Raising finance to buy at auction?

ReadingTim

G_M wrote: »

You need to have all your finance in place before you bid. No good bidding, winning, then applying for a mortgage (or other loan) only to have your application delayed or worse, refused - leaving you with penalties for not completing on the contract.


A Mortgage in Principle is not enough. You need a firm mortgage offer.


Or, like most people at auctions, you need cash in the bank.


There's a reason most people use estate agents.......

And a reason why auction properties appear cheaper than those marketed via estate agents....

G_M

bridgend_girl wrote: »

Thanks. I know that a mortgage offer is not enough. The guarantor could 'guarantee' the sum but not produce cash or I wouldn't need a guarantor.
I'm not sure what you mean by 'guarantee' then. If the guarantor cannot produce the cash, what good is the guarantee....?



I know that sales needs to complete in 28 days. What I'm asking is there a way to have a loan in place prior to bidding?
Yes. Make a formal application for a mortgage before the auction. This involves paying for the application and Valuation, and paying for the legals, so that on the day of the auction you have a firm offer in place for that property.


Of course, if you are out-bid on the day, that money is down the drain.

I don't have experience of the specialist lenders mentioned by others here.

eddddy

bridgend_girl wrote: »

Raising finance to buy at auction?

So what's behind your question?

Is it that you've seen a particular property in an auction, that you want to buy and live in?

If so, it's worth bearing in mind that 99.9% of properties that go to auction are 'problem properties'.

If the property didn't have problem(s) the owner would sell it through an EA.

Have you established what the problems are with this property?

SmashedAvacado

eddddy wrote: »

If so, it's worth bearing in mind that 99.9% of properties that go to auction are 'problem properties'.

This isnt true

Some properties being sold at auction are in that category but there are other reasons - banks may be selling repossessions, housing associations and other companies may be selling of property they don't need, some people need a quick sale, some are selling on behalf of estates, some are sold by local authorities and other organisations which need to show a transparent selling process - and this is an easy way of showing this.

eddddy

SmashedAvacado wrote: »

This isnt true

Some properties being sold at auction are in that category but there are other reasons - banks may be selling repossessions, housing associations and other companies may be selling of property they don't need, some people need a quick sale, some are selling on behalf of estates, some are sold by local authorities and other organisations which need to show a transparent selling process - and this is an easy way of showing this.

That's not really correct for mortgageable residential property - it's especially not true for repossessions.

(The OP seems to be talking about conventional auctions, rather than conditional auctions - so I assume your are too.)

A mortgageable residential property will almost always be sold through an EA - perhaps with sealed bids on a deadline date (to ensure transparency).

This route will allow people who need mortgages to offer/buy. As a result the pool of buyers will be bigger, and so the price achieved is likely to to higher.

So most vendors will choose the EA route to get a better price.

Especially repossessions, where the bank has a legal duty to get the best price reasonably possible. (They would only go to auction as a last resort, after EA marketing failed.)


Also, an auction sale typically takes 8 to 16 weeks from 'decision to sell' to completion. So the speed advantage of an auction is also questionable.

SmashedAvacado

we can agree to disagree
I was talking about the same kind of auction

you are saying that only 1 in a thousand would be not be a problem property. This is certainly not the case.