Buying property at auction

[Dr1ve]

Hi guys,

I've recently started looking at buying a property at auction does any on have any tips or sources of information that may help? It seems daunting but rewarding!

Thanks in advance

Dr1ve

[Cupramax]

BBC1 10am every week day morning, Homes under the hammer... I'm addicted to this program, pitfalls seem to be people not viewing before bidding, not checking the legal pack, finding out its listed/falling down/subsiding after buying basically it's a case of know the area/market you're buying in and dot i's and cross t's

[andye30m3]

I'd be very careful at auction

I looked at a flat with a low guide price, I ended up chatting with a local agent about it who explained the complicated legal issues.

There's also an old coach house next to a friends old house which used to sell at action regularly, it would sell for what looked like a bargain then 6 months later, once the latest purchaser had been refused planning for access it would be back up for sale.

[kentmotorcompany]

There usually a reason it is at auction, and not for sale in an Estate Agents window.

If you watch Homes Under The Hammer keep asking yourself "why is it at auction?" and you normally work it out, even if the programme glosses over the main issue slightly while it makes a big deal out of some other "TV story".

[Muncher]

Do your research, make sure you have covered off every base and are aware of the legal issues, the planning issues, the neighbours and structural issues.

Then you need to make sure you are absolutely 100% confident of your funding in order to complete on time. At the moment this would be my biggest concern.

Work out what the property is worth to you, set your limit and bid up to it and not a penny more.

Finally be aware of any premium you have to pay, as there will be a fee to pay before you leave the auction room and would will need adequate ID with you.

It's fine if you have done your homework and go into it fully informed, if you rush in without considering things you may get burnt.

[XCP]

We sold a property at auction. IIRC the buyer had to pay a 10% deposit up front, which was liable to be forfeited if the sale did not proceed. There were also penalties if completion was delayed.
Take professional advice before bidding would be my suggestion!

[Manks]

Dr1ve said:

Hi guys,

I've recently started looking at buying a property at auction does any on have any tips or sources of information that may help? It seems daunting but rewarding!

Thanks in advance

Dr1ve

Why do you want to buy a property at auction?

I am guessing it's because you think you'll get a better deal than if you buy private treaty (i.e. through an estate agent). The fact of the matter is, you probably won't.

Yes, you can buy properties "cheaply" at auction. But 90% of the time there's a reason why they are there and that reason is generally something that makes the property unsuitable for the majority of amateur buyers. For example the property is unmortgageable (and cannot be easily made so), it has significant restrictive covenants upon it, it is non-standard construction or it has a protected tenant.

Buying at auction demands having the purchase price in cash, really, or at least a facility available that can be drawn down regardless of any complications with the property. You will be required to put down 10% at the fall of the hammer and pay the balance within 28 days. If you don't perform on the second point you will forfeit the deposit, the property will be re-sold and you'll be pursued for any shortfall and costs associated with the resale. So rustling together 10% and hoping to arrange a mortgage after the sale is very unwise. Buying with a Mortgage Promise? Forget it.

You should also keep in mind that auction houses are like the Wild West. Estate agents can be guilty of sharp practice, but auction houses make estate agents look virtuous. They can and do pull any number of stunts on unwary buyers and sellers. Their aim is to line their own pockets by the most efficient means and there are a various legal but questionable techniques they will adopt to achieve this.

Homes Under the Hammer should be taken about as seriously as any other daytime TV. It plays on the money for nothing mentality, but the truth of the matter is that it really isn't very easy to make a killing buying property at auction. Anthing coming to the "room" that is truly a bargain will already have attracted the attention of the professional dealer.

You should probably consider buying a property at auction as a good deal less appealing than buying your next car at auction. The probability of getting a bargain is less and the liquidity of the asset (or liability more likely) is much less, so selling on a bad deal is both much harder and more expensive.

[Dr1ve]

Hi Guys I cant thank you enough for the great advice, yes I was looking to find a property a little cheaper than the norm due to my limited funds.

From all the advice Im now weighing up Risk and Hassle Vs. the potential gains and as you've mentioned it doesnt seem as attractive as I once though. I think too much exposure to homes under the hammer!

Does anyone know if all probate property goes through auction or there are other ways to aquire it?

Also anyone know a thing or two about empty homes?

Thanks again!!

Dr1ve

[Muncher]

Dr1ve said:

Hi Guys I cant thank you enough for the great advice, yes I was looking to find a property a little cheaper than the norm due to my limited funds.

From all the advice Im now weighing up Risk and Hassle Vs. the potential gains and as you've mentioned it doesnt seem as attractive as I once though. I think too much exposure to homes under the hammer!

Does anyone know if all probate property goes through auction or there are other ways to aquire it?

Also anyone know a thing or two about empty homes?

Thanks again!!

Dr1ve

A lot of probate sales will go through estate agent's windows as normal. Have a word with local agents as they might let you know which agencies tend to handle lots of those.

[Dr1ve]

Thanks Muncher!

[Manks]

Dr1ve said:

Hi Guys I cant thank you enough for the great advice, yes I was looking to find a property a little cheaper than the norm due to my limited funds.

From all the advice Im now weighing up Risk and Hassle Vs. the potential gains and as you've mentioned it doesnt seem as attractive as I once though. I think too much exposure to homes under the hammer!

Does anyone know if all probate property goes through auction or there are other ways to aquire it?

Also anyone know a thing or two about empty homes?

Thanks again!!

Dr1ve

Most probate properties are sold private treaty.

