05 Dec What do you need to know if buying a property at auction?
Going once, going twice, sold to the gentleman in the blue hat! Marie Giles of Rutters Solicitors highlights what you need to know when buying a property at auction.
Buying a property at auction can be both an exciting and daunting prospect but have you ever wondered how it works? The key to buying at auction is to make sure you do your homework because once your bid has been accepted by the auctioneer and their hammer has gone down you have entered into a legally bidding contract to buy the property. You will need to be ready and able to proceed with completing the purchase swiftly after the auction day.
Prior to the auction day you will need to:
View the property – you need to know what you are buying, if it needs work, take along your builder so they can cost the work.
Price – beware, the guide price is simply that, it is a guide, generally the property will sell for more than the guide price so you will need to have a clear idea about how much you can afford.
Consider a survey – you will want to know it is worth the money, that there is nothing untoward which will affect the property and that the purpose for which you are buying the property is not affected by its condition.
Finance – if you need a mortgage you will need to ensure you have a mortgage in principle in place, the mortgage company will need to know you wish to buy a property at auction. You will need to check they will be able to process your mortgage application and release the money quickly to allow you to proceed with your purchase.
Deposit and timescale – you will need to be able to pay the deposit, typically 10% percent of the purchase price, on the day of the auction and you will be expected to complete the purchase quickly typically within 28 days. For precise details of the actual deposit and the timescale speak to the auctioneer in advance of the auction day. Warning – if you cannot complete in time, you will lose your deposit and may have other costs to pay as well.
Legal pack – make sure you read this carefully. The legal pack normally contains the title deeds, local authority and environmental searches, fixtures and fittings list and a seller’s information form, plus any relevant leasehold information. Get your conveyancing solicitor to check this, so they can make you aware of anything affecting the property and have time to raise enquiries with the seller’s solicitor prior to the auction.
Terms and conditions – read the small print, the auction company will have details of the terms and conditions of the sale of the property at auction, which you should ask for in advance. You will need to read the terms very carefully.
Insurance – if your bid is successful you will need to arrange insurance for the property on the auction day.
The main difference between buying a non-auction property and a property at a traditional auction is that buying at auction means you are committed to proceeding once your bid has been accepted so all your homework has to be done before the auction day. If your bid is unsuccessful you will have carried out the homework and paid for expenses for nothing. Whereas when buying a non auction property in England you will make your offer and if the seller accepts it then you will have time to arrange your survey, to get your solicitor to do the legal checks before a contract of sale which will then commit you to buying the property.
If you are buying a property at auction and want us to check the legal pack please contact our conveyancing team at Rutters Solicitors on 01747 852377. To find out more about our conveyancing team click here.
This article was first published in the Gillingham and Shaftesbury News in March 2019.