Auction - can this work? How?

[LoonyIdea]

Here’s the bare bones:

I’ve seen a house I love, and it’s up for auction on July 21st with an auction house.

It’s a G2 listed house with some land.

It was previously on with A normal agent and an offer was accepted at £500k but it didn’t complete as the buyer’s solicitor wasn’t happy with a building certificate related to the underpinning. The old agent revealed that they believe the reserve to be £500k.

It is owned by MAG (Manchester Airport Group) who bought it as a compulsory purchase as a part of the A development, which never happened. They sold a lot of their portfolio but kept some with land, and this has been rented since.

My position:

I bought my husband out of my house as a part of our divorce and I now have a mortgage of £195k. My house is very saleable, on a popular estate and worth about £700 on a good day, £670 on a bad one. (Based on 3 local agents)

It was recently valued at £631 for the purposes of the remortgage as that was the figure I’d agreed with my husband some time ago.

I can put my hand on about £20k cash and everything else is in pension and in this house.

I earn £40k, PAYE.

And I really want to buy this house! How can I make it happen?

I had thought I might ask the seller to accept an offer prior to auction but if it’s ordinary auction terms then that doesn’t help me - I need more time, as it’s a cash flow issue.

I’m willing to pay a bit more for it and would go to £520 which I don’t think they’ll get at auction. The guide price is £475.

The house is uniquely unattractive to other buyers - it’s hard up against the motorway the plot is a Scheduled Ancient Monument, and the majority of the land at the back has no vehicular access at all. You can get a mower or a horse in and that’s it. And the house is a (properly underpinned) wreck. I however, love it and it would suit me perfectly.

im talking to some “we buy any house” sites and they’re talking about 75-90% of market value and could complete within a few weeks.

How should I proceed? Is this even possible?

@SarahKennedy

&!whats more, that was organised while I was in the Auction Room as ABBEY stopped all mortgage offers overnight , I got the mortgage onthe day through RBS. I had to find more money for the deposit (about £10,000 I think) & the interest rate was higher (6%)! I think ABBEY had been 3.5%.

I bought it not knowing if the mortgage was. 100% sorted. The mortgages were all a bit nuts at that time.

I just see your dream being shattered by the potential unseen problems which drain your time and finances and your passion turns into your biggest nightmare.

The problems with my house definitely dampened my love for the place. Every time something goes wrong now I instantly imagine the worst. We’ve spent almost £500k on a place we bought for £400k ten years ago. £120k of major unknown works (there was a dangerous mould growing in the lime walls and we had to move out whilst it was removed), £290k on things we know needed doing (full rewire, new roof, new heating system, new windows, repairs to rotting beams etc), and the rest on general refurbishment like kitchen and bathrooms.

I walk in and have a nice feeling about it but all I can now see is how much money we haven’t got to finish it. If you get it and then find it needs £700k work doing to it for which you are totally unprepared and unable to raise the finances for, will you still love it?

I really do hope you get it and it turns out to be fine, but it would be madness to commit to an unknown financial burden.

Wow that’s a cautionary tale! If they remove from the auction that gives me time to go down the survey route a bit further.

In your situation, OP, I'd be tempted to try to make it work too. I told my DP about it and he'd found it within a few minutes - it really is lovely. The grounds could be amazing but the neighbours do seem relatively close per the map.
I'm surprised how good it looks inside for a renovation property. It's definitely liveable while you renovate it. We're currently renovating a Georgian farmhouse and it's only been difficult due to having 2 kids under 2.

The house we actually wanted dates back to at least the 1500s. I kick myself at least once a week that we didn't buy it. We thought it would be a money pit but the one we actually bought is also a money pit so we might as well have bought the one we loved. I think about that house all the time - the small uneven rooms, the lovely garden, the ceiling beams, the inglenook fireplace etc etc. Our house has none of that and the 'original' Georgian features turned out to be fake.