But probate properties have a tendency to be unmodernised and the cost of bringing them up to standard is usually higher than you think. If the property is desirable you'll find that someone will pay more than it is worth because it is a "blank canvas". Furthermore the cost of building work is becoming quite high.

Empty Homes as in Empty Homes Agency? Plenty of info on the web.

If you want to save money on a house, make sure you have your finances sorted and that you can move quickly. Then register with all your local agents and view properties immediately you are offered. Sooner or later you will find one where the seller needs to move quickly and you will buy it a bit cheaper. But buying a wreck is rarely a cheap way into a house these days.

[Dr1ve]

Thanks Manks.

Yeah I think I will be following this route in any case just in case there is something that comes up quickly as you mentioned.

Sorry as for empty homes I mean I was recently reading about how many empty homes there are in the UK and that there are grants and such to help get people into them. I was wondering if it was a viable option.

I am an amatuer DIY'er but would attempt some minor works myself and leave the rest to the experts. Luckily for me I have quite a few builder friends so could get some professional work a little cheaper I think.

[Manks]

Dr1ve said:

Sorry as for empty homes I mean I was recently reading about how many empty homes there are in the UK and that there are grants and such to help get people into them. I was wondering if it was a viable option.

Empty houses are usually that way for a reason. Generally that reason is not easily overcome. Having tried to buy empty but unmarketed properties many, many times I would suggest that it is not a fruitful way to buy.

Properties are left empty for many reasons, usually involving the owner believing they will return to them one day or at some future point bring them back into use. Or they just don't need the money / consider them an investment.

There is a lot of political hot air about seizing unused properties and bringing them back into use. I have dealt with two local authorities who have made a lot of noise about listing all unused housing and what their big plans are about redeploying them. When it comes down to it, though, they don't have the balls to do it, nor the appetite for the law suits that would inevitably ensue.

An aside, the last time I looked at a long-term empty property it WAS for sale. It was a total wreck, but I was prepared to buy it because I needed a property in that area. However, the seller wanted top money and it was not a good buy already. Then I decided to venture into the cellar by ladder to see why the stairs had been removed. The whole of the under-floor had rotted away due to persistent flooding and the floors had been supported with lengths of 4x2 used like pit props! The seller would not reduce the price to refelct the work required to remedy the problem. When I last checked the property was still empty and withdrawn from sale.

[Dr1ve]

Yeah I did think that houses deteriorate pretty quickly when empty. This thread has really opened my eyes.

Its a shame though, it seems ludicrous that there is such a high demand for homes and that many homes empty. But as you suggest there will be good reasons for this in many cases.

But surely looking long enough and with the right research there has to be bargains to be had otherwise why would there be so many private buyers for auctions??

I have also seen alot of auction houses that have properties marked as "sold prior" to auction. How does this happen? I assume the buyer puts in an accepted offer before the auction. Surely that would be a good way to pick up a property with out some of the risks an auction brings and get you a bit og a bargain? How would that benefit the auction house?

Thanks again guys

[Manks]

Dr1ve said:

But surely looking long enough and with the right research there has to be bargains to be had otherwise why would there be so many private buyers for auctions??

I have also seen alot of auction houses that have properties marked as "sold prior" to auction. How does this happen? I assume the buyer puts in an accepted offer before the auction. Surely that would be a good way to pick up a property with out some of the risks an auction brings and get you a bit og a bargain? How would that benefit the auction house?

Private buyers at auction? Homes Under the Hammer for a start. I've been asked about buying at auction twice in the past month by HOTH fans. That and would-be BTLers looking for a home for poorly performing cash.

Are there bargains to be had? Yes, if you know what you are doing and if you have enough cash to buy without a mortgage, or have an agreed facility. Those are important "ifs" though and as you might imagine HOTH makes it look a lot easier than it is in truth.

Yes, when a lot is sold prior someone has come forward with a sensible offer before the sale and the buyer has taken the "bird in the hand". The auctioneer's commission might be slightly higher if the lot goes to the room, but then it may not sell at all. Bird in the hand again.

For the amateur buyer though I still think auctions are best avoided in favour of estate agents.

[Trommel]

Manks said:

HOTH fans

I think it's the "that's a potential profit of between ... " which is missed. Big difference between the opinion of an estate agent with his best Next tie on for the telly and profit in the bank.

[Dr1ve]

Thanks for the great advice guys!

"Potential profit" its so easy to take that as a given!

[Dr1ve]

Manks said:

Yes, when a lot is sold prior someone has come forward with a sensible offer before the sale and the buyer has taken the "bird in the hand". The auctioneer's commission might be slightly higher if the lot goes to the room, but then it may not sell at all. Bird in the hand again.

You had or seen any success with the above Manks?

[Manks]

Dr1ve said:

Manks said:

Yes, when a lot is sold prior someone has come forward with a sensible offer before the sale and the buyer has taken the "bird in the hand". The auctioneer's commission might be slightly higher if the lot goes to the room, but then it may not sell at all. Bird in the hand again.

You had or seen any success with the above Manks?

Bought one prior about 6 months ago. Yes it was a deal, but it was not mortgageable.

[Cupramax]

Trommel said:

I think it's the "that's a potential profit of between ... " which is missed. Big difference between the opinion of an estate agent with his best Next tie on for the telly and profit in the bank.

What, like Wheeler dealers you mean where they completely disregard Edd's labour which on some of the cars must be weeks of work and then pretend to seek it to a member of the crew. At least with HUTH they don't try and build stuff up into something it isn't...

Edited by Cupramax on Tuesday 16th October 10:38