For devotees of `Homes under the Hammer‘, buying property at auction always looks like fun and rarely does anything untoward happen – well, not that the cameras are going to show us!
Buying property at auction can be a fantastic opportunity to buy an unusual property or nab a bargain. For sellers, it can be a great way to test the market or achieve a quick sale.
However, there is a `but’, and it is a big one – once the hammer goes down, that’s it, the contract is made and you are legally bound to buy.
So, following the adage of `act in haste, repent at leisure’, I hope the following top five tips help. They may seem obvious but…
1. Know what you are actually buying
Make sure you don’t buy any surprises. Most auction houses have legal packs that can be downloaded before the auction, with the legal title, search results, tenancy agreements and basic background information. Make sure you download them and have them checked by us in good time for any hidden horrors.
2. Inspect the property properly
A thorough inspection is key, as there is no chance to renegoiate the price for any defects or required repairs if you buy at auction. If you are worried, get a survey done. It might seem like wasted costs if you ultimately don’t buy or you lose out to another bidder but it will give you a better idea as to the true value of the property, not just how it looks on paper.
3. Show me the money…
As you are legally bound to complete if yours is the winning bid, you must make sure your funding is agreed and in place before the auction. The completion timetable for an auction purchase is usually tight, (around 28 days is normal but you must check) so you will need to organise funding before you commit to buy. You also need the 10% deposit readily avaible to pay over to the auction house on the day of the auction. Make sure you have this ready, along with your ID, so that your bids can be accepted.
4. The Price is Right?
Once the legal due diligence is done and you have inspected the property. work out what the property is likely to cost to `put right’, the cost of any improvements you would like to make or need to enable the right onward sale price (if you plan to sell on in the near future). Calculate your bid limit so that you can still make a return once you have the works completed.
5. Don’t get carried away…
Auctions are busy, exciting and tense and it is easy to get carried away in the moment when the bids are flying. Once you have a price that you are prepared to pay, can afford and fund, then stick to it. If the bidding goes over that price, then let the property go – there might be a better property for you next time.
If you worry that you might get carried away, see if the auciton house will allow you to appoint an agent to act in your stead – either in the room, on the phone or by proxy. Give them clear instructions and you can then avoid the risk of an expensive overspend.
If you would like to discuss any of the information mentioned in the article, then you can contact a member of the Property team by telephone on 01626 202404 or email firstname.lastname@example.org. WBW Solicitors has offices in Newton Abbot, Paignton, Torquay, Bovey Tracey, Exeter, Launceston, Exmouth, Sidmouth and Honiton.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.