Buying propert at auction
Discussion
Hi,
I've looked at 3 flats that are being auctioned in 10 days. I've got a solicitor and my dads come with me to do a partial survey (he's a builder). I've been told I need to check other things like:
property title
Any covenants on property
Do various searches for example with the planning department
Has anyone here bought at auction and not got a survey and if so, did you do the above checks?
Thanks!
I've looked at 3 flats that are being auctioned in 10 days. I've got a solicitor and my dads come with me to do a partial survey (he's a builder). I've been told I need to check other things like:
property title
Any covenants on property
Do various searches for example with the planning department
Has anyone here bought at auction and not got a survey and if so, did you do the above checks?
Thanks!
Simond001 said:
I bought at auction, but only after i had a mortgage offer and survey completed.
If you dont need a mortgage then it's your money, and up to you.
If using a mortgage you are taking a big risk with your 15% deposit as you do pay this at the auction.
The problem I've got is that there are 3 flats that I've seen which all fit the bill. As it's an investment I need to get it at a fair price and having sat through an auction before, a few places ended up getting bid up by very enthusiastic buyers. I can't get a survey done on all 3 and I'm dubious of getting it done on 1 and then it may get bid over what it's worth to me.If you dont need a mortgage then it's your money, and up to you.
If using a mortgage you are taking a big risk with your 15% deposit as you do pay this at the auction.
My dad wuld have spotted if there were structural issues or major problems, or am I being very naive and foolish in not getting surveys done on the proeprties that interest me?
Sarah_W said:
scotal said:
Are you going to be using a mortgage to finance the property?
and welcome to PH BTW.
Yes, about 65% of it and thanks!and welcome to PH BTW.
Edited by scotal on Thursday 16th April 16:21
Your lawyer will need to move bloody fast, and should really have a look at the legal pack to make sure there isnothing about the property that will cause you or the lender problems. That will incur cost, and that will be cost for a property you might end up not getting close to buying.
scotal said:
Sarah_W said:
scotal said:
Are you going to be using a mortgage to finance the property?
and welcome to PH BTW.
Yes, about 65% of it and thanks!and welcome to PH BTW.
Edited by scotal on Thursday 16th April 16:21
Your lawyer will need to move bloody fast, and should really have a look at the legal pack to make sure there isnothing about the property that will cause you or the lender problems. That will incur cost, and that will be cost for a property you might end up not getting close to buying.
I got a copy of the legal pack for the properties from the auction website and looking through them, I can't see anything detrimental from any of the searches or other terms.
Thanks your help Scotal!
If you get a drive by valuation by Colleys you will be covering the best part of the BTL market at present, you can then buy with a little more confidence. Remember if you fail to turn up with the balance after putting your 10% down you can be liable for any shortfall if it is re auctioned
The problem that you have is that you are risking the opayment that you make on the hammer fall against the mortgage value. If the flats are all ok, and the mortgage company agree then you should be home free.
An easy solution is to place a bigger percentage as a deposit, as this reduces the banks liability.
An easy solution is to place a bigger percentage as a deposit, as this reduces the banks liability.
Simond001 said:
The problem that you have is that you are risking the opayment that you make on the hammer fall against the mortgage value. If the flats are all ok, and the mortgage company agree then you should be home free.
An easy solution is to place a bigger percentage as a deposit, as this reduces the banks liability.
That depends on the condition of the property though. If it is deemed uninhabitable by the surveyor then there will either be refusal to lend or a retention by the lender of up to 100% of the mortgage amount.An easy solution is to place a bigger percentage as a deposit, as this reduces the banks liability.
Bridging should be possible but it is expensive.... think 1.5% arrangement fee, 1.5% monthly interest and 1.5% redemption fee......
That adds up, and would presume that if the OP bought all 3 flats and suffered similar problems they would be prepared to lend enough for her to complete on all 3 flats, without teh rental income (the 65% ltv would help here, but its no guarantee, especially at the moment.
It is always worth checking out the title and register of a property before you submit an offer, let alone exchange - you can download the info from Land Registry online and it will tell you about any easements present, charges against the property, it also includes a title plan - a copy of the ground lease may also be available to download in some cases too. One thing you should consider if its a london flat is leasehold covenants - restrictions in the leasehold title that will prevent you from certain undertakings at the property as well - you may find that a copy of the lease is contained in the legal pack for the property and that would be worth looking at. Once your lease starts to drop in length it can be a problem to secure funding against it, definitely something worth considering.
ETA: All residential properties, being sold through auction or private treay require a HIPs pack, so you should find your local authority searches and drainage searches through that. The auction agent should be able to help you on that.
ETA: All residential properties, being sold through auction or private treay require a HIPs pack, so you should find your local authority searches and drainage searches through that. The auction agent should be able to help you on that.
