Buying at Auction
We all love a bargain and what better why to secure a bargain than at an auction?
We live in a world of auctions with eBay, Freebay and a plethora of an online auction platforms. It all works very well, it is precise, colourful, safe and secure with Paypal and its built in protection for consumers, with a mediation service and advice on how to deal with mis-descriptions, lost goods etc.
So we have bought the shoes, the DVD and perhaps even the wedding marquee with apparent ease on line so what next? Perhaps a house? STOP THERE. You are entering a whole new world of contracts, bargaining imbalance and potential risk.
Once you bid and have been successful at Auction then the deal is done. There is no adjudicator, no ability to undo the deal etc. To buy successfully at Auction you have to have done your homework and have all your paperwork in order Pre Auction. Once the hammer goes down you will normally have a maximum of 20 working days, possibly less to complete, so time is of the essence.
Rule 1 - A property is in an auction for a reason. Is it being sold perhaps by a mortgagee in possession in which case you will receive a copy of the title and some searches but no more. Are there not only arrears on the mortgage but are ground rent and service charges on a leasehold up to date. Is is structurally unsound or non-habitable and therefore not mortgageable? Has it got sitting tenants/squatters in it? Is there a dispute with the neighbours? Has there been an ‘incident’ there that no one wishes to disclose. Has it flooded and the seller does not want to answer awkward questions? Has it been subject to a spate of burglaries? Are there entries on the title that your Solicitor will not be able to remove?
Rule 2 - Is your paperwork in order? Have you had a survey done? Do you know how much any repairs will cost? Does the risk to insure pass to you on exchange? Can you obtain insurance? Are your finances in place? If you need to borrow money is it agreed in principle? Will your lender issue a mortgage in time to allow your Solicitor to draw down the monies? Is the title going to be good and marketable so that your Lender will lend against the property? Does the contract provide that all charges will be removed at completion? Is there a large service charge demand looming?
Rule 3 - Property is in an auction for a reason. What can you do? Ask the neighbours why it’s for sale, call in the local shop/pub/takeaway. See what you can find out about the property and any concerns you have. As you would with any property purchase view at different times of the day and the week. Can you park, is it noisy, is it affected by smells rural or takeaway? You are going to live there or expect someone else to pay you money to do so, so take the time to investigate. Most people spend more time choosing a car or researching a holiday than they ever do on buying the biggest investment in their lives. Do not fall into this trap. Be prepared.
If you would like any further information and advice please contact: