Buying and selling at auction can be a lucrative and exciting experience, but there are important points that you need to consider. I have outlined my top tips to buying and selling at auctions below:
Do you need a survey and valuation before buying and selling at auctions?
Prior to the Auction, you should consider instructing a surveyor to carry out a survey of the Property. This is to ascertain the state, condition and value of the property.
In some instances, it would be prudent to consider a full structural survey or at the very least a homebuyers’ report. Your survey report may also indicate that it is worth considering further expert reports before placing a bid.
Should you carry out inspections?
It is important that you carry out an inspection of the property. Often auction properties are sold as seen. You will need to ascertain whether the property is in a good physical state or if it is in need of repairs and/or alterations. If so, that you have accordingly factored the likely cost of the repairs/alterations into the potential offer you will be making.
Have you read the auction catalogue?
The auction catalogue will contain important information about the property you are intending to bid on, and it is therefore vital that you read the auction catalogue, very carefully prior to attending the auction. As well as providing a description of the property, there could be special conditions within the auction catalogue that you need to be aware of prior to purchasing and reference will also be made to the conditions under which the property is sold subject to.
There could also be administrative charges which the auctioneer charges and you will most likely be liable for, plus the cost of the legal pack.
Have you read the legal pack?
You will need to ask your legal representative to review the legal pack prior to the auction. There are factors that you need to consider before placing a bid. Carefully read the special conditions of the contract as you most likely could be liable to cover the sellers’ legal costs and disbursements which could include the cost of the search pack, the leasehold pack (if the property is leasehold) etc. You should also have an understanding of the auction standard conditions as the property will be sold subject to the auction conditions.
Often the legal pack that the auctioneers have available is not complete in that not all searches are available by the time the property goes to auction, and if the property is leasehold, the leasehold pack may not be available. In view of this, your legal representative will be able to advise you if there will be sufficient time after your bid, but before completion, to ensure those documents are available.
You will also have to consider that if those documents are not available before the auction you are bidding without the knowledge of what could be revealed in those documents which could be adverse in nature.
You should bear in mind that the terms that will be stated in the special conditions and contract forming part of the auction pack cannot be changed after the auction.
Do you have any enquiries?
If you have enquiries, you can ask your solicitor to raise enquiries on the seller’s solicitors prior to the auction, so you have all the information that you need before placing a bid. Generally, you will not be able to raise any enquiries after the auction so it is always a good idea to ensure your enquiries are answered prior to the auction taking place.
Have you considered your finances?
Ensure your finances are in place. If you need a mortgage, speak to a mortgage company to agree an offer in principle as once a bid is accepted you have to proceed to completion within the timeframe agreed at auction. If you are proceeding with your own funds make sure funds can be easily accessible.
How much is the deposit?
You will be expected to pay a deposit on exchange which would usually equate to 10% of the agreed price. The deposit is generally held by the auctioneers as agents and then released to the seller following exchange. As a result, a buyer may have difficulty recovering the deposit, if the seller defaults in the sale.
Is VAT payable?
Check if VAT is payable. It is possible that VAT could be added to the price agreed and therefore the price plus VAT will be due. It could also be the case that the VAT is already included in the price.
Is there any addendum?
Check if the auctioneers announce any addendum to the property lot or any additional special conditions which have not previously been disclosed.
Are you bidding in the current climate?
If the auction is to be conducted virtually, how you bid will be different and bidding will take place remotely. It is therefore very important that prior to the auction that you are familiar with the procedure by asking questions of the auctioneers and also reading the auction catalogue.
Can properties be withdrawn from the auction?
The property may be withdrawn from auction just before the auction is due to take place so do check this to avoid disappointment on the date of the auction.
This blog post has been written by Theodora Michaeloudis – Consultant Solicitor at Taylor-Rose where Veronica Marks carries out her legal work.
