There are more ways than you might think to buy the home you want. So, if you’re struggling to find what you need the conventional way, here are a few alternative approaches you could consider to get that property of your dreams.
Housing auctions
Although a housing auction might seem a daunting prospect, and there’s no denying you need to know what you’re doing, if you do your homework you could land yourself a real bargain. Harder to sell properties that often need of a bit of TLC, are offered at competitive ‘reserve’ prices considerably below market value. As well as the money-saving bonus, auctions cut out the usual long drawn out process of house buying.
Now, we have to be honest from the outset here, this option does involve a considerable amount of effort. But if you’re willing to put the time and energy in, you really stand a chance of saving some serious cash. So, how do you do it?
9 Step Guide
Step one:
Attend a few auctions as an onlooker first. That way you’ll get a feel for what goes on and you’ll be much less apprehensive when the time comes to bid for real.
Step two:
Find out about future auctions in your area as much in advance as possible. Unfortunately, this actually isn’t as straightforward as it sounds. The best way is to subscribe to a website that sources the information you need from various auction houses. We recommend the Essential Information Group, which is the only comprehensive auction site with the approval of every auction house in the UK. Subscription isn’t cheap at £125 – £500 depending on how long you sign up for, but it’s a small price to pay if you consider the eventual saving you stand to make. The site has a vast amount of properties, all the auction dates and some essential legal documents available to subscribers.
Step three:
Be a step ahead! Make sure you get hold of the auction catalogue as soon as it’s printed, usually about four weeks prior to the auction. That way you’ll have plenty of time to carry out all the necessary preparations.
Step four:
Once you’ve picked out a property that interests you, get in touch with the auction house selling it to arrange a viewing. Whilst looking around, find out the opinions of local residents and estate agents.
Step five:
After the initial viewing, if you’re still interested, make sure you organise the conveyance and get legal advice from your solicitor. You will require a legal pack from the auction house. There will be a charge for this, which is at the auction house’s discretion; usually it’s around £10-£15. However the Essential Information Group sometimes has these available to subscribers online if the auction house has agreed to this.
Step six:
Make sure you have a survey of the property. Mary Sanderman of the Essential Information Group recommends getting a full survey done; it might cost you a bit more, she says, but otherwise you just don’t know what you’re getting. If you have a better idea of how much work needs doing you won’t get any nasty surprises, you’ll be able to make a more informed offer and won’t pay over the odds for your property.
Step seven:
Once you have decided upon your price, you will need to allow some time to arrange a firm offer of a mortgage with a lender. Explain to them that you plan to buy at auction.
Step eight:
On the day of the auction, call ahead to make sure there haven’t been any last minute changes to your lot. This is known as the addendum, a sheet listing any changes to the entries in the original catalogue. This is really important so remember to check it thoroughly before you bid; it’s very common for most of the entries to have had at least some adjustment.
Step nine:
Set yourself a price limit on the property before the auction and stick to it. NEVER get carried away, because successful bidders are legally bound to buy.
Top Tips
If you’re confused by auction jargon, check out The BBC homes’ great glossary to help you make sense of it all. Don’t take your solicitor to the auction – you’ll just be paying unnecessary money for their time; you can bid yourself!
However, if you’re really nervous about bidding you can opt to bid over the phone – just call the auction house prior to the auction to make arrangements for this. You can also get someone at the auction house to bid for you. As long as you provide your fixed maximum offer, this is easy to arrange.
Having had our first experience of a housing auction in an effort to provide you with the best information, we can tell you that it is quite nerve-racking! Do take note of Step one: it’s definitely worth attending as many auctions beforehand as you can, you can pick up tips on smart bidding quite quickly and feel much more comfortable. Make sure you arrive early so you’ve time to ask any questions you want to, and to get more settled. At the auction we went to, the auctioneer did run through the procedures at the beginning for first timers which was very reassuring.
How much do you save?
To give you an idea of just how much you can save, at the auction we visited on the 21 July 2008 a 4-bedroom semi-detached house in Surrey (ok, it did need a bit of work doing to it) sold for £167,000! This kind of house in Surrey would normally go for between £400,000 to £500,000.
Self-build
Over 25,000 people build their own home each year. It may seem a bit extreme – especially if you have little experience in this field – but you don’t have to be a builder yourself. Just be willing to look for land, bring in an architect and have the patience to project manage the work while the house is being built (probably for 12-18 months).
What it entails
Selfbuildit explain that ‘the average self-build project costs around £140,000′. A well-run self build project should see the final value of the home increase by 20-30% on original building and land costs. So, if you’re prepared to wait and do the work, you can make some sensible money on it. For more information on how to build your own home, check out Ebuild, the Self Build ABC website and Build It magazine. These will advise you how to find a plot of land, manage the project and get help from a self-build company and their architects.
Alternatively, make it easier for yourself and get a flat-pack home. These are increasingly popular and there are now lots of designs to choose from. There’s still a lot of building involved but a lot of the work is done for you, and your house can be assembled in a mere 10 weeks! The kit home, where a major part of the house itself is made in a factory, is just another example of the prefab building, but rather nicer and more solid! There are all sorts of companies around the world making kits in all kinds of materials (timber, obviously, but also metal structures and some using former freight containers!), and it’s worth researching what’s out there.
Top tips for self-build success
Make sure you check out your self-build company on the self-build websites and magazines first. Look at magazines like House & Garden and the Homebuilding & Renovating magazine for inspiration. Also, The Build Store National Self Build and Renovation Centre in Swindon is a great place to look if you’re considering self-build options, and until 30 September there’s free entry at the weekends!
There are more and more mortgages on the market for self-build schemes and many lend up to 95% of the cost of building. Have a look at Thisismoney’s advice on getting mortgages tailor made for self-builders.
Buying with a friend or partner
If other options sound too much like hard work, you should consider joint ownership. Two wages are better than one, especially if you’re looking to get a fairly large mortgage; but beware, money matters between friends and lovers can lead to problems! Obviously you need to know you can stand living with them day in, day out; even if they’re wonderful, you should get things ironed out by a legal expert to protect you both.
According to the law, you can own a house with someone else either as joint tenants or as tenants-in-common. Although they sound the same, legally there is a very important distinction.
Joint owners
Two people own the whole house between them. Neither has a separate share they can sell. There’s no fancy word or process to describe this. If one of the owners dies, the other automatically becomes the full owner of the house, no will written by the friend and co-owner giving it to his family can change that. This is a common type of ownership between married couples.
Tenants-in-common
This is when you both own half of the house (or a different percentage depending on what you agree). So each joint owner has a distinct share of the house meaning that if one of the owners wishes to leave his or her share to someone else they can. The other person cannot just sell the house and get all the money. It has to be divided up according to the percentages agreed. So, if you are living together or you are just friends trying to save money by living together, this protects you both. If one wants out, the other owner will have the option of buying up their share of the property too. Joint ownership means you can share your all your bills, the initial legal costs of buying a property and your mortgage repayments.
Both these options can allow you to buy a property when you otherwise might not have been able to. You can get yourself on the property ladder, have a real investment in your property and of course the potential to make a profit if and when you decide to sell.
For more information on joint ownership, and getting a joint mortgage have a look at this website.
If you are a first time buyer, and would like specific information on any of these options, check out First Rung Now.
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