Help me decide what to do - moving house

[SecretWorrier]

We have sold our place and are renting while waiting for our purchase to complete. This means we have 200k in the bank ready for our move.

In May 2021 we offered on a house and it was accepted at 400k. Barclays bank then sat on our mortgage application for a number of months despite much chasing, and eventually the purchase collapsed at Christmas.

We waited for the market to get going again in the spring and in May 2022 we found a house at 465k. Now with a national building society, we are in groundhog day. It has been with the underwriters for so long the vendors have given us a two week deadline to get an offer. (We did have a DIP)

We are seriously losing hope and losing this sale would realistically mean waiting until the spring again as the market and particularly rhe mortgage market have changed.

Today we had a mad thought and looked at some auction properties. There's one that needs to be renovated, roof is sound, but it's still in the 1970s inside. Opening bid is 200k. We are wondering if we could do it up as a project to reduce the amount of mortgage we need.

What would you do? We have no idea if this mortgage will come through, and no idea of we would even win the bids.

We do have some experience of fixing up.
Yanbu- auction
Yabu - wait for spring and carry on original plan

You could always buy cash, it doesn’t necessarily have to be auction. Cash puts you in a really good position for making offers and you can still buy one to do up.

That's an idea ! I'll have a look on rightmove though I did think the pressure of cash only might reduce the market for the auction.

The full figures are, cash 289, house we were buying, 465, mortgage 200 exactly. So it was a pretty low LTV.
No idea what the auction property would finish at but I'd say we'd need 30 for renovations, it's not structural, and 5-8 for fees and legals, and 10 for a buffer (autocorrect trying to give me a 10k buffet there) so perhaps we could bid as high as 240.

I don't know what to do. Struggling to face yet another Christmas in our tiny flat. We are overcrowded.

If you watch homes under the hammer, just make sure you read the legal pack. I'd go to the auction, have a top limit and stick to it.

That's an idea ! I'll have a look on rightmove though I did think the pressure of cash only might reduce the market for the auction.

The majority of auctions are cash only. You can get some amazing deals. Although it will be mainly experienced property developers who are bidding.
It sounds though with your budget you’d need to be looking at auctions starting around 100K though.

If you want to go for auction, get yourself a really, really good solicitor and make sure you are completely clued up about the process. You need to be absolutely on the ball.
Also, unless you are very experienced in looking at houses that need renovating, take someone with you who 100% knows what they are looking for.

Fully understand your market before bidding, research sale and purchase prices, what sells quickly in that area, what types of properties don’t sell as fast, what percentage a driveway/big garden adds for example.

Make sure you know renovation costs and what could potentially go wrong/incur further costs with that particular renovation.

Make sure you have people who can actually do the work in the time frame you need. There is no point knowing electrical work will cost 3K for example but you can’t find an electrician who can start the work for you, then that puts all your other work out.

Ok, so cash closer to 300K is probably very doable on a 200k starting price. What do other actions tend to go for price wise in your area? Do they go much over the starting bid? How’s this house priced compared to market value if fully renovated? If there is a 100K profit to be made, it’s either priced low and will go massively over 200K at action or there is an issue with it - structural/legal for example.

Have you checked how much auction fee is?

Is the 30K realistic price wise for renovation for what you want? Have you actually gone to price things like kitchen/bathroom? Got quotes from tradespeople? Not saying it isn’t, just so many people underestimate renovation cost without even running into anything unexpected.

Do you already have a broker? I would recommend getting a good one and have them hunt for a mortgage for you. Ours managed to get us one in less than 7 days earlier this year. Good luck.

Sorry, was dealing with vomit.

Yes, L&C.

I think what I'm wondering is, if a property is 200, but with a potential renovated value of 300, would it go for 300? Surely there'd be space for a profit for the person doing the works, there has to be, doesn't there? Anyone been in this situation?

I think what I'm wondering is, if a property is 200, but with a potential renovated value of 300, would it go for 300? Surely there'd be space for a profit for the person doing the works, there has to be, doesn't there? Anyone been in this situation?

No it wouldn’t sell for 300 as that would leave no profit as you say. That’s why it’s really important to know your market and have a sound understanding of realistic renovation costs.

If it seems there is ‘too much profit’ to be made at auction then it’s possible that there are issues (structural, legal for example) that means it’s priced lower than you would expect.

? You said you have 200K cash, and the auction starting price is 200K.

In auctions, the price goes UP with each bid (not down).

So to update, our mortgage finally came through, thank you so much for your advice and opinions everyone, good food for thought for the future.