buying at auction?

Glaucus

Glaucus

Glaucus

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there's a house I'm interested in coming up for auction in just over a months time (subject to actually viewing it, when they actually allow me), they allow survey and mortgage valuation in advanced(and are accepting offers in advance) and I have a general mortgage in principle for 40k more than the guide price.
how would this process work, and what are the fees involved with the survey/valuation. The mortgage is free valuation but would they include it for this. Obviously I need to speak to the bank and see what they say, but does anyone have any general experience/knowledge.
 
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You'll need 10% deposit to be able to put down on the day of the auction, as well as any extra auction fees/costs. You'll also need to find a solicitor that can do the quick completion - 28 days is generally expected after an auction so if you have a solicitor in mind talk to them first and ask them if it's something they can do. Some specialise in auction sales for example.
 
My advice would be don't do it. The majority of the time properties are up for auction for one reason, because they won't sell on the open market. Had a client back in March who I convinced not to buy through auction and instead bought the same property outside of auction. Turned out to take the best part of 6 months to complete with serious issues needing sorting. Through auction they'd have had 30 days to try sort those issues but because they would have been legally bound to buy, the seller would have no obligation to assist.

With regards to fees you're looking at typical survey fees whatever they are, 300 quid or so. Mortgage valuation is NOT a survey and is about as good as driving past the house to check its still standing. They may offer a home buyers report or similar at extra cost, do it.

Buying through auction with a mortgage is sketchy at best, there could be any number of problems that mean the bank might refuse to lend but you won't find out till you're contracted to buy the house and put your deposit down.

E: Following on from daz's post, the 28 day completion is easy, the auction pack gives all the paperwork and searches we'd usually get. The issue you have is that because you are already committed to buy, sellers will generally not bother responding to any enquiries you'd normally want raising nor do they have to fix any title issues etc etc that might mean you/your lender want to run a mile.
 
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I've bought a property at auction before. As above it's a quick way of buying and selling.

Whilst some property might be there because of problems, it can be that the seller wants the money now.

So I wouldn't necessarily say don't do it just because it's an auction site. View it, get someone who knows what they are doing to look at it and take it from there.

However, I've never done it with a mortgage as I paid cash for the property so I'm unsure what the lenders would want. Your first born, I'd imagine.
 
The biggest problem for you will be having to pay 10% cash on the day and hoping nothing crops up with the bank that stops them lending. You are risking 10% of the purchase price on stuff outside your control.

Who is selling the property and why, if its a repo from the bank thats good! Should mean they just want quick and guaranteed money and not trying to cover up issues.
The legal packs should give an indication of what has gone on and you dont need to be a solictor to understand that aspect.

Good luck!
 
Don't let anyone put you off buying at auction. Especially solicitors!

Do your homework and it could turn out to be an awesome experience! Good luck
 
Says the solicitor (I presume)...

Showboat - it's not 10% you're risking, at worst, it could be 100% as they could turn around an sue you for breach of contract. At best, they could sue you for their aborted costs and the cost of listing it all again...

Skillmister - I'd be interested to hear, other than telling a client to avoid, why you think this. Plenty of companies sell their property off on a sale & leaseback style at auction in order to prove best value yet you have basically said "don't touch them you'll get stung"...I paid at least £100k less than market price for the one I bought at auction because people thought it had problems, nearly 10 years now and it's got nothing of the sort...
 
You bought with cash, that's far less of an issue. My advice of "don't do it" is predominantly because OP is buying with a mortgage.

If you're buying with cash and you get a survey done before putting the deposit down then I say go for it if you feel the positives outweigh the risks. I see the benefits, but I've seen plenty of issues to put me off if it was my money.
 
as long as I got surveys, valuation and the like done before the auction surely there shouldn't be any issues with purchase or mortgage? but obviously if I was out bid, would lose the money from those surveys etc.

unfortunately all the cheaper properties are sold at auction around here, if they havent been redecorated in the the last 10 years, it always seems to go to auction, probably as there's a strong rental market.
 
A survey doesn't pick up all the problems. There are all sorts of things that could crop up in the title or searches etc that you wouldn't know about until after committing. Depends on the type of property as to how likely certain ones are to crop up, obviously there are going to be more potential problems when it comes to older property with land than a 10 year old semi.

The alternative is to ask a solicitor to review the auction pack before the auction as they would review it pre-exchange in a "normal" purchase. Done that plenty of times, but people rarely want to pay for that kind of thing on top of a survey, as there's no guarantee you'll get the property.
 
yeah that's what I'm talking about its just the survey is the biggest cost. the searches tend to be a fixed fee, so assuming all that is done what if anything could go wrong?
 
