This is an extract from a blog by Pinney Talfourd Solicitors. The full article can be read on their website.
Buying a property at auction can be a great alternative to the standard sale and purchase procedure. It is much quicker, it isn’t reliant on chains and, when done right, it can yield great results for both buyers and sellers. If you are looking to buy or sell at auction we’ve included some advice for first time buyers and sellers below.
Remember the one golden rule, it is always best to arm yourself with as much knowledge as possible before the day of the auction.
The difference between auction purchases and buying through an Estate Agent
The most important difference with purchasing a property at auction is to remember that the moment that the gavel hits you have exchanged and become contractually bound to purchase the property, subject to all standard conditions and the special conditions in the legal pack.
The special conditions trump the standard conditions so if there is a set completion date (normally this is 28 days after exchange or 20 working days after exchange) but there is a special condition specifying a different date then this will the date you are required to complete.
Special conditions are everything
If you don’t instruct a solicitor to report on the legal pack, then you leave yourself open to onerous clauses that could be contained within the special conditions. Remember that if you are successful in buying at auction then you will be bound by the special conditions so make sure if there are additional costs included in the special conditions then take these into account as they’ll need to be paid on completion.
For sellers, always consider if too many additional clauses costing the buyer money will deter bidders. Not everyone at an auction is acting on their own behalf, some have been sent there by bosses or acquaintances who will have studied the packs before. Most buyers will decide before attending which lots are attractive and if one comes with a lot of additional costs then most buyers will favour a similar lot without the same impediments.
Do your research before
It may seem like obvious advice but if you’re interested in buying a property at auction then visit it before. The contract will expect you to have done so and the seller may not be willing to answer enquiries before (or after) the auction so make sure you instruct a solicitor to examine the legal pack and provide a report and if you have any concerns then make sure they are raised before. Even if the seller doesn’t answer any questions then at least you’ll be aware of a potential issue and can factor this into your bid.
If you’re selling, then answering enquiries is a good way of encouraging potential buyers to bid by resolving any fears they may have.
If you are serious about bidding for a property, then timing is the key. Instruct an experienced solicitor like one of Pinney Talfourd’s auction team to provide a report on the property.
If you are selling, then make sure that when your solicitor prepares your legal pack they include as much information as possible. Instruct them ideally no later than two weeks before the auction and provide as much background documentation as possible. If the property benefits from any warranties include them in the pack. It could be the difference between one person bidding or three people bidding which in turn could make all the difference to the sale price.
The full article can be read on the Pinney Talfourd website.