Property Auction - help am clueless on preparation(5 Posts)
Am going to an auction on possible dream house. Don't know where to start with prep. Need to know what to do, and what not to do.
1. We have the 10% deposit. We need a mortgage for the 90% residual. Will lenders give a mortgage for auction properties. It is a yakky bungalow, which we wish to replace with a two storey house for my family.
2. How can we get conveyancing done on the property, if we cannot access it. Does no conveyancing mean no chance of mortgage. The viewing day only lasted for 30 mins.
3. Are there any other solicitor fees too consider.
No idea about the mortgage but you need to find out what prospect there is of getting planning permission to do what you want. Not clear what you mean about the conveyancing without access but most solicitors should be able to give you a quote based on the guide price set by the auction house. You will probably need to pay stamp duty. I would also want a rough idea from a builder (external inspection and sellers particulars should be enough) of the costs of the work. You might have a potential mortgage retention situation if the bungalow isn't habitable. Have you costed up where you will live whilst the work is being done? I think you need to do some basic research about what is involved when you buy a house as you don't sound terribly well informed.
This is a high risk strategy if you only have a 10% deposit. There are lenders at many auctions that will arrange "interim lending" (otherwise known as bridging loans) which are very expensive but would help you to secure the finances while you worked out a more conventional mortgage. However, if the high street lenders decided that the property wasn't mortgageable or that your plans didn't stack up financially, you'd be stuffed.
Conveyancing has nothing to do with access to the property, it is the process by which solicitors check that the property is legally in order and the title can be transferred to you. This usually takes place (over many weeks) before exchange of contracts and the solicitor will typically make many enquiries of the seller's solicitor regarding, for example, shared access/boundaries/permissions for any extensions etc etc and will want all these questions answered before allowing you to exchange. As you know, exchange at an auction happens when the hammer falls so, if there are any legal problems with the property that you haven't picked up beforehand (either by reading the legal pack yourself or paying a solicitor to do it for you), then you are stuck with them. Many auction properties do have legal problems.
If by conveyancing you mean a survey, you can instruct a surveyor who will get the keys from the auctioneer and carry out a survey for you. Bear in mind that you could spend several hundred pounds on this only for someone else to buy the property on the day. If you wish to knock it down to build an new house, is it worth having it surveyed though? And if you are only able to raise 10% of the auction price, how will you pay to build a new house?
Auctions are basically there to serve cash buyers or people who work in property. I think you should proceed with caution on this one.
Echo what lalalong wrote. Have a look at the auctioneer's website where you can find the Bidder Information. That section should point you in the right direction including their Conditions of Sale. Don't forget to read through the Legal Pack with a solicitor. There may be restrictions you may not be aware of. You need to make sure you have mortgage in place, survey done and funds in place since you'll have to complete within the time frame eg 28 days. The deposit and fees must be paid on the day itself.
Based on what you wrote, I think you should sit this one out. It doesn't hurt to attend the auction though if you want to have the experience. It's exactly like what you see on Homes Under the Hammer on BBC One minus the sound effect. If you're curious about the sold price, it is usually listed on their website after the event.
I've been to a few (cash buyer), unfortunately money not enough . Too much competition from BTL landlord. That's the trouble when living in a student city bummer.
Portico - I'm afraid that auctions are not really the place for a potential buyer with no mortgage/ finance arranged as generally the majority (not all) of auction properties available are a) unmortagable I.e poor state,structurally defective or no working kitchen or bathroom or b) repossessions which are perfectly liveable but the mortgage company are duty bound to place into open market but can be frought with possession issues.
An auction sale is an immediate exchange of contract and the following 30 days constitute completion. You would need to have carried out at your own risk/expense of a survey plus getting a solicitor to check out and advice on the legal pack. You cannot recover these costs. You will also have to pay your buyers premium and your deposit on the day.
Guide prices are just that - auctioneers often create a buzz by advertising a very attractive price on a house which is often waaaay below the final hammer price and even if it is your dream house you need to be prepared to walk away. I buy at auction regularly and I have walked away many a time once the bidding is over my budget.
As a pp said, go to the auction (or another one) before the day and understand the process. Pay particular attention to addendums and any other notices.
Finally, it might be worth putting in a bid with the auction house before the sale of you can afford more than the guide price plus the sellers premium. It's a slim chance it'll be accepted especially if it's had a ton of viewers in 30mins but you never know!
Hope that helps. Good luck making your decision.
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