The Dos and Don’ts of buying a property at AuctionOctober 8, 2013
Thinking about buying a property at auction?
In today‟s property market it is becoming more common for both residential and commercial properties to be sold by auction. It is generally viewed as a faster way to dispose of property, than the conventional route. As a first time buyer at a property auction, you can easily get caught up in the excitement of the moment and end up entering into a legally binding contract which you might regret. As a first rule, in an auction situation, as in any other situation, it is always a case of “buyer beware!”, so arm yourself with as much information as possible before the auction to enable you to decide whether or not to bid for a property.
We would suggest potential buyers should do the following before attending an auction:-
1. Instruct your solicitor IN ADVANCE
If you are interested in a particular property, instruct your solicitor as soon as possible to inspect what‟s known as the „title‟ to the property to find out whether there are any adverse matters which could affect the value, or your ability to sell the property on at a later date. Give your solicitor as much advance notice as possible. You have no opportunity to query title issues after you successfully bid for a property at auction. Once the auctioneer accepts your bid, you are contractually bound to complete the purchase.
2. View the property
View the property and, if possible, instruct a surveyor prior to the auction to inspect it to ascertain if there are any structural or other defects in the property which, again, could affect the value and your ability to sell the property on.
3. Have your finances sorted
This is vitally important. Once your bid has been accepted by the auctioneer, you will be asked to sign the purchase contract. You have then entered into a binding contract to purchase the property. The deposit (usually 10% of the purchase price) will need to be paid at the auction, with completion of the purchase taking place within a short time period afterwards. If you are obtaining a loan from a bank or building society you need to have this agreed “in principle” prior to the auction date. You also you need to be sure that your lender will provide funds in good time for completion. If you cannot complete the purchase on the completion date, the seller can sue you for the full purchase price and damages.
4. Put questions in advance
Raise any queries you may have on the property with the seller‟s agent as far in advance of the auction as possible, to give enough time for meaningful answers to be provided.