Buying a property at auction can give you a wider choice of homes to choose from and the chance to pick up a bargain in a quick purchase that avoids months of conveyancing.
You do need to be aware of certain issues before you take the plunge however. Because of the fast nature of the transaction, it is important to ensure you are fully prepared.
Finding a property
You should view the property, which is usually done by way of an open house appointment. Properties are sold at auction for a reason, often because they are in poor condition. Unless you are an expert, you should take a surveyor or builder with you so that you have a good idea of the work that will be required and the likely cost.
If you are serious about buying, you can have a survey carried out so that you know the state of the property. You can also obtain an estimate of its value, either from the surveyor or by looking at the asking price of similar properties in the area.
Auction sales move quickly with often only two to four weeks between the listing of a property and the auction date, so once you have found a property you are interested in, you should start work without delay.
Check the legal title and other documentation
A legal pack will be supplied which will include details of the title, a local authority and environmental search and seller’s information, which may be limited.
You should ask an expert property solicitor to go through the documentation to ensure that the legal title is sound and that the searches do not reveal anything untoward.
Financing your purchase
You will need to put your financing in place before you go to the auction. Decide how much you are willing to pay and if you need a mortgage, make sure you arrange this in principle beforehand.
At the auction
It is advisable to attend a couple of auctions without bidding, to see how the process works. Generally, a property will go for more than the guide price, which can be low to entice bidders.
When you go to the auction at which you wish to bid, you will need to provide two pieces of identification and be able to demonstrate that you are able to pay the deposit. You should check to see whether any last minute alterations have been made to the listing, such as the addition of extra information.
Make sure you are not tempted to bid more than you intended as you may end up regretting it. If your bid is successful, you will need to pay a deposit of 10% of the purchase price there and then.
Completion will usually be set for 28 days’ time, when you will need to pay the remaining 90%. This means that you only have limited time in which to ensure that your mortgage advance will be made.
If you go to an auction and a property does not sell or does not reach its reserve price, it may be possible to make an offer afterwards which could be accepted.
If you would like to speak to one of our expert property lawyers, ring us on 0333 305 5189 or email us at info@lpropertylawyers.co.uk
