Buying a property at auction

Many good investments can be made at auction.

For most people buying at auction can be a little like being in the twilight zone, not knowing if what you are buying will still be standing this time next year, or if you will ever have a hope of being able to extend it or refurbish it in the future.

I've been to auctions before and wondered quite why so few people were prepared to bid, but now I know. It's a lot of hard work, and expense, to get prepared.

Obviously, you can't just turn up and bid. Well, you can, but you'd be taking a huge risk. So there are four areas that need to be de-risked before getting into a position to nervously nod that head. I thought I'd pass them on.

You need to investigate how the economics of the site stack up. What is the end value of the finished house, and how much will the project cost to undertake? The selling agent or auction house should be able to give you some pointers.

You'll need to pay ten per cent on the night and be able to complete the purchase within 28 days. If you can't do that, you lose the deposit. So you need to make sure that any lending or mortgage is guaranteed before the auction. This is likely to include requiring a valuation on the property, which usually takes a week or so. Make sure your lender is able to complete in quick time.

Worth knowing that a good many auction properties are unmortgageable in their current condition, because lenders won't lend on a house with no kitchen, no bathroom or serious structural problems. Which is very often exactly why it's at auction in the first place. Bridging finance is the usual answer and it is a different sort of arrangement, so work that out well before the day.

Appoint a solicitor to go through the conveyancing work before the auction. The auction house will provide an auction pack with relevant searches, but you should engage a solicitor to act on your behalf beforehand, and to make sure your plans are not endangered by something in the legal pack.

It is worth being thorough here, because covenants, rights of way, access arrangements and shared drainage all turn up in auction packs and any one of them can stop you doing what you intended with the property. Reading it yourself is not the same as having somebody read it who knows what they're looking for.

You won't usually have time to submit a planning application on the property before it goes to auction, and nor would it be practical to do so, given the need to appoint designers. However, you should get as much of a grip on the plausibility of your proposals beforehand, either by studying the local policies or, preferably, consulting the council for pre-application advice. Most councils, though not all, will be able to turn it around in a few weeks and it should at least give you a basic idea of what can be done.

We often get enquiries from people considering buying a property at auction, wanting to know what the planning department will let them do with it and how far it can be extended.

We have over 26 years experience dealing with architectural design and securing planning approval for a wide manner of projects. We can look into the local area and the local plan, find similar properties nearby which have been extended, and find out if the property is listed, whether any tree preservation orders exist on the site, and the likelihood of the planning department granting you permission for your dream home. We have wide experience with both domestic and commercial properties.

Our advice, if you are thinking about buying a property at auction, is to contact us before the auction rather than after it, and allow us to give you a free no obligation consultation. There is very little we can do for you once the hammer has come down.

We truly have "the man with the plan".

For more information please call us on 07773 899 597 or contact us through this website.