A property auction is a public sale, usually held at an auctioneers’ salesroom, designed to provide a way of selling properties quickly and easily.
Properties come to auction for a number of reasons: the vendor may require a quick sale, the property may have been repossessed, the property may require significant redevelopment or renovation, or the property may have proved difficult to sell on the open market.
At the ‘drop of the hammer’ contracts are exchanged and the property is sold. Before the auction, the prospective buyer should do the following
1. View the property
If the Auctioneer has not arranged a group viewing of the property, please make the necessary arrangements by contacting the Auctioneer to view the property. Usually for group viewings, which are at prearranged times, there is no need to make an appointment. Group viewings are usually organised at certain times prior to the auction date. Individual viewings are by appointment.
2. Obtain legal advice
It is important that you obtain independent legal advice before bidding. The vendor’s solicitors prepare legal packs containing (where applicable) Building Energy Ratings (BERS), special conditions of sale, copies of title deeds and leases, copies of PRAI/Land Registry entries, searches and as well as replies to pre-contract enquiries. These legal packs should be passed to your own solicitor for their legal opinion before you attend the auction. Your solicitor will help you make an informed decision about the property to be auctioned. Your solicitor will contact the vendor’s solicitor if more information is required prior to the auction date. Please note that these legal packs will usually also be available for inspection in the auction room. Remember that you buy the property subject to the terms of the contract for sale whether you have read the contract or not.
3. Obtain a survey
If you decide to have a survey done, please ask your surveyor to call the Auctioneer directly to make arrangements for access to the property.
4. Arrange finance
Unless you are a cash buyer, you will need a firm offer from a mortgage lender before you can bid. Most mortgage lenders will insist on their surveyor preparing a valuation report before making a mortgage offer. Mortgage offers can take weeks to process so do not delay!
5. Understand all terms and conditions
Buying property at auction is different to buying property privately and we strongly advise potential purchasers to check that they have read and understood all the various legal documents and terms & conditions.
In conclusion, purchasers should ensure that prior to any auction they have had their solicitor investigate title, that a survey has been carried out and that their lender has confirmed acceptance of any conditions or qualifications on title, before they even think of raising their hand in the auction room.
Undoubtedly auctions can offer the prospective purchaser good value. However, auctions also pose risks for the unwary. Risks that, at the very least, could come home to roost if you seek to sell the property at some point in the future.