According to a recent report by Savills, many properties are selling for 20% below market value at Auction. You will need to be aware of the many pitfalls when buying at Auction and, if you are new to it then it is recommended that you watch and sit in on a few Auctions, with no intention of buying, just to get a “feel” for it. Although bargains are certainly to be had, it is also possible to get caught up in a “bidding” frenzy and pay way over the odds, or purchase a property which is a legal or structural nightmare.
You need to keep in mind that if you are successful in your bid, then a contract to purchase is entered into on the day and a 10% deposit is payable. You will normally have one month from the date of the Auction in which to complete the purchase or lose your deposit. It is therefore vital that you do your homework well prior to attending an Auction at which you intend to bid.
Below are some rough guidelines when buying property at auction.
It is important to ensure you receive a copy of the Auction Brochure well in advance of the day of the Auction. Draw up a Short-list a couple of “Lots” that you are interested in and look promising. Get a copy of the Auction Pack in respect of all the Lots that you like. It is recommended that you get the Auction Pack reviewed by an experienced Property Lawyer to ensure that the property’s legal title is satisfactory and there are no onerous covenants, restrictions or third party rights over the land that would affect the future prospects that you have in mind for the property. There will be a fee in respect of the review, but it will be money well spent to ensure that you do not buy a “nightmare” property from a legal aspect. Go and view the property. We would also recommend having a full survey carried out. There will be a fee for this payable to the Surveyor. This is money well spent in order to ensure that you are not buying a property with expensive structural defects or, if you decide to proceed anyway, that the price reflects the cost of the work required to rectify the defects. Having received reports from your Legal Adviser and Surveyor you should take advice from an independent Valuer and decide upon the maximum price you are prepared to pay for the property. Keep in mind any issues that may have been revealed by the legal review and survey. If you decide to bid on the day, stick to the maximum price you decided on and don’t let your heart, or a bidding frenzy, let you pay over the odds!
Leon Kaye Solicitors are able to review your auction pack and provide you with a full title report on the legal matters affecting the title to the property. Why not contact us now for an informal chat over the phone or in person over coffee.
Leon Kaye Solicitors ~ Chelsea Office Tel. 020 7228 2020 or Knightsbridge Office Tel. 020 7095 0930 or email firstname.lastname@example.org