Edited by TimCrighton on Friday 17th April 11:10
The auctioneers should have an information pack available which will cover the basics of the searches etc. However, once the hammer has fallen it is yours and unless the property is found to be seriously misdescribed or there is a significant nondesclosure affecting value then you're stuck with it.
You will have a fixed time to complete, sometimes as little as 2 weeks which includes paying up. The auctioneers will not hesitate to sue for the full price and compensation if you fail to do so.
Your own research will give you a good idea of value and unless you can buy it for a figure well below this it is best not to bother! If there's no borrowing involved you can trust your dad's judgement as to condition but if you're needing a mortgage then get it sorted well before the auction.
The consequences of paying your deposit then running out of time on the finance are unthinkable.
IMHO based on auctions in this area the bargains are not as plentiful as you would think and punters are getting drawn into paying over the odds. A better plan is to canvass agents and receivers for distress sales.
You will have a fixed time to complete, sometimes as little as 2 weeks which includes paying up. The auctioneers will not hesitate to sue for the full price and compensation if you fail to do so.
Your own research will give you a good idea of value and unless you can buy it for a figure well below this it is best not to bother! If there's no borrowing involved you can trust your dad's judgement as to condition but if you're needing a mortgage then get it sorted well before the auction.
The consequences of paying your deposit then running out of time on the finance are unthinkable.
IMHO based on auctions in this area the bargains are not as plentiful as you would think and punters are getting drawn into paying over the odds. A better plan is to canvass agents and receivers for distress sales.
Hey folks - thanks for all your help. I definitely wont be buying all 3 properties, but can almost get one without a mortgage and talking to my dad last night, he can lend me a bit, so I'm planning to not go above this total, hence no need for mortgage initially.
The 3 properties are all quite different - this is my favourite, but Isuspect it will go for well over guide price and be out my range. There's another very similar 1 bed flat in that road that's jsut sold wiht an asking price of 239 so even though this needs some work, I'd guess it will end up at the 160-180k mark:
http://www.eigroup.co.uk/auctioneers/templates/lot...
The other 2 are less expensive and both require some modernising/renovating
I'm going to see my solicitor next week to get some advice, but before I do, in the legal pack, I've noticed some places state "Full title guarantee", some are "limited title guarantee" and some "no title guarantee". The no title ones seem to be the reposessions. Full title seems to mean they guarantee the title to the proprty (i.e. with the land registry), limited seesm to mean that there may be charges etc against the proeprty, but what does no title guarantee mean? Does it mean you may not actually end up owning the property as they're not guaranteeing they have legal title to sell?
The 3 properties are all quite different - this is my favourite, but Isuspect it will go for well over guide price and be out my range. There's another very similar 1 bed flat in that road that's jsut sold wiht an asking price of 239 so even though this needs some work, I'd guess it will end up at the 160-180k mark:
http://www.eigroup.co.uk/auctioneers/templates/lot...
The other 2 are less expensive and both require some modernising/renovating
I'm going to see my solicitor next week to get some advice, but before I do, in the legal pack, I've noticed some places state "Full title guarantee", some are "limited title guarantee" and some "no title guarantee". The no title ones seem to be the reposessions. Full title seems to mean they guarantee the title to the proprty (i.e. with the land registry), limited seesm to mean that there may be charges etc against the proeprty, but what does no title guarantee mean? Does it mean you may not actually end up owning the property as they're not guaranteeing they have legal title to sell?
scotal said:
Have you checked how much it will cost to renew the lease on that one you've linked to?
It wont be a problem now, but might be when you come to sell.
It's got 75 years left and I'd expect to sell in either 5 or 10 years. At that price and with at least 65 years left, I don't expect it to effect the resale significantly.It wont be a problem now, but might be when you come to sell.
What is the meaning of "no title" within the legal pack title search?
Edited by Sarah_W on Friday 17th April 14:08
Hi Sarah,
Scotal is right that you should consider the implications of the lease length. Buying in London is different due to the propensity of cash purchases, but typically lending is more difficult to secure on another with sub 70-65 years remaining - something to bare in mind. It would not be unreasonable for the landlord to demand perhaps 10% of the capital value of a renewal.
I've had a quick look at the legal pack and there are a couple of points - one is that there is a clause in there stating that you will reinburse the cost of any searches etc undertaken by the current owners in the marketing and sale of the property - basically their HIPS pack - likely to run to £500 or so by the time you've covered legal costs.
The limited title is related to the LPA 1994. It means the seller has the right to sell the property, or is going to do all they can at their cost to sell it - see here for a better description http://property.practicallaw.com/1-107-6767 It is probably related to the fact the registered keeper is not the seller as below. Worth checking with the auctioneer. It is also slightly different as it is a leasehold interest and not a freehold.
The sale appears to be a probate - but the deceased does not appear to be the registered owner and neither does the executor - thus it would be worth enquiring regarding the presence of 'any over riding interests' the easements created by squators etc that can have an impact on a sale, it also states that any squators etc that perhaps move in between the auction and completion are your problem and not that of the vendor.
