Buying a house at auction, advice needed for a newbie.

[Bill]

It looks like SWMBO has fallen in love with a house that's due to be auctioned next month. We've received the auction pack (loads of searches and a bunch of other bumf) and are going to see it this weekend so what should I be asking and looking for?

I'm not completely clueless about what to look for as far as the structure etc goes but have no idea about the auction process. Obviously we'll need the deposit ready on the day, and finance sorted and ready to go, but then what?

[Zeemax_Mini]

http://www.auction.co.uk/residential/docs/AllsopBu...

Worth getting the legal pack checked out if you're not confident in fully understanding what you're reading, as if you're the winning bidder it's yours! As you say, having finance fully sorted is vital too. Properties go to auction for a reason, it can be just because they need significant amounts of work doing, but can also be because of complex legal issues/absentee freeholders etc!

Dom

[Bill]

Zeemax_Mini said:

it can be just because they need significant amounts of work doing

It does, and it's a probate sale. We're definitely going to get the pack checked by a solicitor to. It looks like a local agent is organising the auction in the village hall.

Thanks for the link.

[scotal]

Bill said:

Obviously we'll need the deposit ready on the day, and finance sorted and ready to go

Have you looked into this aspect Bill?
You have 28 days from hammer fall to complete. If you need a mortgage you are going to want to be damn sure the place is mortgageable prior to walking into that auction room.

[Bill]

scotal said:

Have you looked into this aspect Bill?
You have 28 days from hammer fall to complete. If you need a mortgage you are going to want to be damn sure the place is mortgageable prior to walking into that auction room.

I thought I had, we have the mortgage agreed in principal, but I hadn't considered whether or not the house is mortgageable. What sort of things would prevent us getting a mortgage?

We're planning to get a survey done if we want to proceed, and I think the bank's planning a driveby valuation, is there anything else to consider?

[scotal]

Bill said:

I thought I had, we have the mortgage agreed in principal, but I hadn't considered whether or not the house is mortgageable. What sort of things would prevent us getting a mortgage?

We're planning to get a survey done if we want to proceed, and I think the bank's planning a driveby valuation, is there anything else to consider?

A driveby on an auction property? Blimey.
The big stumbling blocks (AFAIK) are habitability, and condition, same with any other sale.
Trouble is, throw the time constraints on top of that and it can be a nightmare.

Are they going to do the driveby pre-auction? If so you'll want to know what the guy decides.
His valuation will inform the max lending, and won't, I suspect, be open to negotiation.

If you have spare funds to take up any slack between what the bank will lend, and what you end up paying, all well and good. If not, it'll guide your top bid going into the room.

[Bill]

scotal said:

A driveby on an auction property? Blimey.

I'm getting that secondhand from SWMBO, but we're expecting to be borrowing less than 50% of the value. The house is habitable (and we have 3 young kids, so I don't mean in a living in a building site kind of way ) and we're financially sound.

Lots to consider though, thank you.

[scotal]

Bill said:

I'm getting that secondhand from SWMBO, but we're expecting to be borrowing less than 50% of the value. The house is habitable (and we have 3 young kids, so I don't mean in a living in a building site kind of way ) and we're financially sound.

Lots to consider though, thank you.

Oh, right, well less than 50% LTV may well give you the headroom to go for a higher ltv deal should the need arise.
When you look around it. Does it have a kitchen and a bethroom?
That always helps with habitabilty.
A probate case via auction is likely to be a bit shabby, but you have already seen past that by the sound of things.

[Bill]

scotal said:

When you look around it. Does it have a kitchen and a bethroom?

It does. The kitchen consists of a couple of walls of circa 1960 units though.

We've done two projects (And from the photos they were both worse than this) in the past so we know what we're getting into. Ish

[98elise]

Bill said:

scotal said:

Have you looked into this aspect Bill?
You have 28 days from hammer fall to complete. If you need a mortgage you are going to want to be damn sure the place is mortgageable prior to walking into that auction room.

I thought I had, we have the mortgage agreed in principal, but I hadn't considered whether or not the house is mortgageable. What sort of things would prevent us getting a mortgage?

