Buying flat from auction - a few questions

Doozergirl

That's exactly what it says.

hazyjo

I did say as much in #6. Although this appears to be anyone, not just someone needing a mortgage.

G_M

That certainly seems to be the case.

My guess is that this is a repossession. The original owner defaulted on their mortgage (with http://www.chlmortgages.co.uk/ ?) and CHL are now selling.

If the property sells at auction for less than the mortgage value, the original owner will still owe CHL the difference.

If the buyer (you) later sell the property again for more, the original ower could accuse CHL of selling too cheaply, and therefore claim he no longer owes the dfference.

Hence the clause which protects CHL from a claim by the the original owner.

But that's just a guess.

If you intend to renovate and sell within 12 months, find another prperty.

If you think your renovation will take 12+ months, no problem.

AdrianC

szyblaszczyk wrote: »

That's a huge trap if so!

And that's why you need to go all over the paperwork carefully before bidding.

Oh, and if you do go ahead and buy/refurb/sell, don't forget you'll be viewed as trading, so need to pay income tax on your profits.

szyblaszczyk

Thank you very much for everybody's help. I will take all your advices into consideration.

We saw all 6 flats. I went through all legal packs and found out that 4 from 6 flats we are potentially interested to buy are not worth doing it. Three of them can't be sold withing 12 months and other one needs 5000 pounds additionaly to obligatory change all windows.
Other 2 flats looks fine to me but of course we will send legal packs to solicitor to make sure. Anyway it was a great and satisfying experience to check legal packs by myself and save money. More legal packs to analyse, more money to spend. :-) And I learnt something useful for the future!

Still some time left until auction. Will check and calculate as much as we can before it.

elsien

Go to some auctions if you haven't already so you know what to expect and can also see the difference between the guideprice and what some properties actually sell for.

szyblaszczyk

elsien wrote: »

Go to some auctions if you haven't already so you know what to expect and can also see the difference between the guideprice and what some properties actually sell for.

Already been to some auctions. From what we saw I think we can expect 30-70% higher price than guide price.

szyblaszczyk

I thought yesterday that there are potentially 2 flats we are interested in but it looks like there is just one left... Found out that it might be a huge problem for potential buyer to get a mortgage for the flat which is under 30 square meters. And this one is just about 30 square meters. Confirmed by documents. I think we might get much much less potential buyers on this one compared to any other above 30 square meters!

What do you think? Avoid?

eddddy

szyblaszczyk wrote: »

I thought yesterday that there are potentially 2 flats we are interested in but it looks like there is just one left... Found out that it might be a huge problem for potential buyer to get a mortgage for the flat which is under 30 square meters. And this one is just about 30 square meters. Confirmed by documents. I think we might get much much less potential buyers on this one compared to any other above 30 square meters!

It's almost impossible to get a mortgage on a studio under 30 sq meters. (That's probably one of the main reasons it's in an auction.)

So your target market is likely to be BTL investors with cash.

To work out whether it's a good proposition, take a look at sold prices for similar small studio flats in the same area.

Cakeguts

szyblaszczyk wrote: »

I thought yesterday that there are potentially 2 flats we are interested in but it looks like there is just one left... Found out that it might be a huge problem for potential buyer to get a mortgage for the flat which is under 30 square meters. And this one is just about 30 square meters. Confirmed by documents. I think we might get much much less potential buyers on this one compared to any other above 30 square meters!

What do you think? Avoid?

Go and do some research. It seems as if you are going through an auction catalogue looking at what you can afford to buy now rather than what fits your business model.

If you are buying properties at auction you have got to know what sells on and what is unlikely to get a mortgage.

I am a landlord I did lots and lots of research on what lets well in a particular area. You need to do that amount of research in what sells well in a particular area.