Back out from successful bid on auction property?

by Readers Question

12:00 PM, 8th May 2019
About 2 months ago

Back out from successful bid on auction property?

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Back out from successful bid on auction property?

Hi Everyone, We are in a need of urgent advise. We secured a property in auction just last week and yes despite all the warnings we didn’t see the property and did little research.

Property we secured is a purpose built flat, and what we noticed is no flat has been sold in last 10 years since they were built. Today we called a agent to see how much we can put the property on sale for, and it was somewhat same price that we paid in auction. However, they already had 1 flat (same as us) which was put on market end of 2018 and it is not yet sold. Various reasons for it 1. Property needs lot of work. 2. They had offer accepted, but the bank down valued the property as there was nothing sold in past 10 years. We did not have this problem as we were a cash buyer. He also said that he knows there had been a or a couple of flats sold for which land registry may get updated in coming months and then it should help.

We also noticed there is one block of flats which is not finished since, but agent confirmed that property developer is now starting to build those flats. There is a new school which has been built just next to this block of flats which may give boost little bit to the property.

I have checked with the auction company and obviously they said can’t back out now. I have asked them if they can at least ask the audience if anyone is interested in the property as there were couple of bidders when we were bidding, but they were kind of reluctant and said they will speak to the manager and come back. My point was whats the point of completing the property after paying stamp duty, and other costs and then ask the potential bidders, but again I am not sure if they will accept it.

We are now in panic state, could anyone here be kind enough to give us the advice on what can we do.

Some of the options we thought off:
1. Put up on Rent and in couple of years put up for sale.
2. Can we back off from the auction purchase now (no deposit has been deducted yet), even if that means we need to loose our deposit ?
3. or put the property back in auction after completing.

Many thanks

Kaps



Comments

David Lawrenson

12:16 PM, 9th May 2019
About 2 months ago

I was not aware of any auction houses having any 6 month rule either.
Mortgage lenders may restrict lending in these circs, but most people buying at auction are effectively buying with cash, so should be no issue putting straight back in.

kaps z

17:38 PM, 9th May 2019
About 2 months ago

Reply to the comment left by angela at 09/05/2019 - 09:30
Property is in Cardiff, Wales.

kaps z

17:43 PM, 9th May 2019
About 2 months ago

Reply to the comment left by Graham Bowcock at 09/05/2019 - 09:28
Thank you for your input.
We initially thought we will buy this property on cash and then get equity out to buy another property in mortgage. Now as the agent I called just to check how much we could sell for mentioned that mortgage has been turned down so we are not sure if it is worth asking other lenders or that would not matter if one lender has refused the mortgage.

Other option is to put it back on auction but we aren't sure as doing that may show that property had got some defect and which is why it is back on auction as soon as it was sold. We don't want any of our step to go against property.

kaps z

17:47 PM, 9th May 2019
About 2 months ago

Reply to the comment left by Graham Bowcock at 09/05/2019 - 09:28
By mistake the auction house emailed all the potential buyers for this property about one of the points raised as query in one email to all. So we have the list of all the interested people, do you think it is OK to contact them if they have any interest in buying.

Letting is an option or I should say only option but we really be looking to sell (if we could at all) and use the money to buy property via mortgage. We may get 2 properties putting 50% deposit towards each.

Darren Peters

8:18 AM, 10th May 2019
About 2 months ago

Once you do your sums Eg on likely rent, ask far and wide to see if you can get a mortgage, don't rely on the one broker through the agent. No broker has a monopoly on the deals out there.

Certainly contact all the potential buyers, worst they can say is "No, don't contact me again". But don't do what the auctioneer did and mail everyone at once.

Think about your end game. Would you be happy to hold if you could get a mortgage somewhere?

If you prefer to sell, how much of a hit are you prepared to take to be rid of the property?

SimonR

10:52 AM, 10th May 2019
About 2 months ago

Reply to the comment left by kaps z at 09/05/2019 - 17:47
No don't contact the other buyers, the auction house has breached GDPR legislation. Not sure how this would impact you directly however but better safe than sorry.

rent the flat out for now, see how the market develops and sell/remortgage at a later stage

Tony Hodge

8:27 AM, 11th May 2019
About 2 months ago

I can't believe someone would buy blind at an auction.

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