Buying a Property at Auction
Is there a finance house that deals with auction finance? I have about ten thousand for a deposit.
Asked on May 23 2012,
Home Finance in Henley-in-Arden |
The difficulty with buying at auction is that when the gavel goes down, you’ve just exchanged contracts, you have to pay the deposit there and then and you generally have a fixed time, like 28 days to complete. If you fail to complete in time, you’d be subject to penalties and possibly lose your deposit.
So, really before you bid on a property, you need to have done your survey and got your finance in place. Which is all rather risky, or at least expensive for a property that you have no guarantee of actually buying. In my experience a retail buyer who wants to live in the property and has done the work up front, will always bid over the odds and therefore outbid anyone who's looking at making a profit.
If you are successful in buying the property, to try and secure finance in 28 days is difficult if you need to get a survey, valuation etc. If the property is a complete refurb, it can be difficult to get a normal mortgage. And even with business finance, they’d be looking for something like a 40% deposit, plus you’d need the additional cash to renovate the property.
Answered on May 23 2012,
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