Purchasing a Property at Auction – The Process Explained
Purchasing a property at auction is not something that just exists on ‘Homes under the Hammer’ – it’s an exciting process to buy property! Whether purchasing a buy-to-let or as a project to do-up, it’s important to be aware of the issues that can arise in this process.
Joanne Lerwill, an experienced Licenced Conveyancer at CJCH, discusses five areas of importance when considering purchasing a property at auction.
Know the process for purchasing a property at auction
The process of purchasing a property at auction is different from the usual process of buying a property. It is vital that you do your research beforehand and arrange a viewing to inspect the property.
It is important to understand the difference between the guide and the reserve price. The guide price is the starting price at which the bid will commence. Whereas the reserve price is the minimum figure the buyer will accept. The reserve price is not disclosed to the bidders but is usually 10% higher than the guide price.
If successful in your bid, you are bound by the terms and conditions when the gavel falls! You must sign the contract and pay the deposit on the spot, so make sure your finances are in place.
The main difference from purchasing a property at auction and buying through an agent is timescale. An auction works on a fixed timescale for exchange and completion. It provides speed and certainty for the buyer and seller. Whereas purchasing through an agent has no fixed timescale for exchange or completion.
Understanding the legal pack
A legal pack is the set of documents prepared by the seller’s solicitor/licenced conveyancer. Fortunately, a copy is available in the auction room and will be available to download via the property details page. The pack includes:
- Official copies of Title held at the Land Registry
- A local search/any other searches
- Special conditions of sale
- Property information form
- Management information, leases and tenancy agreements if the property is a leasehold
The purchaser should look through the pack and seek advice from a solicitor that specialises in auction properties. Especially important if there is anything onerous in the pack for the buyer.
Key issues that arise when purchasing a property at auction
The most common issue is a short window of time to arrange a survey for your solicitor to check the legal pack. Worryingly, it is easy to get carried away ad go over budget! Make sure all of your financial arrangements are in order. No turning back after the gavel falls!
Top tips for purchasing a property at auction
Imperative you research the property, arrange viewings, ask questions and obtain a copy of the auction particulars.
Just be prepared! Stick to your budget! Check the small print!
Importance of seeking legal advice
Taking a DIY approach might seem attractive to cut costs – but don’t be fooled! Without knowing the process, you could incur costs down the line. A solicitor or licenced conveyancer will use their legal training and study the conditions of the legal pack. Do not take the risk!
How can we help
The CJCH conveyancing team has 35 years’ experience in property matters. Our reasonable fees, friendly service and expert advice gives you peace of mind. So you don’t have to worry. Why not get in touch with a member of our team today?
Get in touch:
Telephone: 0333 231 6405