Buying a property at auction
Discussion
Just after a bit of advice/pointing in the right direction regarding the process of buying a property at auction. I have seen a property that will be going up for auction at the end of September.
Having read the auction company's website and legal bits, they say that the buyer should have any searches completed before buying at the auction. So as I understand it, this is the process:
1) Go down and view the property
2) Instruct a solicitor to do the conveyancing on the property
3) Go to the auction and hopefully win
4) Pay and complete
I appreciate that may be slightly simplistic, but is there anything glaringly obvious that I have missed?
Is there any chance of getting the conveyancing completed within 3 weeks, or is that just wishful thinking?
I've never bought a property before, let alone at auction, so any advice appreciated.
Having read the auction company's website and legal bits, they say that the buyer should have any searches completed before buying at the auction. So as I understand it, this is the process:
1) Go down and view the property
2) Instruct a solicitor to do the conveyancing on the property
3) Go to the auction and hopefully win
4) Pay and complete
I appreciate that may be slightly simplistic, but is there anything glaringly obvious that I have missed?
Is there any chance of getting the conveyancing completed within 3 weeks, or is that just wishful thinking?
I've never bought a property before, let alone at auction, so any advice appreciated.
I'm selling 4 residential properties next week at auction as it happens.
One of them is totally f
ked. As in, looks ok from the outside but is sinking into the ground badly and is effectively a total and utter write off. Demolition candidate.
But as usual, the buy-to-let mob are salivating over it already thanks to the tantalisingly low reserve.
And all I can say is: Buyer beware
One of them is totally f
ked. As in, looks ok from the outside but is sinking into the ground badly and is effectively a total and utter write off. Demolition candidate.But as usual, the buy-to-let mob are salivating over it already thanks to the tantalisingly low reserve.
And all I can say is: Buyer beware
Should add more detail really...
Yes, pretty much what you have listed.
Just make sure you have funds available before you bid on something.
If you have a good solicitor ready to pounce and literally just want to hand the cash over and get that TP1 signed then a few weeks is no problem for completion.
Yes, pretty much what you have listed.
Just make sure you have funds available before you bid on something.
If you have a good solicitor ready to pounce and literally just want to hand the cash over and get that TP1 signed then a few weeks is no problem for completion.
OP
Your description is pretty much it.
You will need to have deposit funds available to exchange, and in effect you exchange when the hammer comes down.
Make sure that all property due dilligence is complete and any enquiries needed have been raised and answered. This is important as you have the right to rely on answers via solicitors.
Check whether the property is elected for VAT. If it is elected (unusual, but possible if it has been rented or improved) you will have to pay VAT and SDLT will be applied to the gross price.
Good luck
Your description is pretty much it.
You will need to have deposit funds available to exchange, and in effect you exchange when the hammer comes down.
Make sure that all property due dilligence is complete and any enquiries needed have been raised and answered. This is important as you have the right to rely on answers via solicitors.
Check whether the property is elected for VAT. If it is elected (unusual, but possible if it has been rented or improved) you will have to pay VAT and SDLT will be applied to the gross price.
Good luck
blueg33 said:
OP
Check whether the property is elected for VAT. If it is elected (unusual, but possible if it has been rented or improved) you will have to pay VAT and SDLT will be applied to the gross price.
Amazingly unfair to charge tax on tax though isnt it?. Some of the SDLT figures we see are genuinely painful and alone would buy some lovely houses in most of the country.Check whether the property is elected for VAT. If it is elected (unusual, but possible if it has been rented or improved) you will have to pay VAT and SDLT will be applied to the gross price.
Davey S2 said:
blueg33 said:
OP
Check whether the property is elected for VAT. If it is elected (unusual, but possible if it has been rented or improved) you will have to pay VAT and SDLT will be applied to the gross price.
Amazingly unfair to charge tax on tax though isnt it?. Some of the SDLT figures we see are genuinely painful and alone would buy some lovely houses in most of the country.Check whether the property is elected for VAT. If it is elected (unusual, but possible if it has been rented or improved) you will have to pay VAT and SDLT will be applied to the gross price.
cotney said:
Having read the auction company's website and legal bits, they say that the buyer should have any searches completed before buying at the auction. So as I understand it, this is the process:
1) Go down and view the property
2) Instruct a solicitor to do the conveyancing on the property
3) Go to the auction and hopefully win
4) Pay and complete
I appreciate that may be slightly simplistic, but is there anything glaringly obvious that I have missed?
