Auction Properties?

zain

Can anyone direct me to a website where i can find further information about buying a property on auction?

Or a previous thread ( i did a search but nothing came up!)

Many thanks.

trafalgar_2

this may help
http://www.mortgagesorter.co.uk/home_buying_at_auctions.html


and this

http://www.themovechannel.com/howto/buy/buying-at-auction.asp

davef

Hi, suggest https://www.auctionpropertyforsale.co.uk for general info & there is a brief guide to auctions on https://www.halifax.co.uk/estateagency/propertyauctions.shtml

Plus I recommend a book called "Buying bargains at Property Auctions" by Howard R Goodie (3rd edition-2004) which is part of the lawpack book guide series.

Excellent reading covering all apsects of property auctions inc most importantly the advantages & pitfalls of auction purchases. I brought my copy for less than £10 from Staples of all places.

Went to my first auction the other week. A large affair (approx 300+ people) in a local hotel in Plymouth run by Fulfords Estate Agents. The BBC crew were there filming for "Homes under the Hammer" so expect to see myself on TV soon although I did not bid. My 6 year old boy didnt quite understand the process so kept putting his hand in the air thinking it was some kind of game !! much to my dismay. Had to explain that "daddy" did not want to buy a house that day.

Took a copy of the auction brochure & marked up local houses that did not sell as the bidding did not reach the reserve price. Made a few post auction viewings but nothing to shout home about. Stilll some bargains to be had but tread very carefully!!

Hope this helps.
Dave

zain

Thanks davef

Just what i wanted.

You wrote 'tread very carefully'. Do u have any experience of buying through auction or does anybody else? What are the pitfalls?

Thanks in advance.

davef

Hi Zain, not bought at auction yet but intend to once I have built up enough capital. Currently in the process of buying a large victorian end terrace for refurb and sell-on.

The keys issues are (for me !!)
- right price : enough said, aim to get below market value in its current condition. Check out nethouseprices.co.uk for actual sale prices in the area. Speak to local estate agents and make useful contacts. Check rightmove also for comparisons.
- location, location, location. Is it in a sought after area, what are the local amenities like, transport links etc. Is it in a sought after school catchment area.
- Assessement of work. Differs depending on whether you are buying to live in or refurb to sell on. If the former you can take your time with improvements e.g kitchen, gch, bathroom. If the latter (refurb) then be sensible with your budget. Allow for professional fees, loan costs, bought in skills (e.g plumber, sparky) and selling costs (solicitor, estate agents).

A good starting point is https://www.whatprice.co.uk - this gives some pointers but you can obtain reasonably accurate figures by phoning tradesmen direct and asking them for ball park figures. Plus you may be able to gain access via agents for tradesmen to inspect and quote. Add in a contingency and you can calculate your overall budget to determine if you should proceed. I have learnt form experience what the basics cost -new boiler + rads, kitchen, bathroom etc.

Forecast Sales price - (purchase costs+loan costs+purchase price+refurb costs) = PROFIT !!

Another way I keep costs down is by sourcing my own kit. I use Jewsons, plumbcentre, Wickes, Howdens Joinery etc. A tradesmen will get his trade discount and still put his mark-up on so I avoid this. I get trade accounts because I am a full time developer and have registered as a business. e.g 40% discount on most Jewson items. Approx 60% discount on Howden joinery products.

Finally a key pointer to working out your budget is a survey. This atleast will highlight the structural issues (damp, subsidence etc) and you can see whether it requires a new bathroom, kitchen etc. Now at approx £500+ for a full building survey its a gamble. Take out a few of these, loose out on the the auction bidding and you are many pounds out of pocket. Add in a gas or electric survey and the costs add up.
It might be worth asking around your local surveyors to see if they do a pre-auction survey. Some do. Maybe a few hundred pounds but saves you money and would cover the basics and let you know whether to walk or bid. Or could 'befriend' a reputable builder to help you look and assess (for a few pounds in his pocket). Also say they will be given the opp to bid for work.

If you go to auction to bid set yourself a limit/ceiling above which you will not exceed. No point in eating chunks into your potential profits. Make sure your finance is arranged prior and that your solicitor is up to speed and exoperienced in auction purchases. If your bid is successful you normally pay 10% on the day with the balance within 28 days. Exchange takes place on the day so very few sales fall through.

Overall a quick process but take your time, be diligent and get the right people around you. I avoid properties with severe fire damage, subsidence or dry rot. Also consider post auction bids. If a house you like does not sell (falls below reserve price) then speak to the auction agents straight after and register your interest. Some vendors are keen to sell and will drop if you are geared up to go.

I always state my finance is in place (agreed in principle) and my solicitor is only a call away. This is backed up by having a cash deposit.

As stated ealier I buy my refurbs through agents. The current house is a Probate so quick sale wanted and SSTC at under market value. However I keep an eye on local auctions because there are some good potential buys out there.

Sorry to be so long winded but I have heard some horror stories about auction buys and 'hidden' problems. If in doubt ask the people in the know and take someone else along to view properties with you. Two pairs of eyes are better than one.

Like anything in life, experience takes time. I learn all the time and have gained so much knowledge by asking some daft questions and by generally niggling people for snippets of info (estate agents, tradesmen, solictors, finance brokers etc).

Finally, the auction book I brought is very thorough. I recommend you read it cover to cover then attend a few auctions to get a feel for the process.

Good luck.
DaveF

zain

This is a great reply. Thanks for being so prompt and helpful. Plenty to think about.