Auction is becoming an increasingly attractive means of buying and selling property. For the buyer it is a transparent process, the sale is binding at the fall of the hammer and the completion date is fixed in advance.
Buying at auction is not expecially difficult however there are certain guide lines you should follow:
- In general you should not seek to buy a property at auction if your purchase is dependent on the sale of another property on which the contracts have not yet been exchanged. This is because if you are the successful bidder at auction, upon the fall of the auctioneer's hammer you are legally bound to pay the price which you have bid and complete the purchase, normally within twenty eight days.
- If you are thinking of bidding for a property at auction you should instruct your solicitor to inspect Local and National searches, the Title Deeds, any special condiitons and, if applicable, the Home Information Pack. You should be aware that your solicitor will, not unreasonably, make a charge for their services in this respect, whether you end up successfully buying the property at auction or not.
- If you require a mortgage to fund your intended purchase you will need to apply for a mortgage well before the auction and have obtained a satisfactory mortgage offer. You may also wish to commission an independent survey of the property in addition to your mortgage valuation, for additional peace of mind. If you are intending to buy without a mortgage, i.e. for cash, then a survey would be considered essential. Again you should bear in mind that any costs you incur in obtaining your mortgage offer and survey report will be payable regardless of whether you eventually buy the property or not.
- You should also ensure you have adequate funding to cover the cost of stamp duty on your purchase if applicable, and any costs of work which may be needed immediately after the purchase.
- Your surveyor will usually be pleased to give you an opinion as to the upper limit of the price you should pay for the property, however the final decision of course must be yours.
- When you attend the auction sale, listen carefully to the opening remarks of the auctioneer. Amendments may be announced which directly affect the property in which you are interested.
- Most properties are sold at auction subject to a reserve price, below which the autioneer is not permitted to sell the property at auction. The reserve price is usually a private matter between the seller and auctioneer and will not normally be disclosed. If the bidding does not reach the reserve price then the auctioneer will announce that particular property (or lot) is being withdrawn from the auction, unsold. If the property in which you are interested is withdrawn unsold then you are very welcome to approach the auctioneer at the end of the sale with a view to agreeing a purchase price subject to contract. The purchase will then be dealt with between your solicitor and the seller's solicitor in the usual way, rather than through the auction.
- If the bidding exceeds the reserve price and yours is the highest and final bid in the room, then upon the fall of the hammer you have legally brought the property at the price which you have bid. No one can outbid you after the sale and the vendor is equally legally bound to complete the sale, on the day and under the terms stipulated in the contract, which is normally within twenty eight days of the sale. You will usually be required to pay a 10% deposit immediately after the auction ends and you will normally sign the contract in the saleroom.
- Upon signing the contract, contracts are legally exchanged and you will be responsible for insuring the property from that time onwards. After paying your deposit, which is normally done by way of a banker's draft , you will be responsible for paying the remaining 90% of the purchase price usually within twenty eight days. You will therefore see the importance of ensuring that your finances are in place before you enter any bidding!
If you are currently considering purchasing a specific property which is being sold at auction through another firm of estate agents or auctioneers, then Nock Deighton will always be pleased to discuss the most suitable form of survey report for your requirements. For an informal initial discussion about survey reports please feel free to
contact our survey department.