Whilst the property seen in an auction catalogue may seem a bargain, there is highly likely to be a reason for this.
In auction sales, the properties are generally in need of substantial repair and/or modernisation. If you do not possess any experience in auction purchase, it can prove risky.
It is therefore recommended that before making a bid at auction, you ensure that your financing have been put into place in readiness at short notice. This is because the timescale imposed is extremely tight, namely if your bid is accepted at auction, then you sign the contract there and then and you pay a 10% deposit. You will then have approximately 28 days in which to complete the transaction. If you fail to meet these deadlines then you will incur financial penalties.
When considering auction purchases, it is advisable to obtain a copy of the auctioneers’ catalogue. If you find a property that takes your interest, it is advisable to obtain the legal pack which is generally available from the auctioneers’ website. You can then instruct a solicitor to inspect the title documentation to check whether the title contains any awkward covenants or restrictions. The solicitor will also check the auctioneers contract to ascertain whether the conditions of sale prior to any bidding. The solicitor is likely to make a charge for this service although should be successful at auction, the same solicitors can deal with completion of the matter on your behalf and the fee charged for investigating the title documents is likely to be deducted from the cost of the conveyancing bill. Prior to making a bid it is strongly recommended that you arrange a survey to be carried out.
Whilst you will incur the costs of the above and your bid may not prove successful, such advice and survey is likely to save you money in the long term as you may end up with the property which has restrictions that are not suitable for your purposes and the property may have many structural defects.
Written By: Minnie Waite & Clive Whitern