With the decreasing house prices in the UK and the credit crunch that has resulted in many employees becoming unemployed, more and more homes are being put up on auction in an attempt to sell them quickly. However, the fact is that less than half of the homes offered for sale by auction actually sell. There is no doubt that if you are looking for a bargain in a home, then your best bet is to look at what an auction has to offer.
First you have to find the homes that are being sold in this manner. Estate agents regularly hold house auctions and some of the leaders in this respect are Allsop, Andrews and Robertson, Barnard Marcus and Savills. Contact these agencies to obtain a copy of their catalogues with the properties listed for sale. These catalogues are usually released to the public about two or three weeks prior to the date of the sale.
One of the easiest ways of obtaining the guides is to go onto the agency website and download the catalogue when it becomes available. It is important to note that the prices listed in the catalogues are only guidelines. Since it is an auction you may be able to get the house at a lower price. You can also obtain a listing of all the houses offered for sale by auction by paying a membership fee and subscribing to www.eigroup.co.uk. The price of the membership is £125 for three months, but if you are not sure you want to pay this amount of money, you can get a free trial membership.
Before you can bid on a house that is on auction, you must know for sure that you are able to obtain a mortgage. You need to have pre-approval or a letter stating that you have approval in principle for a mortgage. You also need to pay a 10% deposit when the auctioneer accepts your bid. When you do have approval in principle from a mortgage lender, this does not mean that you will definitely get the approval. You will have to submit another application and the lender will want to make sure you do meet all of the eligibility requirements before you receive final approval. This depends on the value of the property and your income along with your credit history and score.
You do have to prepare a budget when you plan to apply for a mortgage to buy a home on auction. The typical fees that you have to allow for include lending fees of about £2000 and a Stamp Duty. On mortgages between £125,000 and £300,000, the Stamp Duty is 1%, but if you take out a mortgage of more than this you will have to pay a Stamp Duty of 3%.
Take your time and don’t rush to buy the first property that you view. Take a tour of all the properties in the area where you want to live that are in your price range. You can also check with the Land Registry to find the price that similar homes have sold for in this area in recent months.
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