Is there any chance of getting the conveyancing completed within 3 weeks, or is that just wishful thinking?
Conventionally, the seller's solicitor should obtain searches and include them in the auction pack, so every buyer can see them. If they haven't, query why that might be the case; are they hiding something (such as an enforcement notice)? Definitely get a report from a solicitor before you bid. You may well have to pay up front for this because clients tend not to be too keen to pay bills later if they don't even manage to win at auction...1) Go down and view the property
2) Instruct a solicitor to do the conveyancing on the property
3) Go to the auction and hopefully win
4) Pay and complete
I appreciate that may be slightly simplistic, but is there anything glaringly obvious that I have missed?
Is there any chance of getting the conveyancing completed within 3 weeks, or is that just wishful thinking?
Check the auction terms thoroughly. You usually need a 10% deposit on the day plus various other fees, and check what methods of payment they accept (do not assume they take cash, cards or cheques - you might need a bank draft or solicitor's client account cheque).
Check how much you'll be expected to pay up front too. It is likely you'll have to pay an auction fee as well as the 10% deposit, for instance.
If you're buying at what is described as 'modern method of auction' or 'conditional auction' then be very careful indeed; they're not strictly auctions and you're likely to have to pay thousands of pounds on top of the deposit to the 'auctioneer' in those cases, despite which the seller isn't bound to sell to you. Be very careful with that type.
If you want to buy with a mortgage you need to get a valuation and mortgage offer before the auction to be safe. Do not expect to be able to do that in the timescale for completion if you win. There's not a lot of conveyancing required after the auction if you're the winning bidder; you're already bound to buy the property by that point so it's a case of signing the paperwork and paying, with no opportunity to back out. So you need to be absolutely certain you've got the funding in place to complete before you even bid.
Finally, on completion you're usually expected to pay the seller's costs, cost of searches etc as well as the balance of the price so do check what you're going to spend in total. On a cheap property that can be a substantial proportion of the price on top.
Hope that's useful.
We viewed ours several times through open days and had set a max price we wanted to pay. We tried to offer before the auction but they wanted to let it run.. As it was an old property we had a full survey (about £800 from memory) but it was worth it for piece of mind as the roof needed replacing so we then offered less but they still wanted to proceed through the auction. We got it for £5k more than our final offer so was pretty please although it s very daunting and was our first auction.
I'd advise going to a couple of auctions to get the feel of them and what you need to do as I froze on the day and the mrs had to bid.
Get a survey as its a big commitment and you want to know if there are any issues - ask yourself why it is being auctioned.
We had to pay 10% on the day so have the funds plus auction fees if applicable (this has been mentioned)
We also had to complete in 30 days which was a nightmare. We had a mortgage in principle but when they knew the roof needed replacing they took that figure off our mortgage offer which left us £60k short - not easy to find in 30 days. We completed 15 minutes before our deadline which almost killed me!!
Set a happy limit, and set a hard limit over which you will not go (which may be say 5-10% above your happy limit) and don't get carried away. Ultimately you have to pay for it.
It was worth it for our dream home but do your homework and good luck.
FFG
I'd advise going to a couple of auctions to get the feel of them and what you need to do as I froze on the day and the mrs had to bid.
Get a survey as its a big commitment and you want to know if there are any issues - ask yourself why it is being auctioned.
We had to pay 10% on the day so have the funds plus auction fees if applicable (this has been mentioned)
We also had to complete in 30 days which was a nightmare. We had a mortgage in principle but when they knew the roof needed replacing they took that figure off our mortgage offer which left us £60k short - not easy to find in 30 days. We completed 15 minutes before our deadline which almost killed me!!
Set a happy limit, and set a hard limit over which you will not go (which may be say 5-10% above your happy limit) and don't get carried away. Ultimately you have to pay for it.
It was worth it for our dream home but do your homework and good luck.
FFG
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