Posted on 12.6.19 by Jan Makara
Buying a property at auction can be a great way to get a bargain for your dream home. However there are some risks you need to be aware of.
Buying a property at auction is becoming an increasingly popular way for clients to buy and sell properties. At Gorvins we work on a case by case basis to review auction packs, but here are some top tips to keep in mind if you are considering purchasing at an auction as remember once the hammer falls, you’re in a legally binding contract.
At most Auctions contacts are deemed to have exchanged as soon and the hammer has fallen. Consequently, if you are the successful bidder you are contractually obliged to buy the property no matter if you have reviewed the auction pack or not. In more modern Auctions, once the hammer has fallen you must pay a non-refundable deposit with the Agents with Exchange/Completion taking place within 28 days. Before you make a bid, make sure you know what the exchange position is.
There are usually a set of ‘special conditions’ forming part of the auction pack. It is often the case that any unusual terms relating to the transaction are set out here. These special conditions will contain details of any leases or rent arrears affecting the property. They would also set out any additional payments to be paid at completion, including; auctioneer’s fees, buyer’s fees and the reimbursement of search fees. Ensure that you are familiar with these additional costs before deciding on your maximum bid amount.
You may need to deal with VAT registration and the submission of an option to tax between exchange and completion, this will again be found in the auction pack. Take note of short completion dates as these may not give you adequate time to receive your VAT paperwork, this should be factored into any bid that you make.
Sellers are not obliged to provide searches within the auction pack, so these may be missing or include minimal searches only. Your solicitor will be able to advise you on whether or not additional searches should be carried out. This is risky, as by carrying out these searches you will sustain a cost and are not guaranteed to be the successful bidder. However, you would be bidding on the property subject to matters that would have been revealed in these searches, so in many circumstances it will be worth making this investment.
The completion date of when the purchase is going to take place will be stated within the auction pack. If you are the successful bidder you need to make sure that you will have adequate time to get everything in place ready for completion. Before you bid, keep in mind that if you are using bank funding to assist with the purchase this may take some time.
If you’ve purchased a property at auction and would like an experienced, full service conveyancing team to guide you through the rest of the process, give our Residential Property team a call on 0161 930 5117, e-mail firstname.lastname@example.org or obtain a free quote using our conveyancing quote calculator.