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How To Buy A Residential Property At Auction

Old Woman Holding Keys

Property auctions are no longer solely the domain of investors and developers.  Homeowners are discovering the advantages of buying a home through an auction.  For those who seek experienced professional advice and complete their research prior to auction day, buying a property at auction is a great way to pick up a bargain.

How property auctions are conducted

To find out when a property auction is taking place, contact an auction house which services the area you are interested in.  They will add you to their email list and keep you updated of upcoming auctions.

Usually a month prior to the auction taking place, the auction house will release a catalogue containing information about the properties (or ‘lots’) which will feature in the auction.  A guide price will be included.  This indicates what the property is expected to sell for and is normally set low to attract interest.  Keep an eye on the guide price, if it increases prior to auction, it means the property is attracting a lot of attention.

On auction day, potential buyers will gather in the auction room.  An auctioneer will run the proceedings, working through the ‘lots’ listed in the catalogue.  The atmosphere is generally exciting and intense, and it is easy to get caught up in the moment and bid more than you envisioned.  It pays not to go into the auction den alone; take a level-headed friend or family member with you.

If your bid is successful, you are contractually bound to purchase the property at the moment the hammer falls.  You will be required to pay a 10% deposit, provide ID, and sign the sales and purchase contract presented by the seller’s solicitor.  At this point, the contracts have been ‘exchanged’.

Completion of the sale must usually be made within 28 days of the auction.  You will, therefore, need to provide the seller’s solicitor with the details of your conveyancer straight away, so this deadline can be met.

Due diligence in an auction sale

One key difference with buying a property at auction is all the due diligence, and legal checks must be made prior to auction day.  In a traditional property purchase, an offer is made and accepted, and then your solicitor checks the title and organises the relevant property searches.

The auction pack will usually contain copies of the sale and purchase contract, the title to the property, any relevant search results and replies to standard property enquiries.  However sometimes the information supplied is incomplete.  Your solicitor will be able to conduct due diligence using this information and alert you to any potential problems with the property or crucial information that is missing.

Examples of potential issues with the property can include:

You should also consider having a building survey conducted on the property.  Many homes sold at auctions are wrecks that estate agents are at a loss to know how to sell.  If you are looking for a project, auctions can provide a magnificent opportunity to buy a huge house (and often land) at a bargain-basement price.  However, you need to know what you are letting yourself in for and a building survey will provide you with the information you need to make an informed decision.

Remember, once the hammer falls, you are legally bound to purchase the property.  Therefore, it is crucial that your solicitor understands the auction process and works quickly to complete the relevant checks on the property you desire within the four-week time frame (sometimes less, it is not unheard of for legal packs to be released two weeks before auction day).

Tips for bidding at a property auction

Many buyers at property auctions are seasoned pros.  To ensure you can hold your own and get the right property for a reasonable price, follow these tips when bidding:

Costs

As set out above before proceeding to bid at Auction you should have sought advice on the Auction pack from a solicitor and advice on the state of the property from a chartered surveyor.  However, there is no guarantee that you will be successful at Auction and you should therefore bear in mind that if you are unsuccessful you will still have to pay your solicitor’s and surveyor’s costs.  You should therefore think seriously about the properties that you are considering bidding on.

In summary

Buying a property at auction can lead to acquiring a home that you may never have seen on traditional sales platforms such as Rightmove.  It also eliminates the risk of being gazumped on your dream house and provides a much faster sale and purchase process.  With the right professional advisors in place, auctions are well worth exploring.

Hart Reade Solicitors are a full-service law firm with offices in offices in Eastbourne, Hailsham, Polegate and Meads.  We hold a both a Lexcel and Conveyancing Quality Accreditation from the Law Society of England and Wales.  To make an appointment with one of our conveyancing solicitors, please phone our office on 01323 727 321 or use the enquiry form below.

Please note, this article does not constitute legal advice.