If you are considering purchasing a property at auction, the procedure is very different than if you were buying on the open market and it is important you fully understand the process and commitments involved.
Once you raise your hand and your bid is accepted, you are contractually committed to purchase and cannot withdraw except in very exceptional circumstances. The process is quite simple, but vigilance is key to a successful purchase.
The key steps involved when buying a property at auction include:
- The auctioneers will advertise the property in their auction brochure. If you are interested in a particular lot, you should notify your interest to the auctioneers. This will enable you to arrange an inspection of the property. If you are able to have a surveyor check the property, then all the better.
- A legal pack will have been completed by solicitors acting for the seller. It is important you have sight of this. Preferably, you should instruct solicitors to act for you at this stage. They will be able to check the auction pack on your behalf and advise whether there are any legal issues that you should take into consideration before deciding to bid. For example, the seller has good legal title to sell, there is full access to the property without having to cross someone else’s land and that any extensions etc have been built in accordance with planning permissions and building regulations.
- The legal pack will include the pre-contract searches a buyer would normally undertake themselves if buying on the open market. It is usual for the contract to have a provision to reimburse the seller for the cost of these on completion. Sometimes, the contract will include a provision that the buyer will be responsible for the seller’s legal costs. Therefore, it is vital the contract is checked by a professional prior to bidding.
- At the auction, you will be given the opportunity to bid for the property you wish to purchase. The seller may set a reserve price below which the auctioneer is not allowed to sell. This is not disclosed at the auction. As stated before, if your bid is the highest received, and it exceeds any reserve price set by the seller then, on the fall of the hammer, you are legally bound to purchase the property.
- You will be required to pay a 10% deposit on the day of the auction, so ensure all your funds are in place to enable you to do this.
- The completion day is usually set for 28 days from the day of the auction. That is the day you have to pay the balance of the purchase money and take possession of the property. Again, it is imperative all funding is in place before the auction. Not obtaining a mortgage offer in time for completion is not a valid reason not to complete and will place you in breach of contract.
- You will notify the auctioneer of your chosen solicitor. You will also need to contact your solicitor to confirm you have made a successful bid so they can start the process to move the matter towards completion. 28 days is a comparatively short period, and the matter needs to be dealt with expeditiously.
Auction Property Solicitors in Shropshire, Cheshire, or Staffordshire
As you can see, buying a property at auction is very different to purchasing in the traditional way with contracts only being binding when all searches, enquiries and funding are in place.
At Onions & Davies we can offer a complete service to guide you through the process, including separate charges for viewing the contract pack, attending the auction (if you need this) and taking the matter through to completion.
For more information or to speak David or one of our other specialist Property Law solicitors, please email david@onionsanddavies.co.uk or call 01630 411222.
Read more about auction property conveyancing here.