What do I need to have in place before an auction?

jonathanh1989

Hello

I've seen a 1st floor maisonette which will be auctioned on the 24th March. I have 20k towards a deposit and the guide price is 55k. I've spoken to the solicitor representing it who has informed me there's 104 years left on the lease and I have spoken to my bank who have assured me I could borrow up to 65k providing the property is deemed habitable.

I've viewed the property. It's an ex council house so fairly modern. It would just need a coat of paint, some new carpet and a new kitchen fitted and would be good to go. It may need a new boiler as it runs on an old gas fire back boiler at the moment.

The esate agents have informed me the legal pack won't be available until a week before the auction. I've arranged another viewing and will take my parents along to as a fresh pair of eyes.

At what point do I need to aproach a solicitor and what will I require from them? (Sorry I'm a first time buyer and quite unsure as to the processes involved.) Would a survey and valuation be necessary and would there still be time for this? Who carries out the survey and valuation and what does it cost?

The mortage advisor said an agreement in principle is not worth the paper it's written on and is simply a guide to the ammount the bank would be able to lend me. He said to make contact once I've bought the property. Does that sound good advice?

Is there anything else I can to do prepare before the auction?

Thanks in advance for any input and advice
Jonathan

DTDfanBoy

You're braver than me if you're prepared to bid on a property without have a mortgage offer in place :eek:

If it takes you longer than 28 days to run through the mortgage application you're in a very bad position.

You should find a lender willing to offer you a mortgage subject to valuation before bidding on the property, not having the valuation done till after you've bid at auction will save you a few £££ if you don't win the property

eddddy

It's a difficult process to buy an auction property when you need a mortgage.

You really need a firm mortgage offer on that specific property before you bid. (So you will have paid legal fees, mortgage application fees etc - which you will lose if you are outbid.)

And a very important question to ask yourself:

If a property is mortgageable and suitable for an FTB, why doesn't the vendor sell it through a conventional EA and get a much better price?

(The answer usually is that there's something wrong with it, and it isn't mortgageable. But perhaps you've found one of the exceptions.)


Here's a recent example of someone buying a house at auction without realising it had subsidence (because nobody will tell you these things, you have to check) : https://forums.moneysavingexpert.com/discussion/5189856

jonathanh1989

DTDfanBoy wrote: »

You're braver than me if you're prepared to bid on a property without have a mortgage offer in place :eek:

If it takes you longer than 28 days to run through the mortgage application you're in a very bad position.

You should find a lender willing to offer you a mortgage subject to valuation before bidding on the property, not having the valuation done till after you've bid at auction will save you a few £££ if you don't win the property

There are few mortage companies that are willing to lend to me. They either don't take tax credits into account or require my wife to be on the appliaction in order to do so, but she's a foreign national. Natwest, who I currently bank with, have offered me a mortage subject to the property being habitable (roof, toilet, kitchen). Is that not the same thing?

ognum

jonathanh1989 wrote: »

There are few mortage companies that are willing to lend to me. They either don't take tax credits into account or require my wife to be on the appliaction in order to do so, but she's a foreign national. Natwest, who I currently bank with, have offered me a mortage subject to the property being habitable (roof, toilet, kitchen). Is that not the same thing?

The problem is the 28 days, it sometimes takes them a while to get someone out to value and do all the admin,28 days is a tight turn around.

Do you have some other method of payment if the mortgage doesn't come through in the short term, can you borrow from someone, do you have equity on a credit card,can you pawn some diamonds!!!!

If you don't complete its possible you will be given more time. If not you lose your deposit.

I am sure you are aware that guide prices are a 'come and get me' price and if more than one person is interested it may go well above that.

jonathanh1989

ognum wrote: »

The problem is the 28 days, it sometimes takes them a while to get someone out to value and do all the admin,28 days is a tight turn around.

Do you have some other method of payment if the mortgage doesn't come through in the short term, can you borrow from someone, do you have equity on a credit card,can you pawn some diamonds!!!!

If you don't complete its possible you will be given more time. If not you lose your deposit.

I am sure you are aware that guide prices are a 'come and get me' price and if more than one person is interested it may go well above that.

Yes I am aware we might not get it. It's guide price is 50-55k and I would go up to 60k. No we have no other funds only 27k savings, 20k towards the house and 7k for any fees and work that needs doing.

I'm going to see if Natwest will offer something more concrete and carry out a survey before the auction. I'd rather risk loosing some money with no property at the end of it than buying into a horror story.

jonathanh1989

eddddy wrote: »

It's a difficult process to buy an auction property when you need a mortgage.

You really need a firm mortgage offer on that specific property before you bid. (So you will have paid legal fees, mortgage application fees etc - which you will lose if you are outbid.)

And a very important question to ask yourself:

If a property is mortgageable and suitable for an FTB, why doesn't the vendor sell it through a conventional EA and get a much better price?

(The answer usually is that there's something wrong with it, and it isn't mortgageable. But perhaps you've found one of the exceptions.)


Here's a recent example of someone buying a house at auction without realising it had subsidence (because nobody will tell you these things, you have to check) : https://forums.moneysavingexpert.com/discussion/5189856

Thank you, reading that makes skipping a survey less tempting. A full survey would rule out those kind of problems right?

HouseBuyer77

Bear in mind that a bank may refuse to offer a mortgage for all kinds of reasons. The only way to be 100% sure is to complete the mortgage application and only bid on the property if you have the official mortgage offer in your hands (not entirely sure how banks deal with mortgage offers on properties going to auction so you don't actually know the purcahse price, I presume you just give them the upper limit you're going for and they'll do an offer based on that and the valuation survey).

On top of this a homebuyers survey so you are aware of any problems would be prudent, again done pre-auction (if you win, you're buying, no way out). The bank's valulation survey just assures the bank they can probably flog the house for enough money to make up a loss, it could pass with flying colours and there still be plenty of issues to deal with.

It's very important to know you can definitely get the mortgage and you're happy with the property. If you win the auction and then the mortgage doesn't work out you will loose your deposit and potentially be sued for further costs. So if it all goes badly wrong you'll have all of your savings taken from you and have no property.

ognum

jonathanh1989 wrote: »

Thank you, reading that makes skipping a survey less tempting. A full survey would rule out those kind of problems right?

This may make interesting reading for you from a couple of days ago!

https://forums.moneysavingexpert.com/discussion/5189856

bris

What's the house really worth and do you really have a chance at 60k. Guide prices are useless with auction properties, often they are just the figure required to satisfy the debt on the property.


You need a survey to make sure it's mortgagable and to give you a better valuation, if the property is in decent condition then the guide price can be well out.


If you don't have a mortgage in place then 28 days is going to be very hard to achieve, then the penalties start to kick in, and they are not cheap.

lincroft1710

As it's ex-council, are there forthcoming expensive building works planned by the council, to which the owner of the maisonette will be forced to contribute?