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Buying Property at Auction

Please note we can only act for existing or previous clients when dealing with auction properties

At NBM we are happy to assist you with the conveyancing aspects of buying a property at auction, and indeed, many of our clients buy their properties in just this way.

However, there are some pitfalls involved with buying at auction and we find that many sellers use auctions to get rid of “problem” properties to the unwary. To avoid being stung we would suggest that you follow the advice in this article.

  • Contact the auctioneers and request their catalogue. Most auctioneers hold regular auction sales with a catalogue printed some weeks in advance. Catalogues are almost always available online.
  • Go through the catalogue and identify the property or properties you are interested in.
  • Download the legal pack on the property or get the auctioneers to send you a copy of the legal pack. This should contain a copy of the title and official boundary plan, it should also contain copies of any documents referred to in that title. A good auction pack should also contain a recent official local authority search result and a range of other recent searches on the property. You should also look to see that the vendor has provided answers to a pre-contract enquiries questionnaire of some description. If the legal pack does not contain any of these items then we would not recommend that you bid.
  • View any properties you are interested in and take a copy of the official title plan with you to check the position and boundaries of the property match the deeds. Check that the description in the catalogue is accurate. If you can, we would recommend that you have the property inspected by a surveyor at this stage.
  • Research the property thoroughly and ask local estate agents and neighbours for their opinions.
  • Carefully read the special conditions in the auction contract. Many sellers insert provisions into the small print requiring you to pay a large sum towards their “costs”. It is usual practice for the conditions to require you to re-imburse the seller for the costs of the local searches. Watch out for any mention that you will be responsible for paying the seller any arrears of rent or service charges on completion. This often means that the seller’s tenant owes him a large sum of money which the seller will then try and re-coup from you and leave you chasing his tenant for the money. Do not accept a condition where the seller is trying to bring forward the completion date, the standard completion date is 28 days from the auction.
  • Make financial arrangements to ensure you have a 10% deposit ready for payment on auction day, You must pay the full 10% on the day, and have access to the remaining 90% within 28 days. It is usually only advisable to buy at auction if you are a cash purchaser, but if you are trying to buy with a mortgage you must ensure that you have a firm mortgage offer on the table before bidding at the auction. If you successfully bid at the auction and then cannot get the mortgage finance you will end up losing your deposit.
  • Be aware that buying at auction is a binding commitment and carries the same legal implications as exchanging contracts in a private sale. Make sure that if you are buying in joint names that both/all names of the buyers are written on the contract even if they are not all at the auction to sign personally. Take the signed auction contract (usually printed in the back of the catalogue) home with you and hand it over to your solicitor as soon as possible after the auction so that they can complete the legal formalities for you.

NBM offer a pre-auction document checking service. This is the best way to ensure that you are not buying a problem title. If you let us have the legal pack before the date of the auction and a payment of £120 we will report to you in full on the legal paperwork before the auction. We always try to do this by e-mail, but where time is short we will do so on the telephone. If you decide not to bid after the advice we have given you our fee for the service is limited to the £120 you have already paid. If you do go ahead and bid successfully then the £120 is carried forward and credited against the fees that we change you for the conveyancing work we do in connection with completing the sale.

Contact the Sales department for more information

Posted by on 12/01/2015 in Buying at auction

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