It is possible to pick up a deal in a property auction, but it is not for the fainthearted and you must be highly organised, plan ahead and keep your wits about you.
- First of all decide what type of property you would like and in what area. Do your research and familiarise yourself with the location that you are interested in.
- Identify the property auctioneers, check that they are well established, well regarded and are members of the various recognised schemes.
- Be realistic, you will be competing with seasoned property dealers and developers to buy property in auction. Additionally the types of property that come into auction are usually those that will not sell easily in the open market e.g. those needing a great deal of work, probate sales, a quirky or unusual property, repossessed property, or local authority or housing association properties.
- After identifying the property that interests you, check out the values of similar properties on the open market, with estate agents and online.
- Contact the auctioneers and visit the property that you have identified as the one that you wish to bid on (or there maybe more than one). Be sure to visit the property at least once. At this stage time is going to be limited; normally property auction guides/brochures are published two weeks before the actual auction.
- PREPARE TO BID IN THE AUCTION. Determine how much you are going to bid, set the level and stick to it. It is very easy to get carried away or become involved in a bidding war and end up paying far too much for the property.
- Organise a full structural survey. This needs serious consideration. These surveys are not cheap and if you fail to win the auction you could end up throwing away good money. HOWEVER, if you win the property, you will be going in blind if you do not have a full survey and could end up buying a money pit!
- Find reputable, experienced, specialist conveyancing and property solicitors who are used to dealing with auction purchases. This is important, because after having bid successfully at auction you are legally bound to purchase the property, it’s the equivalent to exchanging contracts in a conveyance. You will only have 28 days to complete the purchase. The solicitors have to move fast in order to complete the purchase, and at this stage you should hand to them copy information found with the auctioneers LEGAL PACK.
- The LEGAL PACK should contain the following: copy title deeds, local authority and environmental searches, fixtures and fittings list, copy lease, annual service charges / ground rent /sinking fund.
- The solicitor at this stage should complete all the preliminary inquiries.
- GET YOUR FINANCE IN PLACE!! Again this is vital, you will be expected to put down a deposit of 10% when you win the auction and complete the sale within 28 days, so the remaining finance should be in place when you bid. If you fail to complete then your deposit is likely to be forfeited. Bring with you two forms of identification.
- Check that the property is still in auction on the day, sometimes properties are sold outside the auction.
- Don't worry, if the property fails to make its reserve price, speak to the auctioneers, who will act as agents, and see if you can negotiate with the vendors.
- The other advantages are that you will not get gazumped or have to deal with Estate Agents, property chains or the usual stresses of a conveyance chain. It is also a much faster way to purchase a property.
If you require assistance or advice re auction property purchases contact our specialist property solicitors, either by telephone on 020 7387 2032 or by completing our online enquiry form.
