Jan 18 2009
Buying repossessed property at auction (UK)
Property prices are falling fast, but if you buy at an auction, chances are that you’ll get a better bargain, as most of the properties for sale at auction are repossessions, and the lenders who now own them usually want a quick sale. In addition, very few members of the public actually buy property in auctions, your only competition will be property developers, who will not be eager to bid prices up.
How do you go about it? First of all, make sure you have your mortgage in place. If you buy via auction, you have to pay your 10% deposit on the day of auction, and complete the sale within 28 days. So apply for your mortgage well in advance so that you know you’ve passed all the credit checks and have the mortgage offer in hand.
Also try and visit the property listed before you buy and make a visual inspection to ensure it is sound and will pass the structural survey. Be very careful with older property, particularly those built in Victorian times. Newer properties should be a better bet, and properties built within the last ten years should still have their NHBC certificate, which provides a guarantee as to structural faults.
You can find out what the property sold for previously at NetHouseprices.com, which collates all information on purchase prices registered at the land registry since 2001. Once you have found what the previous owner paid for it, try to work out how much the property is worth now, and how much the price has fallen by. If you are struggling with this, ask your mortgage lender to help you - they usually have software that allows them to estimate how much properties have fallen in price. They will be happy to help - it’s in their interest as well as yours, that you don’t overpay.
Finally, before you plunge in, go to some auctions to see how they work, and read everything you can about them, including all the legal work that buying the auction involves. Only start bidding for a property when you feel you know what you are doing.
