Published: 10/04/2024 By Meredith Holmes
Auctions present exciting opportunities but there are pitfalls for the unwary, warns Head of Auctions, Meredith Holmes.There are several benefits to purchasing a property at auction – speed, transparency, certainty and the potential to pick up a project at a good price. Auction lots can offer you great renovation or development projects and the opportunity to buy something special and, often, unique.
Senior Partner and Auctioneer Mark Lewis
While offering many advantages for the proficient purchaser, the auction process for an inexperienced bidder can be confusing, daunting… and sometimes dangerous. The fast pace of the auction process means bidders must carry out their due diligence and arrange their finances in plenty of time.
On auction day, on the fall of the hammer, contracts are exchanged, and the purchase becomes legally binding. Completion usually takes place 20 business days later and, if a buyer fails to complete, they will likely lose their 10 per cent deposit and will be liable for any losses incurred by the seller. If a prospective buyer requires a mortgage, they must move quickly to ensure their unconditional mortgage offer is obtained before the auction.
As well as arranging funding in advance, it is imperative to instruct a solicitor to inspect the legal documents. A legal pack contains paperwork relating to the property including searches, title documents and pre-contract information, together with the special conditions of sale and details of any additional fees. Each pack is made available at least three weeks before the auction to allow ample time for any pre-contract enquiries to be raised.
Auctioneer Graham Barton
It is important to download the auction catalogue and the sales particulars and to check the agent’s notes for material information or details of any title defects affecting the property. The auctioneer will make an announcement reiterating any defects or issues before the lot is offered, but a prudent buyer will already be aware. The catalogue contains auction notes and the auction terms and conditions which must be read carefully. You will be required to agree to the auction terms and conditions when registering to bid. The auction notes refer to the special conditions of sale and the Royal Institution of Chartered Surveyors’ common auction conditions.
As well as conducting background research, it is advisable for a prospective purchaser to arrange at least one physical viewing of the property before auction day and, if required, a survey. If you are an auction novice, it is sensible to attend a sale before taking part. The bidding is fast-paced and can be overwhelming for a first-timer. Be careful not to get carried away, and always have a maximum bid in mind.
If you are not confident bidding in the room, you can register to bid online, by phone or by proxy whereby a member of staff will bid on your behalf up to a pre-agreed maximum. A prudent buyer will follow the above steps to ensure they are purchasing in full knowledge of the property and with a good understanding of the obligations and expectations should they be successful. Remember, if you attend an auction having not done your research, you bid at your peril! Once the hammer falls, there is no going back.
You’ll find the article on P99 of Country Matters 2024 (below), or please do call into your nearest Symonds & Sampson office to collect your free copy, and visit our Property Auction pages for details of forthcoming auctions, recent results, and for details on buying and selling by auction.