Insight
The Perils of Buying at Auction
Have you seen the property?
This is a common mistake for people buying at auction. The property they have viewed and researched is sold or is taken out of the auction and they are tempted to make a purchase on a whim if it seems like a bargain. It is very important to view the property before thinking about bidding for it and to also obtain a survey on the house to establish if there are any structural issues which should be factored into the price when bidding. It is also possible that there be a tenant occupying the property which may complicate matters for you if you haven’t checked. Doing your homework first will help you to avoid the most common peril of buying at auction.
Read the legal pack
Each property at auction has a legal pack and this contains all the information you would obtain through your solicitor when completing the purchase of a property through the usual process. You should obtain the legal pack before the auction and ask a solicitor to review it for you so they can highlight any difficult areas. This could include addendums made to the legal pack right before sale or small print which makes you responsible for the seller’s legal fees and searches which may have been carried out. Either way, being aware of these issues before bidding on a property is critical.
Have the funds in place
If you succeed at the auction you will need to exchange contracts immediately and pay a deposit there and then. This is usually 10 per cent of the price of the property. You will also be required to complete the purchase within 28 days of the auction. Once you have exchanged contacts, you are legally bound to buy the property and if you don’t complete within the 4 week period, you may lose your deposit. Be sure to factor into your budget any stamp duty costs and legal fees to complete the sale.
Enjoy your property
Hopefully you have avoided all of the perils and pitfalls of buying at auction and you have secured a great property at a great price! If you do your homework and don’t buy on a whim, you should be fine buying at auction but remember, making a mistake on an auction property could prove a very expensive one. If you have any property questions, please call our conveyancing department on 01254 297130 and we will happily assist with your initial enquiries.
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