Blogs

With the property auction market back in full swing since the summer, never has there been a better time to look at securing a bargain. Auction houses across the UK have a wealth of stock to offer.

Know when to stop

It is easy to get carried away in the auction room when trying to secure your next home / project or property trade, and prices normally rise higher than the stated guide price.

Winner takes all

One of the keys to success is to set a maximum limit on each lot before you start bidding. We advise that you have figures written down in front of you to refer to so that you are not tempted to get carried away.

Due diligence before you bid

We further recommend that you have the auction pack of any properties that you intend to bid on reviewed by your chosen legal representative. Over the years, we have received hundreds of client instructions after the auction has already taken place and they have successfully secured the property. You may not be aware that once the hammer falls, if you are the winning bidder you have automatically parted with 10% of the purchase price and you have no recourse to pull out of the purchase of the property, unless there is a breach of contract.

What it means to win a bid

By winning a bid and ‘purchasing’ a property at auction, you have committed to exchanging contracts with the seller. This means that an agreement is now in place between you as the purchaser and the seller which is legally binding. A 10% deposit is transferred when are successful in your bid, to the auctioneer.

Completion

Completion is normally set 28 days after exchange; however you will need to check the conditions of sale to be sure of the timeline applicable to your purchase.

Buyer beware

Without a survey or full legal check prior to the auction you are proceeding to buy a property blind, leaving little recourse for your legal representative in the event of any issues arising that you were not aware of. Your legal representative will merely proceed to prepare for completion and deal ensuing that the required financial arrangements are in place.

Common issues

Proceeding with a purchase without a review of the legal pack can result in the following:

• Financing issues;
• Legal title issues;
• Worse than expected condition;
• Unanticipated costs post completion at your expense exceeding any title costs pre exchange;

The majority of auction transactions are often subject to numerous conditions of sale (e.g. to pay the auctioneer or re-pay for searches etc.) and it is vital that these are reviewed very carefully to ensure that all potential costs are known to you at the outset.

In another common scenario, if there is an issue with the legal title which is identified post bid, the seller often avoids cooperation in responding to any enquiries raised by your legal representative.

Auction pack check

To ensure our Clients have the best possible chance of success at auction, we offer an auction pack check with a promised 24 hour turnaround time. We will identify any issues of concern in the auction pack. Not all legal packs will contain the necessary and relevant documents that you would expect in a residential property transaction (e.g. EPC, Searches or other documents referred within title register/s) which would generally be provided in a “normal” purchase, and therefore the sooner the pack is available for review the quicker any issues or gaps in the knowledge of the property or land can be identified.

Moral of the story

Next time you are interested in an auction property, make sure you instruct your legal representative to review the pack before you entertain any thoughts of risking the hammer falling on your bid.

For further information on buying or selling at auctions or any residential property transactions please feel free to contact the property team on 020 8363 4444.