Property transactions being conducted via auction is becoming an increasingly popular avenue for buyers and sellers alike. However, while this can ostensibly seem like a quicker and easier process to buying a home, it can often come with a whole host of differences & pitfalls to the more traditional process that you should be aware of.
Advice For Buyers
Ensure you have the available funds in place by the completion date. Purchasing at auction is the equivalent to an exchange of contacts and therefore you are legally bound to follow through with the transaction. You will also be required to pay 10% of the total price on the day to the auctioneer if you are successful in your bid. It is always advisable to discuss with your lender or broker well in advance of the auction to ensure you will have the funds available to you by the completion date.
Make visits prior to the auction to determine whether the property is inhabited. If someone is living in the property (who is someone other than the seller), you should ensure that you attain a copy of the tenancy agreement. If the lease plan is different to the one held by the auctioneer, alterations may have been made to the property which required planning permission & other regulations.
Keep your solicitor up-to-date with the documentation. As soon as it is possible for you to do so, you should forward the ‘legal pack’ to your solicitor prior to going to auction. This will allow them to review the content & advise on aspects that might affect your decision on the deal.This could save you thousands of pounds of unexpected expenses by following through on an adverse deal.
Be careful of additional costs. Some costs are contained within the special conditions of sale, and once the auction closes you are again legally bound to honour the agreement including any of the special conditions outlined.Typical special condition charges can include legal fees, search fees, rent charges etc.
Advise For Sellers
As soon as you have decided that you would like to sell your property via auction (or in fact by any other means) you should inform your solicitor.The sooner your solicitor is involved in the process, the sooner necessary paperwork can be drawn up & obtained by the relevant parties involved, and the sooner you can get your property sold. In the same vein, the more information regarding the property you can provide at this point, the more confidence a potential buyer will have in the auction room & the higher the likelihood of finding a buyer.
The day of the auction is the date of the contract exchange between the two parties. When the auction is completed, the countdown clock towards the completion date will begin.Within this time, it would be highly advisable to ensure that your property adheres to the terms of the contract & will be vacant by the time of the completion date.
Make sure you outline any special conditions you wish incorporated into the contract to your solicitor. These special conditions could encompass contributions from the buyer to the seller’s legal liabilities.
There are many bargains to be found when purchasing properties at auction, but you should always stay aware for hidden costs & associated risks. When buying at auction, always be sure to have your solicitor look over any documentation for the deal well in advance to enable you to make a much more informed decision.
When selling it is always prudent to engage with a solicitor to ensure all necessary documentation is produced to enable the property to go to auction as quickly as possible.
At Davey Law, we can help you navigate all perks & pitfalls of buying or selling property at auction and would be happy to help guide you through the process. To get in touch with a member of our knowledgeable and friendly team, contact us today by emailing firstname.lastname@example.org, or calling our Cirencester office on 01285 654875, or Gloucester office on 01452 508800.