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Is buying property at auction right for you?
- AuthorDanny Ball
Buying property at a traditional auction can be a thrilling and potentially rewarding experience. However, it is important to be aware of the legal implications, rules and regulations, and possible risks involved in such a purchase. In this article, we will explore the key considerations for anyone looking to buy property at an auction in the UK.
Understanding property auctions
Firstly, it is important to note that purchasing property at auction is a legally binding agreement. This means that once the hammer falls, the winning bidder is legally obliged to complete the purchase. Therefore, it is essential that you thoroughly research the property before making a bid. This should include a detailed inspection of the property, checking for issues or defects, and obtaining a copy of the legal pack.
Other Methods of auction
We are now seeing a variation of the traditional method of auction, often known as the modern method of auction. The principle for buyers is the same. You should only commit yourself to paying the reservation fee or deposit if you are certain that you can complete the matter and you have had advice on the auction pack as well as a survey. Once a reservation is paid under this method of auction it is often non-refundable. Check the timescale that you will be required to complete by as this can be a short period. If you need mortgage finance to purchase the property make sure this is all fully agreed before your commitment to purchase is made.
What is the legal pack?
The legal pack will contain important information such as title deeds, searches, and any planning permission or building regulations that apply to the property. Instructing a solicitor or conveyancer to review the legal pack and provide you with their professional opinion on any potential issues or concerns is advisable.
Property law and auctions
It is also important to be aware of the UK's rules and regulations surrounding property auctions. These will vary depending on the auctioneer and the type of auction being held. Typically, auctions are governed by the Auctioneers and Valuers Association (AVA) and the National Association of Valuers and Auctioneers (NAVA). These bodies set standards for auctioneers and provide guidance on best practices.
Property auction process
When attending an auction, arriving early and registering your interest with the auctioneer is essential. You will be required to provide proof of identity and, in most cases, a deposit in order to bid. The deposit is typically 10% of the purchase price and must be paid immediately if you are the winning bidder.
It is important to set a budget before attending the auction and stick to it. Auctions can be fast-paced and emotionally charged, so getting carried away and overbidding is easy. Also, remember that there may be additional costs on top of the purchase price, such as legal fees, stamp duty, and auction fees.
Should I buy property at auction?
The main benefit of buying property at auction is the potential to secure a bargain. However, it is important to be aware that risks are also involved. For example, the property may have hidden defects or be subject to restrictions that could affect its value or your ability to use it as intended.
It is important to approach it with caution and fully understand the legal implications, rules and regulations, and any risks involved. By doing your research and seeking professional advice, you can increase your chances of a successful and stress-free purchase.