We're planning to get a survey done if we want to proceed, and I think the bank's planning a driveby valuation, is there anything else to consider?

Make sure you have read and understood all of the auction conditions, you will probably need to register as a bidder and have proof of ID. Every auction I've been to has had at least one incidence of someone bidding and "winning" without a bidders number, or any means to pay!

You will normally need 10% of the purchase price to be paid in cleared funds at the auction, and don't forget that you don't know what that price is yet, so its no good rocking up with a bank cheque for the wrong amount. I bought a flat recently at auction and I used my debit card to pay the deposit.

A property will probably be "unmortgagable" if its missing a bathroom, a kitchen, is not weather proof, is not structurally sound. Unmortgageable is probably not the best term though obviously you can borrow money for just about anything as long as the lender is happy. You are just unlikely to have access to all the normal high street deals.

You exchange on hammer fall, so there is no going back. Make sure you have done all of your research before hand. 4 weeks is a very short space of time.

Good Luck

[jamescodriver]

If you are the winning bidder you will need to put 10% of the purchase price down when the hammer falls, you are deemed to have exchanged contracts at that point.

You will then have 28 days to complete. Best to get mortgage offer done before the auction, just in case. If you don't win the auction you will lose you val fee, but the thought of winning and not getting the mortgage is far worse!.

Get a solicitor to check the legals, and if you have never been to an auction either get your solicitor or friend to bid up to your maximum (its easy to get carried away) or see if there are any near to you before your auction to get a feel for how its done.

And just be aware that the auctioneer can bid on behalf of his client upto but not beyond the asking price, so it may look like there are lots of bidders but it may just be him!

[M400 NBL]

I have been lucky with my lenders/solicitors, but how certain are you that you'll get the funds in your bank within 28 days.

And if it was approaching 28 days, would it be the decision of the vendors because a couple of extra days is better than startingthe aution process again.

Best of luck OP.

[Bill]

Thanks all.

jamescodriver said:

And just be aware that the auctioneer can bid on behalf of his client upto but not beyond the asking price, so it may look like there are lots of bidders but it may just be him!

So effectively he bids up to the reserve? What if he wins?

[jamescodriver]

He will stop at the reserve, if there are no further bids he will withdraw the property being very careful not to bang the hammer down in the meantime

[Jasandjules]

jamescodriver said:

And just be aware that the auctioneer can bid on behalf of his client upto but not beyond the asking price, so it may look like there are lots of bidders but it may just be him!

Is that the "off the wall" bidding system - or fraud as I like to think of it.......

[spikeyhead]

Jasandjules said:

Is that the "off the wall" bidding system - or fraud as I like to think of it.......

Suppose you're selling soemthig at auction and put a reserve of £100k on it.

Two bidders take it up to £98k and bidding stops. It won't get sold for £98k so the buyer won't get it and the seller will have to start again and pay another auction entry fee.

Would you rather the auctioneer took a bid off the wall for £99k and then the buyer bids the £100k required to make the sale happen?

[Bill]

As a buyer? Of course not

Edited by Bill on Wednesday 6th April 07:09

[Mr E Driver]

Most auction houses will accept a personal cheque for the deposit as it is an offence to write a cheque with no funds. Take a utility bill with you and some ID like a drivers licence or passport.

[Jasandjules]

spikeyhead said:

Would you rather the auctioneer took a bid off the wall for £99k and then the buyer bids the £100k required to make the sale happen?

No I would rather than the auctioneer withdrew it from sale advising that it hadn't met the reserve. That way the potential buyer could then discuss with the seller the price - they might meet in the middle etc or even the seller might then accept the 98k, or the buyer might be willing to go to 100k.

Just a bit of honesty really, I don't think it's too much to ask.

[98elise]

Jasandjules said:

jamescodriver said:

And just be aware that the auctioneer can bid on behalf of his client upto but not beyond the asking price, so it may look like there are lots of bidders but it may just be him!

Is that the "off the wall" bidding system - or fraud as I like to think of it.......

In every auction I've been to the auctioneeer has been very clear that they may do that. Its not fraud if you understand how an auction works.