Modern Method of Auction - Experiences and Tips?

chaotic_j

Hi,

We are going to view a property which is for sale under the 'modern method of auction'. I was just wondering if others who have tried, or been successful in purchasing a property in this way have any experiences and tips to share please?

It is a detatched 300 year old house on a very sizeable plot in a good area near to school and nursery. Ticks nearly all the boxes. Seems to have been empty for 2-3 years. Needs modernisation? Radiators look rusty and generally it's very unloved.

Sold for £97,500 in 1998 and then £420,000 in 2008. Previously offers over £380,000. Now with a guide price of £250,000 with reserve no more than 10% i.e. potential min. £275,000 offer, 3.5% PLUS VAT at 20% to the auction house which I work out as £10,500 - NON refundable, exchange contracts in 28 days, complete in a further 28 days.

Presume someone bought at the height of the boom then got into difficulty? The £10,5000 would be an 'exclusivity' fee which is non refundable - I have the money and also a large deposit for a mortgage but this is NOT yet arranged - would it even be possible to do that in the quoted timescales?

Previously we saw three other properties we were interested in being sold in this way:

Property 1: Serious damage to parts of house from gutters, central heating stripped out by thieves, cracks in walls (possible spine wall foundation issue or roof deflection) found out cellar had been flooded for some time due to the theft. Went for a LOT less than the original 'auction price' in the end! Used to be a business property but they had moved out.

Property 2: Serious damage to whole house from gutters, literally mushrooms on the carpet and mould in every room. Went for slightly less than the original 'auction price' in the end. Owner had died, sale agreed once but they refused to clear out the contents and it fell through which I think is why it went to this modern method of auction to try and prevent it happening again?

Property 3: Wasn't being sold as modern method of auction when we first saw it.. attractive price, all liveable just dated.. one of the owners was unwell and they were struggling to sell it. In hindsight should have bought it. Ended up going modern method of auction and went cheaper than previously being advertised for..

Would really appreciate all your experiences, tips, strategies etc!

Thanks in advance
chaotic_j

Bossypants

I'm no expert so by all means someone correct me if I'm wrong, but the fact that it went from 'offers over' £380k to reserve £275k raises a flag worth checking out to me. You might be right that someone got into difficulties with the mortgage, but it's equally possible that something majorly nasty was uncovered during the original selling process.

Proceed with caution I would say.

Mr.Generous

modern method of auction is a way to get buyers to pay the sellers estate agent fees basically, although they probably add in a few other charges if they can get away with it.

Personally I would not buy anything offered this way unless it was well below market price.

eddddy

28 days is usually enough time to get a mortgage offer. And it's unlikely that the seller would 'dump' you after 28 days, if you were getting close to exchange.

I guess the main risks are:

1. The mortgage lender refuses you a mortgage - either because their valuer doesn't like the property, or something bad shows up about you.

2. Your solicitor finds something in the legal pack which you hadn't noticed, and it makes you want to change your mind about buying.

In either of those cases, you would lose your £10.5k.

Also, many people think it's outrageous that an auctioneer gets £10.5k in commission - but that's kind of a different issue.

stator

Avoid, completely and utterly avoid.
Pay £10k for the right to try and buy a house?
No thanks!
So many things get delayed and you would lose the cash with no comeback.
How would you know if the house is even mortgageable?
Tell them to stuff their auction and make an 'standard' offer in the normal method, making clear they have to pay their own fees and you won't pay a deposit except the normal one at exchange of contracts.

sparky130a

For MMOA read muppets make offers anyway.

If it were me, i'd stay well away.

Davesnave

I only know one property that sold this way and data shows it went for the same price as it was previously advertised for.

So, presumably, it ended up more expensive for the buyer, a 'developer' who hasn't managed to turn around the developed property in the 10 months since its completion.

A sample of one isn't much to go on, but it does look as if that one went to someone naive; not an experienced developer, who'd never have their capital tied-up so long.

getmore4less

https://forums.moneysavingexpert.com/discussion/5573510

no followup from the poster.

chaotic_j

stator wrote: »

Avoid, completely and utterly avoid.
Pay £10k for the right to try and buy a house?
No thanks!
So many things get delayed and you would lose the cash with no comeback.
How would you know if the house is even mortgageable?
Tell them to stuff their auction and make an 'standard' offer in the normal method, making clear they have to pay their own fees and you won't pay a deposit except the normal one at exchange of contracts.

Hi stator,

I have read online that the vendor will have entered into an agreement with the auction house and so it wouldn't be possible to buy outside of this process? i.e. the sale would have to progress via what they have signed up for? Is that correct?

