Written by Marion Oliver, a Conveyancing Executive at our Aylsham office.
There is a common misunderstanding that properties sold at auction are either repossessed or properties with problems. However, this is not the case in today’s market. In fact auctions are becoming more popular for a variety of reasons one of those being the speed and assurance of the transaction.
The main issue is to work out the maximum you are prepared to pay and stick to it, however frenetic the auction room becomes at the time of bidding.
It is also prudent to instruct a solicitor to read through the legal pack that comes with each property at auction (normally available several weeks beforehand ordinarily online) to check for awkward covenants or restrictions which may prove a burden later on.
It may be that the solicitor/conveyancer acting for the seller of the property is available at the auction for you to be able to ask questions regarding, say boundary issues, parking arrangements at the property etc and also raise any last minute concerns you have. You will need to check before acquiring the property that any proposed renovations have planning approval.
You also need to organise your mortgage requirements in advance, should you require one. You only have 28 days after the hammer falls to pay the balance of the bid and must bear this in mind should there be delays in your obtaining the mortgage finance you require. This is one of the benefits of buying at auction because if you wish for transaction to be quick the whole process can be completed quickly.
A bonus of purchasing at auction is that there is a fair chance for everybody in terms of placing their bids, gaining confidence that your fellow bidders have the same opinion of the property’s value as you do.
At the auction you will need to provide a 10% deposit of the purchase price with the remainder payable 28 days later. A purchase at auction would also not fall through due to lengthy delays from other parties or breakdowns in communication.
You will need to have insurance on risk since you will become liable for any damage to the property as soon as your bid is accepted.
Take care to read any addendum sheet to the auction particulars on the day as this states any changes that may have occurred since the catalogue was published.
Finally if a property seems a bargain and too good to be true – then it most often is. Therefore, it is essential to inspect the building yourself before the auction in case the catalogue has forgotten to mention the motorway flyover planning near by. If the building is elderly and needs a lot of work it is worth investing in a structural survey to check for hidden problems, as is the same in any purchase of a property whether at auction or otherwise. The cost of this survey is normally around £500.
If nothing else, bidding on properties certainly adds an element of excitement to property transactions!