Having recently discussed property auction sales from a seller’s perspective, we now turn to looking at points to consider at property auctions from a purchaser’s perspective.
There are some great advantages to purchasing property at auction rather than through a private sale. It can be a much quicker transaction and you can often achieve a discounted price.
However, as there is less opportunity to negotiate the terms of the purchase, you should bear in mind these top tips if you are purchasing at auction:
- Obtain the pack of legal documents in advance and send it to a property solicitor
You will need to act fast because there is little time between the pack being released and the auction. We will be able to review the sale conditions and inform you of any onerous conditions. For example, the conditions might require that the purchaser pays the seller’s legal fees.
Also, we will be able to investigate any search results and title documents (such as leases and historic conveyances) to inform you of any problematic points that might affect the property’s value. There might also be the opportunity for enquiries to be made of the seller in relation to these.
Be aware that you are likely to be charged even if you are unsuccessful at auction.
- Inspect the property and arrange a survey
You and preferably a surveyor should inspect the property’s state and condition. You could also ask local estate agents and neighbours of their opinions so that you can get a feel for the property’s value.
Some mortgage lenders offer a free basic valuation, however, this will be inadequate if the property appears to require a lot of work. A surveyor or architect will be able to tell you how much any works are likely to cost. Also, you should consider whether any proposed renovations have planning approval.
Again, be aware that you are likely to be charged by the surveyor even if you are unsuccessful at auction.
- Arrange funding before the auction
Ensure that you have the deposit ready for payment on auction day; the deposit is usually 10% of the purchase price. Ideally, you should also obtain a mortgage in principle before the auction. If you cannot obtain a mortgage after the auction and are, therefore, unable to complete the purchase, it is very likely that you will lose any deposit paid. Usually, completion will take place within 20-28 days of the auction date, so ensure that the mortgage amount is ready for then.
You should also consider what additional funding you will require for the legal, auction and insurance costs. You may wish to seek an increased mortgage amount to cover any renovation work or to allow for flexibility in your budget.
- Arrange insurance for the property from the date of the auction, if the sale contract requires
You should be aware of your insurance requirements as you will be liable for any damage to the property after the auction.
- You are not restricted to purchasing at the auction itself
If you are interested in a property, you can contact the auctioneer to attempt to negotiate a purchase on the auction conditions before the auction takes place. Also, should the property not sell at auction, you may be able to negotiate with the auctioneer after the auction.
If you are thinking about purchasing a specific property at auction, get in touch with our Property team and they can help you best make use of the auction process.