BUYERS’ GUIDE TO A SUCCESSFUL PROPERTY AUCTION
Auctions are a great way to bag a property bargain, investment opportunity or a dream home, but make sure you do your homework and get prepared.
Sally Smith Director and Auctioneer at Loveitts, Coventry’s only property auctioneer, answers some of the most common questions potential buyers should ask themselves before bidding for a new property
Why would I want to buy a property at an auction?
Auctions are a great way to buy a new property. Investing in this way may not only provide a great return, but it is also far quicker, allowing buyers to avoid house buying chains which can usually result in long and uncertain process, and can often fall through at the 11th hour. They also give complete transparency to the house buying process – you can see for yourself the number of bids your desired property has attracted, and the amount of money others are willing to pay.
What can I do to prepare in advance of the auction?
Buying a property is a huge financial commitment so we would strongly advise you to undertake your own thorough research in advance. Visit the property at least twice. It would be wise to take a friend with you for a second pair of eyes who may spot problems you haven’t noticed within the property. Even better, call on the help of an experienced builder. Any potential problems can then be worked into subsequent financial calculations.
As well as all the rooms within the property it is vital you also check the outside of the property. We would advise you to visit the property armed with a camera, tape measure and a notepad.
When you decide you want to put in a bid for the property you should meet with a solicitor for a pre-auction title report and we would also strongly recommend that you consider carrying out a building survey to ensure there are no surprises.
You will find a number of conditions in the legal pack. It is vital you read this in full. The conditions will not only govern the way in which the sale should take place but will also form a part of your binding contract. If you haven’t read them carefully and in full, you will find yourself stuck with them once the hammer has fallen.
Do I need to have finance in place?
Yes, unless you are paying outright this is imperative. In many cases the completion date specified may be before the 28 days. Therefore before bidding for a property it is vital to ensure the necessary funds will be available.
Can you put an offer in before an auction?
Yes. Here at Loveitts we are happy to accept offers prior to an auction which we will put forward to the seller. It has to be remembered that if an offer is accepted then contracts have to be exchanged before the auction and the property will remain on the market until exchange.
Do you need to register in order to bid?
No – there is no need to register. All that is required is to bring two forms of ID plus the means to pay the deposit if you are the successful bidder.
Do I need to attend an auction in order to bid?
No – there is no need to attend. We accept proxy bids. In fact it is an area where we are seeing an increasing number of proxy bids – particularly from investors from outside the area.
What does the fall of the hammer actually mean and what happens after?
The fall of the hammer signals a binding contract and depicts exchange of contracts, therefore from that moment you have legally committed to the purchase. Immediately after the auction you will be required to provide your ID and pay a deposit which is usually 10 per cent of the property price. If you fail to complete the purchase, you will lose the deposit. Also if the property is sold to another buyer for a lower price after you have backed out of the deal, the vendor has the right to sue you for the difference.
How do I pay my deposit?
Cheque or debit card. Not cash.
Are there any other associated costs?
You will be asked to pay an admin fee which will be stated in the catalogue to the auctioneers. Other costs upfront include any costs you may incur during your preparation prior to the auction including any solicitor’s or surveyor’s fees. The Legal Pack will confirm any other additional costs that you may have to pay. These costs can vary per property, so it is essential that you read the Legal Pack.