Has anyone bought a house at auction?

[wilbur]

Just wondering if anyone has experience of buying a house at auction? There is a house in our road that would make a good investment buy to let and we are thinking of trying to bid for it - should be able to raise a deposit and then hopefully get a BTL mortgage for the rest. Some questions that come to mind are:

Do auctions look down on people who don't have the full amount in cash? I know timings are very tight - do they allow a bit of room for completing with mortgages?

Are the sales rooms terrifying, or do they go a bit slower for properties?

Is it worth getting someone to bid on our behalf?

Any thoughts or tips very gratefully received.

[wilbur]

bump

[lalalonglegs]

You need to be a cash buyer really - the chances, at the moment, of being able to raise a mortgage between the auction and completion (generally 4 weeks) are very, very slim. I don't know when the auction is taking place but you could start the process now, of course, but then you might not get it. I was recently advised by an IFA that mortgages are generally taking 6-8 weeks once a mortgage in principle has been approved. If there is any problem with the paperwork (and there usually is with an auction property), it can take much longer.

I bought at auction a few years ago - I had the money in place beforehand, my husband bidded on my behalf.

[wilbur]

Thanks for that lalalonglegs. We have already started the mortgage process, although the time frame is very tight and we may not make it, so we are not holding our breath. Currently looking at bridging loans to plug the gap but they are ££££!

Did your husband find the sale room intimidating?

[lalalonglegs]

No, but he definitely felt that one developer was bidding against him for a laugh so we probably paid #10k more than we had to, iyswim. I used to work in an auction room and didn't trust myself not to get saleroom fever and bid over our agreed amount .

When's the auction taking place and is the property freehold or leasehold? I don't want to be pessimistic, but if it's leasehold, I would be very worried about satisfying the lender in time that all the paperwork was in place.

[wilbur]

Thankfully it's freehold, and we know the property really well, but there are likely to be some headaches - it's been owned by a Housing Assoc for years and years. There were swarms of people at the open viewing yesterday - some just looking, but some all serious with cameras and tape measures and so on. It will be interesting to see how many of those are able to bid.

[lalalonglegs]

Hope it works out, good luck.

[ChippingInSmellyCheeseFreak]

I bought a leasehold property at auction, freehold will be easier :)

Make sure you get the 'pack' and read through it thoroughly, I actually had a solicitor do so too - I felt it was money well spent.

Everyone tutted A LOT about how little time there was to get things done. I just smiled a lot and said 'Yes, but that's life '

Auction company wont give a rats arse if you have a mortgage are paying cash or if you have to sell your kids to raise the money, so long as you have the non refundable deposit on the day!

I had the mtge in place before the auction started

You need to take the deposit bank cheque (check with the auction company but it's usually 10% of the sale price but as you don't know what you will pay, they're pretty flexible as long as it's a reasonable amount of money.)

Sale room isn't scary, full of a right mix of people

Bidding is fun - no way would I have let anyone else do it But if you do, I'll come and do it for you!!!

Decide on your maximum bid before you go.

Then decide how much over that you will actually be prepared to go to

Bridging loan.... you are taking your life in your hands doing this, I wouldn't do it. You just never know - for some reason unknown to you, the property may be unmortgageable - then you are fucked. Just keep calling the lender/mortgage broker and chivvying them along!

[NorbertDentressangle]

We went to look at an auction property recently, with a view to doing it up and selling or renting it out.

However it soon became evident on viewing that it had a lot of major structural problems (as well as needing re-roofing/rewiring/a kitchen and bathroom putting in as it had neither etc etc) and TBH I don't think anyone would have got a mortgage for it.

Despite that it still went for around 40% more than the guide price so don't be surprised if it goes way beyond your limits. Just make sure you know your max. and stick to it.

[wilbur]

Thanks so much for this. Norbert, I think you're right, it will go for massively over the guide price, they have undervalued it a lot, even though it's a bit of a dump. We are taking an architect/surveyor guy we know round with us next week to see if there are any structural issues but it's the same type of house as we live in, so we know it will have raging damp on the lower ground floor, and it will need a new roof!

Chippingin - you sound like you really know what you're doing. I am waiting for the legal pack at the moment and am going to have a solicitor look it over - worth the cost, I think. And yes, unless we have a firm ok for the mortgage offer we won't bid. The bridge is only if the mortgage co put a retention on some of the funds until we have done some work on the house as some of the rooms have locks on the doors and sinks in them which may have to go before they will release the full amount.

[CointreauVersial]

You are so brave, wilbur, I'm getting a cold sweat just reading all this.

Good luck, anyway (from someone who'd love to do this but wouldn't dare in a million years!)

[NorbertDentressangle]

Keep us up-dated won't you?

Its still something we may do in the future so I'm keen to hear others experiences.

Good luck

[ChippingInSmellyCheeseFreak]

Wilbur - I do now that I have done it - I had no idea going into it! First house I've bought in the UK as well, so it was all new :)

Keep us posted !!!

[traceybath]

Good luck!

We aren't buying at auction but in terms of getting a mortgage - it took us 10 days from our offer being accepted on the property we're buying to having mortgage offer and to be honest the main delay was waiting for the valuation to be done.

We used a mortgage broker and he was very good and got things done incredibly quickly.

[lalalonglegs]

Did they advance you the money in that time or did they just say they would be prepared to lend to you on that property?