Is the Buzz of the Property Auction for you?
- AuthorEmma Gilroy
Emma Gilroy, Director and Head of Residential Property at JCP Solicitors, shares some of the ins and outs of property auctions either as a buyer or a seller.
Buying or selling property in the traditional way, with its chains and its frequent delays, can be an arduous process, even though you know your efforts will be rewarded with a shiny set of keys to a smart new home.
So, for some, the idea of buying or selling at auction is an attractive one.
Here are some of the key points to consider regarding property auctions:
As a seller:
- The auction process reduces the risk of the buyer pulling out and upsetting a carefully constructed chain as it’s unusual for there to be a chain.
- Auction buyers tend to come prepared, with any finance arranged and with an intention to make a transaction. So the auction option is great for sellers who don’t want to wait for a buyer to shop around.
- You should expect to pay around 2.5 per cent of the final purchase costs to your auctioneer and you might also be required to pay advertising and legal costs.
- You may receive offers on your property prior to auction. This is legal, and it is up to you to decide whether you want to accept it or whether you want to risk the uncertainty of the auction. Bear in mind that if someone is very keen on your property they are likely to attend the auction to bid for it anyway.
- Your buyer will be legally obliged to pay 10 percent of the buying price on the day, with the balance to be paid within 28 days, so this is a fast-track way of selling – Ideal if, for instance, you need a quick and uncomplicated sale.
- If your property fails to meet its reserve on auction day, it doesn't mean it’s all over. If you need to sell your property, and if you are willing to sell at a price lower than the reserve, it may be possible to negotiate with a potential buyer when the lot has finished.
As a Buyer:
- Once the hammer falls you have entered into a legally binding contract
- It is wise to carry out a detailed inspection, with professional advice, well in advance of the date of sale.
- Auctions often feature properties in need of renovation or repair. Make sure you are aware of any flaws and be realistic about the cost of any repairs – this should be factored into your budget.
- Obtain a copy of the legal pack and read it carefully. I would advise asking your solicitor to help you by carrying out a pre-contract investigation in every case. This report will highlight all the relevant information you need about the legal title to the property, so you don’t face any unpleasant surprises later, such as issues with planning permissions, rights of way, or covenants relating to the property which could restrict the way you use it or cost you money to remedy.
- Be aware that you may have to pay an administration fee to the auctioneer and you may be responsible for insuring the property from the day of the auction.
- You must have agreement from a lender to loan the money subject only to survey. If you fail to complete the purchase you could lose your deposit; be sued for breach of contract; be made to complete the purchase by the Courts (specific performace) and/or be sued for other losses sustained by the seller.
For further advice, please contact our specialist property solicitors in:
- Swansea: 01792 773773
- Cardiff: 02920 225472
- Carmarthen: 01267 234022
- Caerphilly: 02920 860628
- Cowbridge: 01446 771742
- Haverfordwest: 01437 764723
- Fishguard: 01348 873671
Or request a quote for your conveyancing here.