Glaucus said:
yeah that's what I'm talking about its just the survey is the biggest cost. the searches tend to be a fixed fee, so assuming all that is done what if anything could go wrong?
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You get outbid! :p

Seriously, if it were me, i would take a good builder with me to view the house too. Someone you either know or can be highly recommended. Surveyors are meant to be very important but i have found them to also be hit and miss!
 
Glaucus said:
yeah that's what I'm talking about its just the survey is the biggest cost. the searches tend to be a fixed fee, so assuming all that is done what if anything could go wrong?
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Searches are part of the auction pack paid for by the seller (but the costs are usually recovered from you).

You're missing the point of what I'm saying. The contents of the searches/title is what can be the issue, not the cost of them. And you only find out about those issues once you are committed to purchasing and your chosen solicitor sees them for them to complete the purchase for you, unless you get someone to review it before the auction.
 
Glaucus said:
yeah that's what I'm talking about its just the survey is the biggest cost. the searches tend to be a fixed fee, so assuming all that is done what if anything could go wrong?
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Well you having said the survey is the "biggest" cost means you're probably out of your depth here.

A survey might cost you £500 or £1,000 yet the property is likely to be 6 figures and some. I'd argue that is a somewhat bigger cost. The searches, in my humble opinion, are a con. The same searches are carried out on properties every time they are sold and rarely anything of significance changes. Flood reports, mine reports, utilities reports, contamination reports etc. Rarely anything changes yet fees are being generated for something that largely means nothing (especially in well established residential/built up areas). You can check the title yourself for £3 on the land registry (although it's likely in the auction pack) and if there is anything wrong - solicitor to review for you.

I'd further argue that surveys aren't usually worth the paper they are written on. Most (think home buyers style) will say they couldn't see this, suggest you get a specialist in for that etc. Paint a horrific picture when that might not actually be the case and your lender will get cold feet. Of course, that could happen with any property...you still lose the cost of that if you decide not to buy.
 
SeatIbiza said:
Well you having said the survey is the "biggest" cost means you're probably out of your depth here.

A survey might cost you £500 or £1,000 yet the property is likely to be 6 figures and some. I'd argue that is a somewhat bigger cost. The searches, in my humble opinion, are a con. The same searches are carried out on properties every time they are sold and rarely anything of significance changes. Flood reports, mine reports, utilities reports, contamination reports etc. Rarely anything changes yet fees are being generated for something that largely means nothing (especially in well established residential/built up areas). You can check the title yourself for £3 on the land registry (although it's likely in the auction pack) and if there is anything wrong - solicitor to review for you.

I'd further argue that surveys aren't usually worth the paper they are written on. Most (think home buyers style) will say they couldn't see this, suggest you get a specialist in for that etc. Paint a horrific picture when that might not actually be the case and your lender will get cold feet. Of course, that could happen with any property...you still lose the cost of that if you decide not to buy.
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Agreed 100%
 
what a silly and unhelpful post, unlike others in this thread.

yeah because I don't realise the cost of the house is the biggest expense, are you really that stupid. :rolleyes:
 
Although you can go around the house beforehand you may only have a limited time, Clive Emson for example give 20 minutes to view properties so any surveyor no matter how experienced won't be able to find every problem in that time and would have to make many assumptions. Those would be based on the area topography, age of the house and a visual inspection in the time allowed. You could do some research as well about the local area if you have the time/inclination.
Of course if they allow your surveyor to go round for as long as they want make make sure you get a good one :)

If you go around the house, check for things like squeaky or spongy floors, what does the condition of the timber look like; is the paint peeling, are there holes. Are the bricks discoloured; do they have efflorescence on the inside, is the the plaster blown on the inside. Can you see damp patches/mould, if there are where are they; on the inside to rainwater goods, or at/near ground level or near roof line.
What is the condition of the roof.
If you see stuff like this bear in mind the cost to replace it in the worst case scenario, rotten timber joists could mean only a small section is bad, or it could mean you have an infestation of deathwatch beetle and several joists need replacing, if its an older house they could be tied in to the wall, in which case the wall might be spreading changing the load of the roof.
What is the condition of the mortar, if the mortar is in poor condition could mean damp ingress and might need stripping back inside, or it could just be a weather facing elevation in which case repointing might sort it.
If you've got the cash to put stuff right and to make the necessary payments upfront to the auction house it may not be a bad idea especially if you pay under the odds for it.
 
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Just remember most surveys don't allow for opening up/intrusive investigations/areas they cant view so you might find when you start renovating the property the unexpected could crop up. Saying that its the same with any property you buy.

If you got the building knowledge/experience or know a good builder then go for it. If not might want to think twice about it
 
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