There are some people who find the auction-buying process nerve wracking, stressful and something to avoid at all costs. There are also those who love it – often for the fact that obtaining a property at auction can cut out a lot of the usually long and drawn-out house buying process.
Those in favour of buying at auction would probably say that the best thing about it is this: once the hammer comes down and it’s in your favour, the property is owned, with no fear of being gazumped further down the line.
For those who require a mortgage to support the purchase, it is vital to have spoken with your mortgage provider to ensure that they support auction properties and to get the relevant paperwork drawn up before the event.
Here’s a handy list to help understand the process.
1) Auction houses will provide a catalogue of available properties, which can be requested in advance. This allows the purchaser to assess the properties before the event, and decided which one they are interested in.
2) Where possible, carry out some research on the properties, speaking to local contacts – such as estate agents – for their opinions. Your findings can then be compared with the catalogue description to ensure all of the information within the brochure is up to date and correct.
3) It is important to familiarise yourself with the conditions contained in the catalogue, and to obtain independent legal advice from a solicitor.
4) On the day of the auction, the purchaser will need to make sure that they are in a position to pay a deposit of 10% should they be successful in their bid. The remaining 90% is due for repayment in full once the contracts have been exchanged and signed, with a 28-day timescale provided.
It must be noted that during the purchase of an auction property, once your bid has been accepted as the winning one, you enter into a binding commitment to complete the purchase, and it carries the same legal weight as a signed contract.
On the day of the auction, the auctioneer will be acting on behalf of those actually selling the properties. They are the people responsible for compiling the brochure of properties, complete with picture, description and guide price.
The auctioneer has the power to confirm the final bid winner, cancel an auction if necessary, and alter the order of the lineup. They survey the room during each sitting, looking for bids and accepting the winning bid, providing it meets the reserve price of the property. The winning bid is confirmed once the auctioneer bangs the auctioneer’s gavel (hammer) on the desk. It is at this point that the bidder, if successful, becomes legally bound and committed to the purchase of the property.
It is possibly this point that puts those of a more nervous disposition off walking down the auction property path. When you choose to purchase through the more conventional route, things do not become legally binding until contracts have been signed and exchanged by both parties.