Updated: Nov 3, 2020
hey everyone I hope you are all good
most of you will know we have been trying to get a few properties secured this year to add to our portfolio we were just about to complete on a 6 bed hmo just before lock down and due to the uncertainty the deal fell through
however we have been back at it viewing houses with multiple agents and even conducting a marketing campaign through facebook what lead to a few leads just nothing that we happy with
so we turned to the dark side the Auction
never been a particular fan of auctions as its seems to me like people just get carried away in the heat of the moment and end up buying a property way over the odds
we located 5/6 property's that we were interested in within the auction done a few viewings and checked out the legal packs
logged into the auction and watched as houses sailed past the guide prices up to 100k more
all of our houses we were interested in had quickly been sold for more than I was willing to pay as there would be no room for profit
but in the finish our last property came up and we managed to secure it with a winning bid just before the hammer fell
its a 2 down 2 up property in a street that rents out very well
and will create a decent little return
but its not like what you see on the TV so I have put together some tips and lessons we learned for when you decide to have a go at buying from a property auction for yourself
1. Visit the property
Attend the viewings and read the legal pack,
make sure you have seen the floor plan check the pictures online go round the property and look for water damage, mould, damp problems, large cracks ect check the guttering roofline boiler and electrics bathroom, kitchen and windows
2. Know what you are buying
Do your due diligence check what the property prices are like in the street check the land registry find out how long they take to sell and how long they take to rent check the rental figures to make sure the property stack up
3. Discuss the property with your mortgage broker
You don’t have to be a cash buyer at auction. I’ve funded all my hammer purchases with mortgages. But you do need a good broker.
Video the property when viewing it and show this to the broker. Then agree how much you can borrow and how much the property is likely to be worth.
The broker should also visit the property and get your mortgage agreed in principle if possible
Arrange a valuation as fast as possible after a successful bid.
You usually have 28 days to complete. You will lose your deposit if you fail to get the mortgage, or if it takes too long.
We like to have the cash available just in-case the mortgage does not come through in time then your under no stress if it mortgage doesn't come in time
4. Read the legal pack
It goes without saying read the legal pack you would be surprised how many people don't
Start with the special conditions and read them carefully, as this is where nasties can lurk. If in doubt consult your solicitor.
Things to look out for include: any outstanding bills
a buyers premium you need to factor all these costs into your bid.
If you are buying with a mortgage, make sure the lease is longer than 80 years, that the seller has owned the property longer than six months and that you have at least 28 days to complete.
5. Plan of action for the auction
Auctions are fast paced and exciting so It’s easy to bid more than you can afford.
always ignore the first few properties. They are there to get bums on seats and attention for the auction as a matter of fact I was interested in the first 2 property's and they well 100k over the guide
remember to be prepared to go home empty-handed
there is always an other auction around the corner
lastly remember your maximum bid write it down and stick to it don't enter into a bidding war its just not worth your bother
6. Don't forget your bank card
If you succeed, you must pay a 10 per cent deposit and some auction costs immediately, so make sure you have the funds available
remember to have all your paper work to hand
7. Use a solicitor that deals with auctions
A lot needs to happen between the hammer falling and completion. You need a solicitor who can act for you fast and efficiently and hurry the other side along
ask the auction house for a recommendation they should know a few solicitors
You also need to be switched on yourself.
Send the sale documents and the contracts to your solicitor as soon as the hammer falls and respond to their enquiries fast call them and your mortgage broker regularly to ensure everything is on track.
Hope this helps guys if you decide to take the plunge and go it through auction
happy investing guys have a great day