Bidding in an auction with a principle mortgage approval

B

blocks

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Hi all,

We would like to bid on a house at auction. We have a principle mortgage approval not specific to any property. The auction winners are required to pay a 10% deposit, and the deposit is lost if you can't get the money in 6 weeks.

I called the mortgage advisor at the bank to ask her what to do. She told me it would be no problem to get the money in 6 weeks, but I find it hard to believe as I've heard that the average time between sale agreed and drawdown is 4 months. She also said that we can get the valuation done after the auction, but what if the valuer disagrees that the price paid is representative of the property value?

Is this normal for the process of buying a house at auction?
 
Is this one of the BID XI auctions? That is an interesting condition and a fairly good one.

Forget it. You can't buy at auction.

Go to the auction and watch the bidding. Hope that it does not sell. Then make an offer after the auction.

Brendan
 
While caution is needed here, I think Brendan is being overly cautious.

The time delay between sale agreed and drawdown in a regular private treaty sale can be caused by any one or more from a range of issues. In an auction most of these issues are closed off by the auction process.

The mortgage advisor at the bank's opinion is worthless unless they are willing to put it in writing.Your solicitor should be able to advise if draw down within 6 weeks is possible. Make sure they have reviewed the legal pack for the property.

It is most unlikely that there would be a problem with the valuation, the price paid at open auction is by definition the value of a property. Valuers are not in the business of frustrating sales. If you think the sale price may be more than the value, you shouldn't buy in any case. If you are still concerned you can get a valuation done before the auction. Obviously the cost is lost if you dont buy, but that is small money in the context.

Lots of people successfully buy at auction using a mortgage.
 
The usual situation is that the deposit is lost if the purchaser cannot close by the closing date.

The actual closing date is contained in the contract for each individual property.

I would be impressed by the auctioneer having a common closing date for all properties in the auction and highlighting it in advance.

6 weeks may seem short, but the auctioneers are in the business of selling properties, they would not insist on 6 weeks if purchasers generally were unable to close in that time.
 
You would need your head examined if you were to bid at a property auction on the expectation of a draw down on funds with the way banks operate these days.
Pure madness, as there is a very very strong chance you will be frustrated in some way or other by lack of common sense, and you will loose your deposit.

So in that case, there is an element of a gamble here, and you have to be prepared take a hit.

I had a really good, switched on mortgage adviser, who, even though couldn't foresee any issues that may arise, knew well enough to say, someone, somewhere in the chain could cause a delay which, even though they would be aware of the time constraints, ment very little.

If you proceed, and are successful, you will be extremely lucky imo.
 
OP, you should have a survey of the house carried out prior to the auction by a surveyor approved by the bank. Anything you become aware of later will have to be rectified by yourself and the bank may refuse drawdown of the mortgage.

In the event of bidding successfully and not being able to complete the sale the vendor may take action against you for breach of contract, in addition to keeping the 10% deposit.
 
another reason it might be difficult to get draw down within the closing window is title , banks will want a clean title , a very significant number of properties sold at bidx1 auctions have less than perfect title .

i would not risk it personally .
 
Auctions are a great way to get rid of problem properties. Problems as regards title and planning.

Which is why cash buyers can pick up bargains.
 
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