You really would be wise to pay an hour of lawyers time to run through these bits.
Most importantly though - have you inspected inside and out though?
Scotal is right that you should consider the implications of the lease length. Buying in London is different due to the propensity of cash purchases, but typically lending is more difficult to secure on another with sub 70-65 years remaining - something to bare in mind. It would not be unreasonable for the landlord to demand perhaps 10% of the capital value of a renewal.
I've had a quick look at the legal pack and there are a couple of points - one is that there is a clause in there stating that you will reinburse the cost of any searches etc undertaken by the current owners in the marketing and sale of the property - basically their HIPS pack - likely to run to £500 or so by the time you've covered legal costs.
The limited title is related to the LPA 1994. It means the seller has the right to sell the property, or is going to do all they can at their cost to sell it - see here for a better description http://property.practicallaw.com/1-107-6767 It is probably related to the fact the registered keeper is not the seller as below. Worth checking with the auctioneer. It is also slightly different as it is a leasehold interest and not a freehold.
The sale appears to be a probate - but the deceased does not appear to be the registered owner and neither does the executor - thus it would be worth enquiring regarding the presence of 'any over riding interests' the easements created by squators etc that can have an impact on a sale, it also states that any squators etc that perhaps move in between the auction and completion are your problem and not that of the vendor.
You really would be wise to pay an hour of lawyers time to run through these bits.
Most importantly though - have you inspected inside and out though?
Edited by TimCrighton on Friday 17th April 16:27
TimCrighton said:
Hi Sarah,
Scotal is right that you should consider the implications of the lease length. Buying in London is different due to the propensity of cash purchases, but typically lending is more difficult to secure on another with sub 70-65 years remaining - something to bare in mind. It would not be unreasonable for the landlord to demand perhaps 10% of the capital value of a renewal.
I've had a quick look at the legal pack and there are a couple of points - one is that there is a clause in there stating that you will reinburse the cost of any searches etc undertaken by the current owners in the marketing and sale of the property - basically their HIPS pack - likely to run to £500 or so by the time you've covered legal costs.
The limited title is related to the LPA 1994. It means the seller has the right to sell the property, or is going to do all they can at their cost to sell it - see here for a better description http://property.practicallaw.com/1-107-6767 It is probably related to the fact the registered keeper is not the seller as below. Worth checking with the auctioneer. It is also slightly different as it is a leasehold interest and not a freehold.
The sale appears to be a probate - but the deceased does not appear to be the registered owner and neither does the executor - thus it would be worth enquiring regarding the presence of 'any over riding interests' the easements created by squators etc that can have an impact on a sale, it also states that any squators etc that perhaps move in between the auction and completion are your problem and not that of the vendor.
You really would be wise to pay an hour of lawyers time to run through these bits.
Most importantly though - have you inspected inside and out though?
Hi Tim,Scotal is right that you should consider the implications of the lease length. Buying in London is different due to the propensity of cash purchases, but typically lending is more difficult to secure on another with sub 70-65 years remaining - something to bare in mind. It would not be unreasonable for the landlord to demand perhaps 10% of the capital value of a renewal.
I've had a quick look at the legal pack and there are a couple of points - one is that there is a clause in there stating that you will reinburse the cost of any searches etc undertaken by the current owners in the marketing and sale of the property - basically their HIPS pack - likely to run to £500 or so by the time you've covered legal costs.
The limited title is related to the LPA 1994. It means the seller has the right to sell the property, or is going to do all they can at their cost to sell it - see here for a better description http://property.practicallaw.com/1-107-6767 It is probably related to the fact the registered keeper is not the seller as below. Worth checking with the auctioneer. It is also slightly different as it is a leasehold interest and not a freehold.
The sale appears to be a probate - but the deceased does not appear to be the registered owner and neither does the executor - thus it would be worth enquiring regarding the presence of 'any over riding interests' the easements created by squators etc that can have an impact on a sale, it also states that any squators etc that perhaps move in between the auction and completion are your problem and not that of the vendor.
You really would be wise to pay an hour of lawyers time to run through these bits.
Most importantly though - have you inspected inside and out though?
Edited by TimCrighton on Friday 17th April 16:27
Yes - I looked over the property with my dad and whilst it needs a good bit of work (hence the guide price), we didn't find anything majorly wrong. With this particular one, he thinks it will go for well over the 125k guide price, so it'll probably end up out of my league. I had no idea about the leasehold length making a difference at that sort of length. A lot of the flats we've looked at in London started out on a 99 year lease and many were 70s and 80s conversions, so have about the same length of time remaining on them.
I've spoken to a local solicitor who's happy to act for me in the purchase and I'm going back to see him in hte wek, so will take the legal pack with me and see if there's anything else he thinks is worht checking before the auction.
Thanks for your help guys!
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