Also, we have been to look at the property now..

Apparently it was rented out until 'recently' which is why it is now for sale as the tenants have left.. all the services were turned off!

Inside it was quite cold and unheated with a lot of condensation on the windows - not really surprising given the weather. There was some bits of mould in the rooms and a bit of moisture on the stone flag floor in another area but nothing too awful.

When I went into the small two chamber vaulted cellar, it was dry lined and plastered with gypsum on top. Under the stairs a hole had been cut through the dry lining, a stone flag had been lifted and earth dug out underneath!

There was a large pool of water! with a clay drain/pipe either side, the middle section of which was missing! I asked the estate agent if he knew anything about this - and he said no! In the kitchen which was quite nice, there was a burnt electrical fuse sat on the worktop? Not sure if that bears any relevance.

The other main concerns were that in some of the rooms on the side of the house with the render/on the front wall there were horizontal cracks to the plaster. It looked like some had been patched up previously. I wonder if this is due to the wrong materials being used i.e. the cementitious render, pointing and gypsum plaster inside? or just historic movement of the building?

A large outbuilding housed the boiler - the entrance was set down a couple of steps and this area was full of water from a drain! I gingerly stepped over a couple of bricks and went into the boiler room. It was full of building materials including about 20 large bags of gypsum - yuck! The boiler had the cover off and looked like it was from the 60s/70s with HUGE pipes etc. and some ginormous kind of heating coil that looked like it was no longer used. I would be really surprised if it worked! Flags on the floor to step on seemed to suggest the water had gained entry at some point!

Other areas of concern the pointing outside was thick and cementitious over the soft sandstone, a large side wall is cement rendered with some cracks to the render. Inside I believe some sections of original lime plaster have been replaced with gypsum as well.. so all in all not good for moisture levels as the house will struggle to breathe in parts..

Despite this it did have some charm and it was on a lovely big plot! I take it the above would put most people off! Does it sound unmortgageable?

Thanks,
chaotic_j

sparky130a

chaotic_j wrote: »

Hi stator,

I have read online that the vendor will have entered into an agreement with the auction house and so it wouldn't be possible to buy outside of this process? i.e. the sale would have to progress via what they have signed up for? Is that correct?

Also, we have been to look at the property now..

Apparently it was rented out until 'recently' which is why it is now for sale as the tenants have left.. all the services were turned off!

Inside it was quite cold and unheated with a lot of condensation on the windows - not really surprising given the weather. There was some bits of mould in the rooms and a bit of moisture on the stone flag floor in another area but nothing too awful.

When I went into the small two chamber vaulted cellar, it was dry lined and plastered with gypsum on top. Under the stairs a hole had been cut through the dry lining, a stone flag had been lifted and earth dug out underneath!

There was a large pool of water! with a clay drain/pipe either side, the middle section of which was missing! I asked the estate agent if he knew anything about this - and he said no! In the kitchen which was quite nice, there was a burnt electrical fuse sat on the worktop? Not sure if that bears any relevance.

The other main concerns were that in some of the rooms on the side of the house with the render/on the front wall there were horizontal cracks to the plaster. It looked like some had been patched up previously. I wonder if this is due to the wrong materials being used i.e. the cementitious render, pointing and gypsum plaster inside? or just historic movement of the building?

A large outbuilding housed the boiler - the entrance was set down a couple of steps and this area was full of water from a drain! I gingerly stepped over a couple of bricks and went into the boiler room. It was full of building materials including about 20 large bags of gypsum - yuck! The boiler had the cover off and looked like it was from the 60s/70s with HUGE pipes etc. and some ginormous kind of heating coil that looked like it was no longer used. I would be really surprised if it worked! Flags on the floor to step on seemed to suggest the water had gained entry at some point!

Other areas of concern the pointing outside was thick and cementitious over the soft sandstone, a large side wall is cement rendered with some cracks to the render. Inside I believe some sections of original lime plaster have been replaced with gypsum as well.. so all in all not good for moisture levels as the house will struggle to breathe in parts..

Despite this it did have some charm and it was on a lovely big plot! I take it the above would put most people off! Does it sound unmortgageable?

Thanks,
chaotic_j

It's all yours. Because i doubt many others will be bidding on the terms described.

Hoploz

Two large queries for me ...

Is this property mortgageable? You don't want to be spending a large sum of money committing to a purchase you will be unable to make.

Is the property able to be modernised to the standards you wish to live in? Asking due to age - many properties of ths age are listed and simple improvements to modern standards such as double glazing, even timber framed double glazing, are not permitted under conservation laws.