There are two main types of auction that we come across. The first is a “traditional auction” and the second is known as a “modern auction”.
In both types, an auctioneer invites bids and the property goes to the highest bidder. In a traditional auction, at the point that the bid is accepted, contracts are legally exchanged and so from the point that the hammer goes down, the buyer is obliged to put down a deposit and to buy the property. Completion is normally set for 28 days after the auction.
In a modern auction, when the offer is accepted, a non refundable deposit becomes payable, but no completion date is set nor is there any legal obligation on the buyer to proceed. Instead, the acceptance of the offer creates a period of exclusivity within which the seller agrees not to sell to anyone else and contracts still have to be entered into and exchanged in the same way as a non-auction purchase.
What both types of auction have in common is that a non-refundable deposit is committed at the time that the bid is accepted. This means that you should be 100% sure that you want to proceed before you make a bid and this is why we encourage customers to seek our advice PRIOR to making the bid. Most properties being sold at auction come with a Legal Pack which the Auctioneer makes available online prior to the auction.
If you contact us prior to making your bid, we are happy to check the Legal Pack for you and let you know if there is anything that you need to be aware of before you do so. It is not an absolute rule, but it is frequently the case that properties are sold through auction because there is a problem with them which makes it difficult for them to be sold on the open market. For example, there could be a missing landlord, missing title documents and many other potential issues. We can help you identify these before you commit a substantial amount of money.
It is also important to bear in mind that many sellers at auction change the standard contract terms to make it state that you, as the buyer, would be responsible for paying for various things such as the auction fee, the sellers’ solicitors’ costs or the cost of the searches provided within the Legal Pack and so it would be advisable to check on this PRIOR to making a bid as such costs could run into thousands of pounds.