I live now in a grade 2 listed farmhouse. I grew up in a grade 2 listed building and my first house was a grade 2 cottage. As you said the history of the buildings is special. We were very lucky in that our current house could have been sold for around 450k but we bought it off family for 260k. If we had bought it for the full amount we wouldn't have been able to afford the upkeep. When we sold our cottage we had a nightmare of people buying it who didn't have a clue about old houses. E.g. damp.. old houses get damp! Someone wanted 20k knocked off! Windows not double glazed. Worrying about getting approval from the council to do works. I think if you've lived in an old house before you accept the problems you will come across. If the house is habitable then you will get by! Jobs can be done over time. I would just make sure you take into account increased bills and council tax. We are in band E which is around 270 a month. Gas and electric 450 a month (we also have an aga) water 70 a month. They are just the ones i can remember off the top of my head. It is very expensive to run and we haven't even done a winter here yet! I will say the expense is worth living here!

Also I'm dying to see a link. I love houses with history if you're happy to share even by PM 😀

it sounds amazing OP, love your description of it. lots of secrets to unearth I imagine.

Good luck. Please post a link once it’s sold (hopefully to you!). Nobody can say you didn’t try your hardest, Whatever happens!

@LoonyIdea i love your enthusiasm for this house, however buying at auction (or post auction using the standard contract) reduces your ability to ask questions of the vendor before exchange, which could be an issue. Have you had a solicitor read the auction pack for you? I’d really urge you to get a professional opinion.

Other financial issues you need to factor in:

1. buyers premium - usually a % of the sale price, subject to VAT and is a fee you need to pay on top of the sale price (effectively you are paying the vendors EA fees)


2. other disbursements payable by the seller such as the vendors legal fees (Auction House tend to be the worst for these) which are added to the hammer price


3. if you are not selling your house before you exchange for this one you may be liable for the extra 3% SDLT as you’ll own more than one property.

I buy and sometimes sell at auction. Not all auction properties offered are unmortgageable. In the case of a property owned by a corporation it might be that they have to show they have achieved open market value and that might be why they won’t withdraw from an auction (repos tend to be like this). However, post auction you might be able to negotiate a longer exchange and completion. You’ll still need your 10% to exchange though.

However exciting it all is, please don’t forget the value of your (presumably) hard-fought equity in your house post divorce. Sell your house retail with a normal agent, don’t give it to a house-buying site. There are so many chain-free buyers out there that you might be able to get a 30day completion of your own.

good luck to you!

OP please try and delay them and have a proper survey. And even then you are buying the unknown.

we almost bought a Victorian house, looked fine on viewings but would have needed £100ks of work due to damp, dry rot, subsidence which we hadn’t spotted And that is a regular London semi. And we were not prepared to take that financial risk with a tiny mortgage and a combined salary well into six figures. Your heart is making the wrong and potentially ruinous decision here, mainly because if you do uncover seismic issues you can’t just sell it on.

Thankyou - that’s really helpful and what you said about the corporation having to show that they achieved market value is what the other estate agent said (the one who handled the sale that didn’t complete).

More decisions. I think…

The auction house is arranging viewings today and I’m booked in along with 7 other people apparently.

I think that I have almost shelved the idea of buying at auction - it could be done via bridging etc but the overall risk of doing it, and then not being able to service the loan if there was a delay in selling mine, is too much. I could borrow the money to service the bridge within the one contract but I think it’s too risky.

The cash-buy company is tempting but by the time I factor in how much equity I’d be writing off, and add that to the sale price of the new house, it makes it not the relative bargain it was.

Then there’s the issue of no survey - I don’t think it’s as bad as it could be but it’s a risk I can mitigate with just a bit more time.

So, either the corporation agree to my offer and terms of completion or I let it fly at the auction and hope it doesn’t sell and then come in afterwards.

Bit fed up today.

Please don't give up, if it's your dream, dream big, I personally as another 50 something am absolutely rooting for you.

I get where your heart is and if I could I would. Can't wait to see the pictures 🙂

@LoonyIdea good luck with the viewing and do your due diligence. Just because a property viewing is well attended doesn’t make for plenty of bids. You’ll also get tourists and people who’ve been dying to see inside it for years 😉

Please get a professional opinion on the auction pack. The average ‘buyers premium’ is about 2.75% plus VAT. On an offer of £520,000 that’d be another £17k on top of SDLT, your legal fees etc plus everything else (not forgetting you might end up paying an extra 3% SDLT if you own both properties simultaneously regardless for how long you own them both). plus the vendor is no longer obliged to insure it post exchange so you need to get insurance in place. Is it definitely being sold with vacant possession? And full title?

please also consider how much time maintaining land takes up. It’s more than 90mins per acre just to mow grass after you factor in arsing about emptying the collectors etc.

