Selling or Buying Property at Auction – We Can Help!
If you have a property that maybe you have inherited or own a property that has become a little run down or simply need to achieve a quick sale, placing your property in auction can be an attractive prospect.
As a seller, remember:-
- Whichever agent you choose to place your property in auction with should give you an indication of their fees which often include auctioneers costs.
- Whilst you may want as quick a sale as possible you should choose an auction date that allows your solicitors an opportunity to put the auction pack together. The auction pack will usually consist of evidence of your ownership of the property either by a copy of a registered title or by producing evidence from unregistered deeds and conveyancing search results. The auction pack should be with the auctioneer’s agents some time before the auction date to allow prospective bidders at auction the opportunity to inspect the documents and raise any queries in advance.
- It is generally the case that an auction pack includes conveyancing searches in respect of the property, usually at the very least a local authority search (undertaken with the local authority of the area in which the property is situate) and any other appropriate searches for the area, for example, a mining search in West Yorkshire. This is another reason your solicitors would need some notice to prepare the auction pack prior to the auction date. It should be noted that the search costs would be borne by the seller when the searches are instructed but the auction contract for sale will often provide for reimbursement of these fees by the buyer on completion of the sale assuming of course that the property successfully sells at auction.
- A successful sale at auction will mean that your sale is agreed and the contract is then binding at the price at which the hammer fell. Timescales to completion can vary but generally these tend to be 28 days from the date of the auction although can be brought forward if both buyer and seller are willing and able. Therefore, be confident that any house clearance can be achieved prior to the completion date and keys can be deposited with the selling agents for the date of completion.
- It is important to ensure that, before your property is placed at auction, your reserve price is sufficient to discharge any financial charges secured against the property or otherwise you can make up any shortfall from your own funds on the date of completion. It will be your obligation as seller to ensure that any financial charges are removed from the deeds on completion.
Of course, auctions are not exclusive to sellers and a budding purchaser may be looking for that investment bargain or new potential home.
As a buyer, remember:-
- You should ensure that you are able to pay a 10% deposit at the date of the auction and the balance can be placed with your solicitors as cleared funds by the contractual date of completion. Failure to complete on the completion date fixed by the contract can mean a buyer is in breach of contract which generally brings about financial penalties and can ultimately lead to the loss of the deposit. It can be a risky business aiming to acquire a property at auction if a buyer is reliant on obtaining Mortgage finance on that property as the time to completion starts ticking once the hammer falls. Failure on the part of a bank or building society to value the property and produce a mortgage offer in time to enable funds to be requested by a buyer’s solicitors would place the buyer in breach of contract.
- As a buyer you may well be expected to reimburse the seller on completion the cost of the searches included with the auction pack. Also be clear on any hidden auction costs. Some modern auctions can require a buyer to pay the seller’s auctioneer’s costs!
- More important than funding is know what you’re buying. There are many reasons why a seller would place a property into auction and one of those reasons can be that there are issues on the title that would create issues in a standard sale transaction. Take advice from an experienced conveyancer prior to the date of the auction and perhaps ask them to glance their eyes over the auction pack and comment on potential issues they see. Remember, once the hammer falls you are obliged to complete on the contractual completion date, or risk the loss of the deposit on breach of contract, and therefore issues or problems with title become yours on completion.
- Surveys should also be undertaken or at least considered before you are committed to the purchase and building defects would also pass to a buyer on completion.
At Ridley & Hall, our residential conveyancers, Alison Mason, Adam Fletcher and Liz Wallis can assist in the preparation of an auction pack for sellers wishing to sell property in this manner and/or advise buyers prior to becoming committed to the purchase of a property at auction.
If you feel we can assist please do not hesitate to contact a member of the Residential Property team on 01484 538421.