The auction brochures can make a property look like an attractive proposition and there are programs on the television which highlight the profits to be made by buying a property this way but there are pitfalls and it is important to understand the process involved.
1. Why is the property being sold at auction?
There can be a wide variety of reasons why a property is being sold at auction, for example, repossession by a Lender, the owner has died and the family want a quick sale, but it may be because there are structural problems with the property or defects in the legal title and the property may not be the bargain it first appears.
2. Where is the property?
If the property is out of your area, it's important to do your homework. Although the house may be attractive, if it's not in a good location it would impact on a resale.
3. Can you afford to buy the property?
You will need to have a 10% deposit to buy at the auction and the balance of funds available (as cleared money) usually within 28 days of the auction, otherwise you will be in breach of your commitment to buy and there are financial consequences.
What you should do
- Instruct a solicitor to obtain the "auction pack" which will contain the contract and documents such as a plan of the boundaries, searches, planning permissions and documents containing covenants which may prohibit the existing use of the property or something that you may wish to do to it.
Your solicitor will tell you if there are searches which are not within the pack that they would recommend and can also advise whether there are additional questions they would raise with the sellers solicitor prior to auction.
- View the property prior to the auction. This will give you the opportunity to check the area and the condition of the interior of the property as well as checking that the boundaries accord with the plan which forms part of the Auction Pack
- Research the property to check comparable sale prices in the area.
- Obtain a survey so that you are aware of any structural issues prior to committing yourself to buying it. It is too late after the auction.
- Make sure your funds are available and will be cleared within the timescales imposed by the contract - your solicitor will be able to advise you on this.
- Set yourself a budget and don't be tempted to go over this as you get carried away by the bidding process at auction.
What can we do to help you?
We can provide access to clear professional advice in relation to property, funding and trusts to find the solution that best suits your family and their individual circumstances.
Call our Residential Conveyancing Solicitors
on freephone 0800 689 1358 or contact us for more information.