance (survey and searches) and accepting there is no guarantee of getting a successful purchase and/or realising you might still buy a 'pig in a poke' and have to cough up some serious sums of money to fix the issue.


I agree with your solicitor.


Please realise that you will be competing with others more experienced and probably much better funded than you - I guess successfully bids at auction are 1 in 3 at best, so you might have to pay for several 'goes'.

ruggedtoast

There really isn't much point appointing a solicitor if you are going to ignore his advice in favour of a bunch of randoms on a web forum.

kingstreet

Absolutely essential you have a solicitor inspect the documentation prior to auction. Basically, you should do everything which would be done for a normal purchase, but before you make the offer instead of after.

Kynthia

You should be almost ready to complete once you go to the auction as you absolutely must complete 28 days later. This means you have to have paid money up front on surveys, searches and analysing the legal pack. Due to the risk of the mortgage lender taking too long or not agreeing to lend, the majority of auction buyers are cash buyers.

stator

Yes it's quite risky. You have to pay a large deposit, plus auction fees on the day. Completing within 28 days is going to be tricky with a mortgage to get sorted.
You need to get professional advice from an experienced solicitor or conveyencer who deals with auctions.

steeeb

Go to the auction anyway but don't bid to get a feel for the process. Then, when you go there and it sells for 40k you can kick yourself and then see it as a trier next time. If it sells for 100k you can be thankful you didn't waste a load of money for something you would never have been able to get in the first place.

hazyjo

Bear in a mind a lot of properties are put into an auction because they're unmortgageable.


Don't take any risks! You need a firm mortgage offer, not just a mortgage in principle or the like.


You're committed to buy if you win the bid. You will lose your deposit (and much more) if it falls through. Also may incur fines at least if it's delayed.


Most house purchases take three months. You'll be pushing to do it in probably a month. It may not be possible.


I wouldn't touch an auction property with a bargepole unless I was a cash buyer. Obviously plenty do, but you must be aware of the risks. Listen to your solicitor - it's what you're paying them for.


Jx

lincroft1710

lissie7777 wrote: »

I have had a valuers survey done with the bank free to ensure the price of the house. They state it is worth 85000 as is

But it could go for a lot more at auction


but say there is some old movement and something in the loft space which needs investigation and under the floorboards (I think to do with the timber)

As long as it is not dead bodies or a colony of rats

I also agree with the advice and comments of previous posters

AlexMac

If you still feel like taking the risk after the advice above, and just in case you bid successfully, do more homework and have alternative funding up your sleeve.
- The auction house should have a 'legal pack' which I assume you have given your lawyer, and I assume s/he has also checked the title (who it belongs to, whether it's freehold, leasehold, boundaries...) with the land registry for any problems...
- check your mortgage offer is bombproof, and that they can meet the usual 28-day deadline to do their messing around and relese the cash, as you are committed when the hammer goes down, and will lose (at least) your deposit if you fail to complete in time. And even if it is...
- look at other sources of funding if the lender lets you down; based on my experience, below

I bought at auction, some years ago, when I was wet behind the ears. Had spoken at length to my lender (NatWest, with whom I'd banked since I was 17) who were posistve throughout but who let me down a few days before the completion deadline by imposing a 100% retention until I commissioned and I paid for and they examined a series of 4 surveys by appropriately qualified experts; a full structural, a timber & damp, a roof and a tree survey! So = no dough for weeks.

Luckily I'd gone to Halifax (who then had in-branch Mortgage Advisors not kids in remote call centres like then at NatWest) who pulle the required £60k out of the hat in time.

All this happening over Christmas in the month before my end January wedding; which, in consequence nearly didn't happen as wife to be thought my property empire planning skills were a little - mistimed?

So all right on the night- just, and in then fast-rising local property market I made a bundle...but if you go down that route, ask yesself

- can I take the stress?
- do I feel lucky
- can I afford to lose £10k if it goes teats up and
- am I really saving a loada dough compared with a more routine purchase

lissie7777

Thanks so much everyone for your advice. I will be contacting the solicitors in the morning! Better to lose a little bit of money and not win than win with the possibility of losing a whole lot more!!