Property Auction Finance – The Fees
As with mortgages and other property finance, there are a range of fees that apply when taking out auction finance and all buyers should be aware of these charges.
Before finance is agreed, there should be a clear and viable exit strategy in place to ensure the loan can be paid off in full and within the required timeframe. This can be put in place via the refinancing or sale of other assets or properties. This is important and should be accounted for from the outset to ensure the process runs smoothly.
Vendor’s Fees – Once the price is agreed, a fee will need to be paid to the estate agent or vendor and in cases where the property has been repossessed, to the seller. These fees can sometimes total more than 2%.
Auction Fees – Every auction house will take a cut and will need to be paid a fee, sometimes up to as much as a few hundred or even £1,000 per sale.
Legal Fees – It is very important to ensure that all of the paperwork associated with the property’s purchase is properly checked through by a solicitor. This makes sure that there are no loopholes or clauses in contracts and other documents that you may be unaware of. Furthermore, you will need a legal expert in the field to look through the Offer in Principle (OIP) that will initially be provided by prospective lenders.
Valuation Costs – This may be taken care of before the auction, but is necessary. It will entail a property surveyor providing an assessment and a homebuyer’s report for the property in order to provide a structural survey.