Property developers also often look to auctions to pick up a property at a reduced price. However, whilst auctions have their attractions, there are also a number of points to consider to ensure your interests are best protected and help you to make the right decision : –
- Make sure you have viewed the property you are interested in. Viewings can be arranged through the auction house or estate agent. You can then check that the description given in the auction catalogue is correct and be sure about what is and is not included in the sale. For example, an inspection of the property might reveal that a garage is no longer there or the garden is not quite as big as described. These things may influence your decision and can affect the ultimate value of the property. You may also want to consider instructing a surveyor prior to the auction as any adverse points picked up in the survey may impact on how much you are willing to pay.
- Make sure you are satisfied that you have the financial resources to fund the purchase before the auction. Usually a purchase at auction must be completed within 28 days of the date of the auction. You will therefore need to ensure that you have the funds available at short notice. You may want to consider applying for a mortgage or get a decision in principal in advance of the auction to ensure you are in a position to proceed quickly if yours is the winning bid.
- If you win, you must pay the deposit immediately, usually 10% of the purchase price. The payment is made direct to the auction house on the day so you should make sure you have the funds readily available and remember to take your cheque book, bank details and forms of identification with you. Some Auction houses also charge a buyer’s premium, so be sure to check the small print before you go, and make sure you take some ID along. If you are successful this will be needed. You should also make sure you have made provisions to insure the property from the date of the auction as most auction conditions will pass the risk to the buyer when the hammer falls.
- Instruct a solicitor to check the legal title to the property prior to the date of the auction. If the title is defective, it is too late to withdraw after the hammer has fallen. A simple review of the title beforehand could save you lots of time and money. Your solicitor can also check the auction conditions and draw your attention to what your obligations will be if you make a purchase at the auction.
Remember, buying a property at auction is legally binding and if you are the winning bidder, you must purchase the property within the time allowed for the price agreed and are bound by the terms and conditions of the contract. Make sure the property is right for you and if in doubt, think twice before committing yourself.
For further information, please contact Vinesh Mistry in our Property Department.