Auction - must exchange within 28 days

eddddy

cs0rpc wrote: »

The terms and conditions state that there must be exchange of contracts within 28 days and completion within a further 28 days.

There is some confusion here.

Some posters are assuming you are talking about a conventional auction...

... but I suspect you are talking about a particular firm, who call their auctions "Modern Auctions".

The buyer pays a reservation fee to the auctioneer (usually a minimum of £6k) and then has 28 days to exchange. If you fail to exchange you lose your reservation fee.

My big objection to this is that the £6k fee all goes to the auctioneer/EA - not the vendor. It seems like a ridiculously large fee.


Like you, I wouldn't take the EAs word for the flexibility over exchange, unless it was in writing.

blackshirtuk

also if you are hoping to get a mortgage on it. It must be habitable ie have a working kitchen and toilet

Thrugelmir

eddddy wrote: »

My big objection to this is that the £6k fee all goes to the auctioneer/EA - not the vendor. It seems like a ridiculously large fee.

Vendor pays no fees. The fees are transparent so can be priced into the bid made.

Better than putting down a 10% non refundable deposit then failing to exchange contracts.

stator

Yes it does sound a bit like one of those "Modern Auctions". Personally I would avoid them if possible. It's another money making trick by estate agents.

However if it's the only house you love then go ahead but check the T&C carefully.

cs0rpc

This a "conditional lot" auction:

* exchange contracts within 28 days
* complete purchase within an additional 28 days of the exchange
* a non-refundable £3,600 deposit
* pay an admin fee of £780 (including VAT)


I have had a through survey completed, researched local house-prices, etc. I have DIP on mortgages, but I'm not going to pay product fees up-front for a property I don't know if I will win at auction. I can take losing the survey costs. I property is OK, but tired. My concern really lies in any delays in searches coming back or the processing time for the mortgage. There is also risk that the valuation may not match what I pay, but I have enough funds to cover a shortfall.

alchemist.1

cs0rpc wrote: »

This a "conditional lot" auction:

* exchange contracts within 28 days
* complete purchase within an additional 28 days of the exchange
* a non-refundable £3,600 deposit
* pay an admin fee of £780 (including VAT)


I have had a through survey completed, researched local house-prices, etc. I have DIP on mortgages, but I'm not going to pay product fees up-front for a property I don't know if I will win at auction. I can take losing the survey costs. I property is OK, but tired. My concern really lies in any delays in searches coming back or the processing time for the mortgage. There is also risk that the valuation may not match what I pay, but I have enough funds to cover a shortfall.

Engage a broker if you are worried about timescales re mortgage.
Some lenders will have a turnaround of 10 days others 2 months.

davidmcn

cs0rpc wrote: »

This a "conditional lot" auction:

* exchange contracts within 28 days
* complete purchase within an additional 28 days of the exchange
* a non-refundable £3,600 deposit
* pay an admin fee of £780 (including VAT)

When it says "exchange contracts" - is that in a form agreed at the auction? Or left to be negotiated during the 28 days? If the latter, what happens if the seller isn't prepared to exchange contracts in terms which you're happy with?

cs0rpc

Got a mortgage adviser to help out on that front.

One further question - under what scenarios do mortgage companies without funds? Is it for any issues with a property? Or is it more driven by existing issues that could devalue property further if not addressed (e.g. roofing issue causing damp)

stator

They withhold funds if it is an important issue that needs to be addressed right away. They withhold the funds to make sure you do the job. Leaky roofs, damp problems, visible cracking, broken doors, missing bathroom, could be anything really, but it must be something that is fixable. They will probably ask for a quote for the works before they offer, so that would delay things. Be aware that some lenders won't ever withhold funds, they will simply decline the mortgage until the works are done BEFORE completion. Bank of Ireland/Post Office are one such lender.
If it is a serious problem that could be fixed they might impose a 100% retention, which would stop you buying the house unless you have all the cash.
If there is a very serious defect, like obvious structural movement that can't be fixed or determined to be safe they will decline the mortgage completely and you would lose all of your deposit and fees paid already.

Why not apply for a mortgage with no fees like Santander? Then you have something to fall back on.

Please be sure before you do this. Are you willing to lose the £4.5k if things go pear shaped?

solchain

My memory isnt the best, but I watched a program on TV years ago where a chap bought a house at auction, he didnt have his mortgage ready so didnt complete within the 28 days, it cost him thousands in the end (I think 20k), to the point that the family that had originally put the house up for auction no longer needed to sell it because the money they got from him covered what they needed.