Why would a house be sold by auction?

KaratePigeon

We've seen a bungalow for sale, in the area we want to buy (where very little comes up for sale at the moment!)

But on the rightmove listing it says 'for sale by auction, unless sold prior'. What does this mean, is it for cash buyers only? is there likely to be something structurally wrong with it?

I haven't seen it for sale before so it's not like a last resort because it hasn't sold, and it's a very desirable area (though the property looks like it does need some work from the photos!)

we would need to sell our house first (which is on the market), I guess this means we can't bid at auction?

HampshireH

Repossessions are sometimes auctioned but often unusual or poor condition houses are auctioned

Likewise something which needs a quick sale / cash buyer

Thrugelmir

Someone has died intestate and has no tracable living relatives.

As you've a property to sell then you wouldn't be in a position to proceed quickly.

KaratePigeon

Ok thanks, is it worth me phoning up about it or do you think they wouldn't consider an offer from someone in a chain buying with a mortgage? (obviously I'd need to get surveys etc done but just wondering if it's even worth me making further enquiries)

If it went to auction, would it usually sell for less, or more than the guide price?

AlexMac

Lots of reasons; maybe in poor shape, maybe structural problems or even unmortgageable, or maybe the vendor (whether an individual, an executor or repossessor) just wants a quick sale.

But as most auction sales require completion in 28 days, you'd probably lose your deposit unless you can finance it pronto. Even buying on a mortgage without having to sell your existing home would be dicey.

I did it once but only by the skin of my teeth, via a very accommodating lender, days after my own bank had said they'd lend me the necessary... but subject to a 100% retention pending a full survey, timber survey, damp survey and (wait for it) tree survey!

You can get "auction bridging loans" but that too ain't for the faint-hearted as eventually you'll want a regular mortgage - which will depend on surveys etc.

So uness you have ready cash, I guess that's a no in your case; keep searching; good luck!

AlexMac

Sorry; I just saw your follow up Q. I used to follow local auctions (sad eh?) While in the 90's prices seemed to be under market value in that it was mostly developers buying to turn a profit, there was then a weird burst of interest (probably prompted by TV programmes like "Homes under the hammer") in the 'noughties, where individuals were buying for themselves and prices didn't seem to be bargains. Although prices round here were rising so fast that you's turn a profit if you just sat on the wreck for 6 months and sold it improverd or not.

For example, the place I bought in 1997, on the guide price, for £67k, and which then cost £25-30k to mend, sold 3-4 years later for a ridiculous £180k.

Dunno what's happening now- look at past results of any of the many auctioneers websites; links at
https://www.propertyauctionaction.co.uk/
and compare sold prices with other calues and sales in the area (from Zoopla, etc)

or don't- or you'll become a sad property geek like me!

KaratePigeon

ok, I guess it's a no then. thanks for the replies

Thrugelmir

KaratePigeon wrote: »

Ok thanks, is it worth me phoning up about it or do you think they wouldn't consider an offer from someone in a chain buying with a mortgage? (obviously I'd need to get surveys etc done but just wondering if it's even worth me making further enquiries)

If it went to auction, would it usually sell for less, or more than the guide price?

If the vendors were prepared to wait they would market the property through an EA.

All depends on the day. Guide price is often conservative. Particularly if there is redevelopement opportunity.

misswansea

I bought a house at auction once

It had been repossesed and was not in the best state.

I didn't have a house to sell but would need a mortgage.

I found a solicitor who was experienced at auction purchases and he suggested making an offer in advance of the auction as sometimes they are accepted. I tried but was turned down so off to auction I went.

The solicitor did some searches in advance for me , so if I didn't win i would still owe him some fees for his work.

I applied for a mortgage be fore the auction and the mortgage company did their valuation before hand too, so I also paid that valuation fee and the mortgage application fee for a house I might not get to buy, but did have mortgage that was fully agreed before I bid.

The auction rules were that once won exchange of contracts occurred on the auction day. I had to sign the contract and pay the 10% deposit before leaving the auction room. I moved money to my current account 5 days before and used my debit card on the day.
I then had 21 days to complete the purchase or I would loose the 10% deposit and the house (I mayalso have been liable for cost of auction too, can't remember)

All very hairy stuff! Was very glad of the experienced solicitor.

I did have a back up plan if the mortgage didn't come through in time (short term Private loan offered by a family member)

Probably not for you, even if you managed to get it all lined up if something went wrong with your buyers chain you could end up loosing both your deposit and the house.

Might be worth keeping an eye on it though, whoever buys it at auction may be looking to do it up and sell. You could put a note through the door after the auction in case they want to sell it on quickly, or the chance of an estate agent free sale once they've done it up nicely for you.

chappers

KaratePigeon wrote: »

ok, I guess it's a no then. thanks for the replies

Not at all it says unless prior sold , so ring them up and offer, though be prepared that if they accept your offer they may insist that you at least exchange or maybe even complete before the auction date.
Ask them their position, not us lot who can't begin to guess the motivation for going to auction

G_M

When is it scheduled for auction? Will you be in a position to at least exchange before the auction date?