In this latest blog from Susan, one of our portfolio landladies, we hear how she recently purchased her last property through a property auction, from overseas!
As an overseas investor/landlord it can be a challenge, even at the best of times, to purchase property in the UK – having to rely on local contacts to view the property on your behalf and provide feedback …. and for them to fit this into their already busy schedules. Of late, there seem to have been fewer ‘bargains’ coming onto the market and, when they do, there is always huge demand for them – usually with estate agents taking it to ‘best & final offers’.
So, when a perfect-looking property came on the market for auction, we decided to try this approach. The house needed a complete refurb and had a ridiculously low guide price (probably to attract attention). There were 3 ‘Open House’ viewings scheduled by Auction House, and a booking/reservations was required. Matthew (Redbrick Properties) agreed to attend one of the viewings on our behalf. He confirmed that it had great potential and would ultimately be a good rental investment. Additionally, our local builder agreed to attend one of the scheduled viewings and he confirmed that the property needed a full refurb but that the fabric of the building appeared to be sound. With this knowledge, we decided to register for the Auction.
The Auction House website carried lots of useful information about the auction process and procedures. As an overseas bidder, we would need to either enter a Proxy Bid, or be a live telephone bidder. We decided on the latter and, as we would not be present at the auction, there was quite a bit of preparation to do.
We needed to register our interest in the property and complete a Telephone Bidder Registration Form. In addition, (in the event of successful bid) funds need to be in place to provide a 10% deposit on auction day – the options being to either forward a blank cheque with the Registration Form, or wire funds direct from your bank account (which would be returned in the event of an unsuccessful bid). We completed the registration form, attached a blank cheque and forwarded both, by mail, allowing about 10 days for delivery.
In the meantime, it was essential to ensure that all funding was in place. Once the hammer goes down on a winning bid, that is considered ‘Exchange of Contracts’ and there is no going back. Completion MUST take place within 28 working days, otherwise penalties and fees will be incurred.
Another consideration was the conveyancing and legal process. As we had never purchased at auction before, we decided to err on the side of caution and get the legal pack checked by our solicitor prior to the auction. The cost was £300.00, but we were determined to get this property, so it was worth doing – for peace of mind, if nothing else.
The legal pack was available to download on the Auction House website. We forwarded this to our solicitor for review. She spotted one minor anomaly and contacted the vendor’s solicitor for clarification. It is important to note that after Exchange of Contracts ie. once the hammer has gone down, the vendor’s solicitor is under no obligation to respond to any further questions.
On Auction day, our property was Lot 7 and the Auction House agent called during Lot 6. I received a running commentary on what was happening and where the bidding was at, but once you get involved in the bidding, it all goes really fast – you have to think quick and be sure of what you are doing. Within just a few minutes it was over, and we had purchased the house.
We contacted our solicitor to confirm and she got to work with the conveyancing. Due to the urgency of fast completion, the legal costs are slightly higher than on a regular house purchase. As it turned out, we completed within 7 days!
The property auction is a fast and efficient way to purchase property. I would definitely recommend it but be sure to do the research and preparation in advance and be confident. It’s not an experience for the feint hearted!!