BUYING A PROPERTY
Many people who are considering buying or selling a property may be unaware that sale by auction may be as good or even better method than more conventional means.
Auction is becoming an increasingly attractive means of buying and selling property. For the buyer it is a transparent process, the sale is binding at the fall of the gavel and the completion date is fixed in advance.
For sellers the amount of competition at sales often means that auctions achieve higher prices than private treaty sales.
In general you should not seek to buy a property at auction if your purchase is dependent on the sale of another property on which the contracts have not been exchanged.
If you are considering the sale of your property by auction, you must be able to give vacant possession at a fixed date, unless the sale is subject to tenancies, this is usually four weeks after the date of the auction. You will therefore need to have access to alternative accommodation and/or storage of your furniture and other belongings.
- You should obtain a copy of the auction catalogue from the auctioneers. This may have information relating to the property as part of a "home buyers package".
- After looking round the property yourself, consult a chartered surveyor and if you wish to proceed, instruct them to carry out an RICS Homebuyers report.
- This report will advise on the condition and value of the property and may also suggest certain enquiries you should make, other specialist reports you should obtain or indicate expenditure you may face over repairs. Ask for the Report to be in your hands at least week before the sale.
- Instruct your solicitor to inspect Local and National searches and the title deeds for any onerous covenants, restrictions etc. Again, this Report should be with you at least one week before the sale.
- Ask the auctioneer at the outset if they have information relating to the property since this could reduce your costs considerably. Otherwise you should instruct your solicitor or chartered surveyor to make enquiries at relevant local authorities regarding planning, building regulations, highways and any other factors which might affect the property directly or indirectly, such as new roads or redevelopment.
- Discuss with your chartered surveyor the upper limit of the price you should pay for the property.
- Remember to take into account the cost of advice from the source lending you money to buy the property as well as the fees for obtaining the professional advice outlined above, stamp duty if applicable and the cost of work which may be needed immediately after purchase.
- Check what methods of payment the auctioneer will accept for the property. If you are the successful purchaser, you will usually be required to pay a 10% deposit subject to a minimum specified in the catalogue immediately after the sale and should therefore have sufficient funds to cover this. It may be necessary, for example, to make arrangements for a banker's draft prior to the sale.
How the sale works
In the auction room.
- If you have any queries on the day of the sale ask the auctioneer or his staff. They are more approachable than most imagine and are knowledgeable about the properties they sell.
- Ask for a copy of the addendum for any changes to the original details.
- Your surveyor or solicitor can attend the sale and bid on your behalf. This may be advisable if you are likely to be carried away by the proceedings and bid over your upper limit.
- If you do attend the sale, listen carefully to the opening remarks of the auctioneer. Amendments may be announced which directly affect the property in which you are interested.
- Most properties are subject to a reserve price below which the auctioneer cannot sell the property at the auction. It will be made clear whether the property is being sold subject to a reserve in the catalogue or conditions of the sale although the reserve price will not usually be disclosed.
- Attend the sale and bid for the property up to but not beyond the price you have previously decided is your maximum bid.
- It is a popular myth that auctioneers mistake any casual movement for a bid. Do not worry, auctioneers are able to distinguish between someone scratching their head and bidding but, if for some reason a mistake is made, tell the auctioneer straight away; do not wait until the end of the sale.
- If you are the last and highest bidder at the fall of the auctioneer's hammer, you are the successful purchaser and are legally committed to pay the price you bid and complete the purchase.
- No one can outbid you after the sale and the vendor is equally legally bound to complete the sale on the day and under he terms stipulated in the contract.
- You will usually be required to pay your 10% deposit or a minimum specified in the catalogue immediately after the sale and will sign the contract in the saleroom. The date on which you will be required to pay the remaining 90% of the price to complete the purchase will be stipulated in the contract document and is usually within twenty-eight days of the sale.
- Upon signing the contract you will be responsible for insuring the property.
Get an Insurance Plan
Once you have have found the mortgage that is right for you it is very important to insure your home. Be sure that the plan that you choose includes everything you need and that you fully understand the agreement.
If the property remains unsold after the auction i.e. your bid was below the reserve price, speak to the auctioneer to register your interest before leaving the saleroom. It may be possible to buy the proper by private treaty at a price agreed with the vendor.