What your client should consider when buying a home at auction

As a mortgage professional, you will encounter all manner of enquiries from your potential customers. Having completed the relevant training and exams, you will be ready to deal with a multitude of proposals, with one no doubt being the purchasing of a property at auction.

Whilst the process that you follow will be dependent on your employer’s procedures, there are a few things that you will need to make certain that your client is thinking about. As such, when approached by someone considering buying a home at auction and enquiring about a mortgage to fund it, you will have to ensure that they are aware of and have considered the following:

Have they researched it?

Make sure that they arrange a viewing of any properties that they are interested in, so the buyer can have a good look around before getting involved in any auction bidding. It will also help to talk with neighbours and local estate agents to make sure that they have fully researched the area, its amenities and a bit about the property’s history.

Look into the details

If initially gathering information from a brochure detailing properties for auction, a buyer should make sure that the descriptions tallies with the house itself. They must also fully absorb all terms and conditions of the auction, which should also be in the accompanying brochure, and ensure that they have sought the advice of a solicitor prior to auction.

After the hammer falls

Your client should be reminded that if they are successful at auction, they will immediately become legally bound to continue with the process, in the same manner as an exchange of contract during a more traditional purchase. This means that they need to make sure that they have a deposit of 10% ready to pay on the day of the sale for any successful bids.

The next step after signing the contract is to make sure that the buyer has arranged the funds to pay the remaining balance within 28 days of the auction date, which is where you will likely step in.

If a mortgage is needed in order to complete the auction purchase, it is vital that the buyer speaks with a professional ahead of the event. They will also need a mortgage in principal before attending the auction, which will confirm to the auctioneers that they have the wheels in motion to complete the purchase. If they do not complete the sale within the required timescale, the buyer will risk losing their deposit.



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