22nd November 2023
Auctions, cheap as chips?
These days, selling and purchasing a property can feel like a challenging process and in some cases, vendors and purchasers look at other ways in which they can achieves their desired transactions. A method which has never been more popular than now is via auction.
Auctions are a popular method in which to purchase a property for investors and buyers, as often the properties available offer potential for redevelopment and renovation for either resale or a rental property. That said, you do not need to be a property investor to purchase a property via auction, and this method also appeals to mainstream buyers and sellers too. It also takes away the worry about being gazumped or being in a chain situation; it can also mean completion is potentially reached quicker than a conventional conveyancing transaction.
You so need to be mindful of fees associated with either selling or purchasing via auctions. As a seller you would be responsible for the cost of the legal pack as well as an auction entry fee and any possible advertising fees, similar to an estate agent. As a buyer you would be responsible for any buyers tiered costs which are often added to the sale price. It is also important to check the Auction Conditions as there are instances whereby the auction and legal costs are the responsibility of the buyer (in whole or part) as well as the cost of the Local Authority and other standard search costs.
Auctions are often held at an auction house whereby bidders can attend in person, however, there are usually means for bidding to take place online.
There are two types of auctions; Traditional and the Modern Method.
Traditional auctions mean that the highest bidder will be successful in securing the purchase of the property and will have exchanged contracts, with completion taking place 28 days following the auction or as per the Auction Conditions. you will be required to pay a deposit with is 10% of the final sale price.
Modern Method auctions are generally online and the highest bidder will be required to exchange and complete within 56 days of the auction.
Prior to an auction taking place, a legal pack should be made available for prospective bidders which allows them to peruse the documentation prior to the auction – to ascertain whether they wish to bid on the property. The legal pack is usually available approximately three weeks prior to the auction taking place and will include information such as:
- Auction Conditions
- Official Copy of Land Registry entries and plan (showing the registered owner of the property) together with any association title documentation
- Protocol forms, such as Property Information Forms, Fittings, and Content Form and Leasehold Information Form (if applicable)
- Local Authority search result
- Other relevant information such as management packs for leasehold properties (if applicable)
If you are considering purchasing a property at auction, it is advisable to instruct a solicitor as soon as possible prior to the auction taking place. This is to ensure that as soon as the legal action pack is available, the necessary checks can be carried out on the title and documentation.
If you are selling a property at auction, you will need to choose which auction method is preferable to you and instruct a solicitor to put together the legal pack for the auction.
If you have any queries relating to selling or purchasing a property via auction, please do contact us.