I can see how much you love it and the excitement of owning this piece of history. I worry that you have no margin at all if in a couple of years you need to replace the roof or the electrics etc. What is insurance like on a property like this?

Sometimes your heart just overrides all sense . We live our lives doing the right things and something comes along that you know is a complete money pit but the thought of what might be is all consuming .
I wish OP lots of luck .

That’s a good point about nosy types!

I’ve teed up my conveyancing solicitor to have a look at the legal pack - which they haven’t released yet! For purposes though I’m assuming it’s just standard auction terms.

I guess it’s a test of one’s mettle to be able to make the right decision even though there are emotions involved.

Please let us see the link to the house OP!! I don't think you have any rival bidders here.
Wishing you all the very best

@LoonyIdea bear in mind that the late release of the auction pack might be to drum up viewings before the conditions put anyone off…auction house then look like they’ve done their job and justify the fees (that you’ll pay) 😉

The legal pack hasn’t been done yet, it’s still with the agent/vendor.

im allowing myself to hope that that is because they are considering withdrawal!

I also had a long and useful chat with the same homebuying expert I spoke to yesterday. I’m going to post his details if he gives me permission.
Im trying displacement activities to calm myself. These have so far involved eating half a packet of Rich Tea (I didn’t even dip them) and two ginger nuts. Going to tidy the airing cupboard and visualise the agent calling me to say it’s mine.

I don't think you are in a position to buy this property at the present time. From the information you've given. If you can't get a mortgage on it and you are dependent on the sale of your own house for funds how can it be done.

OP if you are trying to tune your finances to the guide prices, just take those with a pinch of salt, everything local to me is going well over guide prices at auction.

Hi OP, just wanted to add some advice.

You are not is a position to buy this property at auction. The reason MAG are selling this non core asset is that they want a short process that shows they achieved market value. Putting it up for sale through a regular estate agent is a time consuming method of sale for a property/seller like this.

At auction, if your offer is accepted as the highest bidder on the day, this is actual exchange of contracts. You are bound by the legal pack accompanying the property to complete in, usually, 6 weeks. You will pay, usually, 10% of the purchase price within 24 hours of the offer being accepted, plus the auctioneers fees.

Any surveys you complete or findings you uncover after the point of exchange are solely your problem, there will be no renegotiating on terms or price.

On completion you will have to pay the remaining 90%, usually plus the cost of the sellers searches. If your don't complete, you will lose your deposit. Whether the property is mortgageable or not depends on the merits of property itself, not on the method of sale engaged. However, there would not be enough time to start and complete a mortgage application within the exchange to complete timeframe. The only debt buyers at auction have an overarching lending facility that they can draw down on at any time.

Your only hope is that this property doesn't sell on the day. With 7 viewings this seems unlikely. Commercial auctions have been flying so far this year, but a very different beast. Having said that, its a fairly unique proposition, and if it genuinely is unmortgageable, this narrows the buying pool to cash only.

I think your only hope is to try and get in touch with an individual at MAG high up enough the decision making process. Write them an email

• succinctly covering why you want to buy (the most convincing 2 paragraphs of your life),


• how you are going to pay for it, include a valuation of your house from EAs (ie an actual letter) and outline what your outstanding mortgage is. Don't waffle about your earnings/situation/etc


• finishing with an offer of what you are willing to pay on a private treaty basis, including what deposit you are willing to pay as a mark of commitment, as obviously this is unusual under a private treaty. Mark this letter subject to contract.

Do this before the auction, so they know they have a fall back position, albeit via a more protracted and risky process for them. Also, register your interest to bid on the auction website. You'll have to prove your ID. This gives you the advantage of being kept in the loop if there are any attempts by anyone else to buy it prior to the auction (but I'm afraid if you don't have the funds readily available, you wont be able to do anything about it. Anything 'Sold Prior' is under the same rules as Auction). It does not mean that you are obliged to bid on the day.

Have your estate agent ready to go live with marketing your house asap (you might need to speculatively pay for the photos and listing costs to fast track this)

Literally your only hope is that it doesn't sell on the day and your email arrives on the desk of someone who cares something about the building and its future custodian. Its a long shot, and only worth it if you think it is!!

Good Luck