Sourcing properties part 1

 

Are you a buy to let investor, then you already know that finding a good deal on a property is getting gradually harder, this is mainly due to the fact more people over the years have seen property as a good investment and it’s no longer the niche investment it was in the 80’s and 90’s .

Auctions

Property auctions, when as mentioned above property was more of a niche investment for the few who had the knowledge and were brave enough to take the chance on property investment when interest rates were more likely to go up greatly in the 80’ and 90’s, auctions were a good place to go to source property and you could pick up real world good deals.

Now property auctions are attended by so many investors from all walks of life and picking up a property that is a good a deal as you could off in the earlier days is much more difficult, also it takes experience when buying at auction as there are many pitfalls to the process. Properties bought at auction are subject to a mostly bought as seen protocol  so any issues with the property or title once purchased you are basically stuck with them without any recourse to the vendor  , it is possible to investigate the property prior to the auction and you can request an auction pack that includes limited property searches . It is then advisable to employ a conveyancer who is experienced in auction property to inspect the pack and property prior to the auction so that you are not buying a property that has underlying issues that are not visible immediately , example you could buy a property that has been extended but without the proper planning permission and building regulations , then receive a visit from the local authority after purchase asking for the extension to be removed , you will have no comeback to the seller and the property price will be severely affected once the structure has been removed let alone the cost to remove the structure .

So in summery when buying at auction request a brochure on all properties being sold and do in depth research on the property  that you are interested in before attending the auction .

The other big issue with auctions is the timescale once you have won the property , you have to immediately exchange contracts with a ten percent deposit and are given a further 28 days to complete . This means that you must not rely on getting finance after the purchase as you might run out of time and could end up losing your 10% deposit and being sued by the vendor. It is always advisable to get finance in place before the auction cash purchase is always the safest readily available funds in your bank account. There are a myriad of issues that can arise if you are buying with finance even if it has been agreed prior to auction , the survey after exchange could find issues like subsidence , damp or even risk to flooding and the financier might turn the you down after exchange. You might have an issue getting all the things done in the 28 days to satisfy the financier so pre planning this is essential. Also you need to have the 10% readily available for the deposit as it will be asked for on the day off winning the auction.

Next estate agent sourcing.