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  • Auction Tribe

    Auctions, solicitors, legal packs, best practice?

    Hi there, what a delight to find Property Tribes. Very much enjoying the possitive & open flow of information. I have one successful BTL property & am ready for more. My question: there are a handful of properties coming up at auction that meet my criteria but I am keen to ensure all the legal packs are read & understood by a solicitor as I don't like nasty surprises. Do I need to pay for a solicitor to read through half a dozen legal packs if I only hope to buy property?

    Thanks for any advice on not getting this bit wrong!
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    Yes, pretty much, unless you have a solicitor friend who'll do it for free... perhaps on the basis of an existing relationship or, if you're very lucky, the promise of future business. But if you don't pay them then I suppose you have no comeback if they miss something that ends up costing you a lot of money.

    But also read through them yourself and build up a picture of what you need to look out for - things like short leases / ground rent review clauses / mine shafts that will make the property unmortgageable, etc... as well as any glaring omissions, which should set alarm bells ringing! Eventually you might feel confident enough to go ahead and bid without having to pay a professional to read the info.
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    Hi CB,

    I would only ever advise buying at an auction with cash as buying with a mortgage is risky.

    Remember that auctions can often be places where "problem" properties are sold off to naive buyers which is why the anagram of auction is "caution".

    If you have a read of "Masterclass of how to value a property", there is a list of issues which can affect the value.

    Read the auction packs very carefully and discard any properties that have any issues you are not comfortable with.

    You may be able to negotiate for a solicitor to look through 2 or 3 packs at a flat fee price, to try and keep costs down, especially if you offer them the conveyancing work. Our partner Solicitor Anthony Gold have been helping PT members with auction purchases.

    You could also wait until after the auction and consider any unsold lots at your leisure, but again proceed with caution and ensure that you get a solicitor to look over the pack

    Repossessions tend to be sold below market value. A less risky way to source a property would be to use Property Tribes RepoList. Smile
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    Hi Vanessa,

    Will please share the details of the solicitor who review the legal Pack,Thanks

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    I mean you mentioned Anthony Gold who help PT members to review the legal pack,How do I contact him please ,Thank you

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    Contact Alan Zeffert on his email at alan.zeffertt (at) anthonygold.co.uk

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    Hi Shah, did you have any success with these, would you be happy to share who you found most reliable and cost effective reviewing you legals packs?

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    (25-01-2015 09:37 PM)Chodbag Wrote:  Hi there, what a delight to find Property Tribes. Very much enjoying the possitive & open flow of information. I have one successful BTL property & am ready for more. My question: there are a handful of properties coming up at auction that meet my criteria but I am keen to ensure all the legal packs are read & understood by a solicitor as I don't like nasty surprises. Do I need to pay for a solicitor to read through half a dozen legal packs if I only hope to buy property?

    Thanks for any advice on not getting this bit wrong!

    The short answer is yes I'm afraid if you want to know with certainty what it is you are buying. If you are experienced in property you can probably whittle down the types of properties that are likely to give you problems. The beauty of paying a Solicitor is that when they advise you that it is safe to transact you have redress if for any reason you cannot rely on this advice. As a purchaser you have the benefit of the solicitors indemnity (insurance) when you operate in this way. Also if you are using Mortgage or bridging funds your solicitor has a duty to protect the lender's security. If you are gung ho you may risk losing a deposit if you are reliant on lender funds.

    We have a solicitor up north who looks at legal packs -short notice for about £100. She deducts this from the conveyancing costs if we proceed. Inbox me if you would like me to put you in touch. Apart from that leaseholds are inherently more tricky than freeholds. If a property has been recently altered check the planning (I have always found duty planning officers to be very helpful) in most areas initial advice is free, although annoyingly some planners want a pre planning app!

    Paying a few hundred pounds to avoid a land mine is money very well spent. When you do find an auction bargain you will more than cover the cost of the properties that you didn't want or missed. Finally I suggest that when a property has issues ;short lease, building regs, tenants or planning issues, this is a potential opportunity (provided you are aware and have priced in the cost of any remedy). Easy properties tend to have a lot of competition solving issues delivers profit in my experience.

    PT Repolist is currently testing our auction property service. We hope to go live sometime in February. All the best with your efforts. If you need any other pointers do not hesitate to PM me.
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    Founder of Repolist Ltd, the UK's largest real time database of repossession and refurbishment properties.
    Find out more:
    RepoList Website

    In my opinion, BTL is not a hobby it is a business and so due diligence on all aspects of acquisition, ownership, management and disposal is crucial at every stage.

    And so is the financing too.

    Vanessa is spot on to say it is risky to buy at auction with the hope of getting a mortgage arranged in time for the strict completion deadline. So, what are the alternatives? Cash? Yes. Auction finance? Also yes.

    There are many finance solutions available that are designed with auction purchases in mind. However the message I seem to have to advise repeatedly is that the finance (if that is indeed what your strategy requires) does need to be arranged before the auction has started!

    1) See the auction catalogue well in advance
    2) Select your choice of possible acquisitions
    3) Start your due diligence asap, and that includes going to view the properties inside and out
    4) Fully cost what you will need to fund the purchase (purchase price, auction fees, legal fees, val and survey fees, professional fees, refurb costs etc)
    5) Apply for financing for up to the maximum that you will require
    6) Secure pre-approval
    7) ... and then if approval is secured, go to the auction and buy.

    Too many times I have seen people start at number 7!

    https://www.propertytribesbridging.com/auction-finance/
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    At Property Tribes Financial Services, you can access tailored options for bridging, short term lending, commercial mortgage & BTL solutions, sourced from a huge range of banks, building societies and specialist lenders, via a team of industry award winning Advisers. We also provide a full financial planning service for life cover, wills and estate planning.

    T: 01206 654 444
    E: advice@PropertyTribesFinancialServices.com
    W: www.PropertyTribesFinancialServices.com

    Venessa is spot on

    Auction properties often come with issues and some are hidden quite well. The crucial aspect is to learn when a property can be mortgaged and not because if it can never be mortgaged even auction finance is tricky as they will only see you exit as sale which many might not like and certainly reduce the LTV. If you don't know what issues can cause a property not to be mortgagable or how to look out for them (in the flesh or in the legal pack) and occasionally they're hidden from both then buying auction property is quite risky and maybe be worth networking with someone who has this knowledge and skills. Having said all that caution, its also a great place to buy well if you can do your numbers correctly on due diligence or work with someone who can help you do that and also know how to find / avoid all the risks / issues you don't like.

    best of luck


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    regards Andrew Peers - property investor / sourcer - 07912674181

    a.peers@seamlessproperty.co.uk

    Property Redress Scheme Number 011436     NLA member 174404