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Buying at Auction – after the Gavel falls
As you might expect me to say, buying property at auction is an exciting and rewarding way of securing your wanted home or investment opportunity. The thrill of actually being in the auction room, bidding against other interested parties until the end gives such a buzz - and even regular auction buyers will say that no matter how many times you do it, there is always that certain exciting feeling.27-01-2012
However, once the dust settles on the auctioneers block, there are some serious things to deal with and anyone contemplating buying a property at auction should make sure that they are 100% prepared in the event of being the highest bidder.
Firstly, prior to the auction, you should:
1. Request the legal / auction pack compiled by the auctioneer on the property. This should be available about 4 weeks before the auction.
The pack will have details of the property, the memorandum of agreement (which is equivalent to the contract), the title documentation, the searches, information about any outstanding planning or environment issues and replies to general enquiries.
2. Make sure that your solicitor studies this pack and advices you accordingly. Have him also look out also for any special conditions, for example, it may say the buyer has to pay the vendor’s legal fees.
3. View the property! I am still amazed at the number of buyers who bid ‘blind’ and only get to see the property internally once they have become the successful bidder. In some cases, properties can only be seen at block viewings, so you’ll get to see possible fellow bidders. If you still like the property recheck with your solicitor that there aren’t any legal problems.
4. Get a full survey done. Many properties sold at auction have structural problems, and sometimes these aren’t always obvious to the untrained eye. If it needs work, get a some detailed quotes showing a proper specification of the works to be done and what materials will be used so you can budget for these in the case that you end up buying the property.
5. This is also a good time to get quotes for buildings insurance cover. Be aware that many insurers will charge more or won’t insure at all where there is subsidence or if it going to be unoccupied for a long period after purchase.
6. Get your finance in place if you are going to be taking a mortgage on the property. You will normally have 28 days from the date of the auction to complete, so its no good starting to try and organise your mortgage once you have successfully bid. Mortgage companies, on average, will require 6-8 weeks to get to a point where they can make you a formal mortgage offer.
7. Get your deposit in place. If you are the winning bidder, you will be asked to pay the 10% deposit on the day. Due to Money Laundering regulations, Auctioneers will not accept cash so you will need to check with them (often this is stated in the Auction Catalogue) what methods of payment are acceptable.
Once the gavel falls:
Firstly, you will need to identify yourself to the auctioneer so they know who you are.
You will need to take two forms of identification with you, such as a Driving License or passport and a bank statement or utility bill as proof of address.
You will also need:
o your cheque book or debit card to pay the 10% deposit (unless the auctioneer has stated otherwise)
o details of your solicitor
o all your banking details.
Remember, if your bid is successful you are legally bound to buy the property and will need to put a down payment deposit there and then of 10% of the property's price.
You will also be required to sign the purchase contract in the sale room so you should feel comfortable that your solicitor has done all the legal checks necessary prior to you bidding.
Completion will take place 28 days later, so on leaving the auction room, you should:
Contact your solicitor to inform them that you have been successful and give him/her the date of completion.
2. Contact your mortgage broker or lender to inform them that you have been successful and the date of completion – since you will need to drawn down the loan on this day. They will need details of your solicitor also.
3. Contact your insurance company or broker and activate buildings and contents insurance (if necessary) so that you are covered straight away
4. Crack open the champagne and enjoy the glory of your purchase!