In This Guide
Apply for a mortgage
Buying at auction
1. Introduction
2. Pre-auction preparation
3. On auction day
4. Bidding tips
Buying in Scotland
Conveyancing
Find and view
Negotiate
Plan your purchase
Success and failure
Surveys and valuations
To buy or not to buy
Buying at auction
Pre-auction preparation
Print
Contents
Prev Page
Next Page
Turning up at an auction unprepared is like going on holiday with no luggage. While it may be OK for some incredibly (admirably?) reckless people with a passion for high-pressure risk and the unexpected, it is not a sensible course of action if you dislike incredibly high doses of panic and stress. The old adage about proper planning promoting painless property purchasing definitely holds true with buying at auction.
Bidding for a property on the strength of some pictures, a floor
plan and not a fat lot else is not very wise. You should get yourself
round to a property that you like as soon as possible after seeing
the auction brochure. If you do decide that there is something
that you like then you will have move pretty quickly, as the catalogues
are usually only brought out around three weeks in advance of
the auction and you will have plenty of organising to do before
auction day comes. You can arrange a viewing through the auctioneer,
who will either take a deposit for the keys, arrange a group viewing,
or set up a meeting with a local agent who will visit the property
with you.
Ensure you can genuinely afford to do this. Think about your total
costs, including solicitors' fees, any repairs, renovation or
redecorating, your mortgage and
move costs. Then work out what the
absolute maximum you can afford is, and set your ceiling price
just below this - you don't want to be too overstretched. Don't
forget that if you are successful, you will have to pay the 10%
deposit immediately after the auction finishes, so you really
do have to have the funds readily available.
You need to have a firm offer of a mortgage before you get serious. You must also tell your lender that you are buying at auction. Most lenders will probably be OK with this, though they may well baulk at an 18-year-old first time buyer deciding that this is the route they want to take to owing their own home.
If you are savagely competitive and have a feeling that you might get into a bidding war, make sure that you allow for this in the maximum amount you arrange to borrow. While it is easy to gain acceptance for a mortgage of £100,000 and then reduce the amount that you borrow, you may not have it so easy if you try to do it the other way around.
You need to arrange some legal assistance before you turn up at
the auction. As with a normal property transaction, this could
be either a solicitor or a licensed conveyancer. Unlike a normal
purchase, however, they do a good proportion of the conveyancing
work before you actually agree the sale of the property. They
have to complete the local authority and other searches as well
as making sure that the owner and property are accounted for at
the Land Registry.
In addition, the auctioneer usually has copies of various legal documents that are kept available for prospective buyers. They may charge you a fee of around £10 for a pack that outlines the property's special conditions of sale and some details about the title deeds. The auctioneer should be able to provide you with any other information that you reasonably request.
Your lender will want to know which property you are bidding for,
so that it can instruct a surveyor to conduct a valuation. If
you are buying anything by auction that even slightly dubious
in terms of its condition you should probably get a full survey.
Getting only a basic valuation may be a recipe for disaster, as
it is unlikely to tell you any of the things that you really need
to know about. RICS recommends that for a standard property under
auction, a homebuyers report should be commissioned from a properly
qualified surveyor.
It can be a good idea to go to an auction before the one at which
you intend to bid for a property. This can help give you a feel
for the pace, atmosphere and processes of the proceedings.
The preparation for an auction involves some of the things you
would normally do when researching a property purchase and some
of the things you would normally do a little later on down the
line. You do have a slightly higher risk losing money without
ending up with a property. You pay for a survey and some of the
conveyancing work before you have made an offer. One of two things
can go wrong - either the survey or the research by your solicitor
uncovers something which puts you off making an offer, or you
get outbid on the day. Either way you have spent money for nothing.
But is this really so different to buying a home by the conventional
method? Although you don't spend money on the survey and valuation
until the offer has been accepted, you can still get gazumped
until the contracts have been exchanges and there is nothing to
say that the survey or searches won't put you off going through
with the sale.
Prev Page
Next Page
Contents