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Biffo the Bear

Are Current Auction Prices Similar To What We Expect Potential Post-crash Prices To Be?

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Seeing on another thread that some new-builds in the poster's home town (Colchester) went at auction for 145k when they were originally on the market for 245k, and the various anecdotals over the past few months of similar reductions at auction, is it possible that buying at auction represents the similar value you'd get in looking for a home after a crash?

I've noticed board sentiment floating towards there being anything between a 20-40% reduction overall when a crash arrives; are these not the similar prices adjustments that we're seeing at auction houses right now?

If, as is forecast, the interest rates do end up a lot higher, then I'm thinking that it might be best to get a mortgage arranged now and get a vastly reduced auction price as opposed to waiting until the mortgage interest rates are sky high, and buying on the 'standard' market something which would've been similarly priced 1-2 years previous at auction? :huh:

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Often up to 6 months from the date on which the offer is made (note, offer, not agreement in principle).

Before someone asks, you can't take the mortgage now and just pay it till you find the property - it's a secured debt, what would it be secured against if you've not bought ?

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Often up to 6 months from the date on which the offer is made (note, offer, not agreement in principle).

Before someone asks, you can't take the mortgage now and just pay it till you find the property - it's a secured debt, what would it be secured against if you've not bought ?

Which would mean that house prices could lag a credit crunch by six months.

Make you think maybe you should go and get a mortgage now, as we all know its going to get more and more difficult to get one. Can you agree one and then never use it?

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Which would mean that house prices could lag a credit crunch by six months.

Make you think maybe you should go and get a mortgage now, as we all know its going to get more and more difficult to get one. Can you agree one and then never use it?

This is what I was thinking. I've never had a mortgage so obviously can't be 100% (although I'm sure I'll be corrected v.soon ;) ). I worked on the premise that you applied for a mortgage, and then it kind of stood there in suspended animation until which time (within six months) when you wanted to use it?

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hmmm...I am not 100% convinced of this, although I have never bought at auction.

If what is being said is correct, someone could buy at auction for a reduced price and then sell it through traditional channels at a profit. It can't be that simple, if it is then I'll sell my house and use the equity to buy auction properties each under market value...

There may be many reasons why an aution sale appears a bargain, but perhaps it was just overpriced on the market originally.

Auctions usually have reserve prices, which is obviously what the seller is happy with...so the final price may be under market value but will it be substantially lower?

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This is what I was thinking. I've never had a mortgage so obviously can't be 100% (although I'm sure I'll be corrected v.soon ;) ). I worked on the premise that you applied for a mortgage, and then it kind of stood there in suspended animation until which time (within six months) when you wanted to use it?

What you can do is investigate mortgage companies - and go to speak to them to get a Mortgage in Principle. This means that the mortgage company would be prepared to lend you £X based on your current situation (income, outgoings, savings). There would also be something in the mix for what job you do. With a Mortgage in Principle when you find a house a mortgage company then checks out the house (survey) and agrees that the house is mortgageworthy too. Once you AND the house both pass it's "OK", then you can have a mortgage on that property.

Before an auction you can have access to (buy for a few quid [say £25-50]) a Legal Pack which tells you all about the property - oddities, oddities in deeds etc, special requirements (they might want YOU to pay the auction fees) etc etc etc. And you should have a survey done before auction.

However, say, you had a Mortgage in Principle for £200k on a fairly new build where there was nothing untowards about the block (not all empty or something else potentially nasty), then it is possible you COULD risk your neck at auction and if it only went to £160k feel confident you'd get the mortgage on that property .... then you could chance your luck.

When you buy at auction you HAVE to immediately give a 10% deposit (might be with vat or other bits/bobs) BEFORE you even leave the auction room. Then you HAVE to complete within 28 days (again, check the legal pack as it might say much less time than this).

Sounds to me like you need to spend a week or so looking into this a bit more. Go hang out at some auction rooms. Talk to some people. Buy a book. Google it.

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