Buying A Property From An Online Auction
Physical auctions are no longer an option due to the pandemic, however many are still going ahead online.
Buying a home at auction can be a great way to pick up a deal, but it’s not always straightforward and there are various pitfalls and details that you should be aware of before taking the plunge and putting in the highest bid.
Below, we give some tips for those thinking about getting a residential or commercial property at auction.
View the property
This sounds basic, but purchasers don’t always view a home before they place a bid. Auctioneers will provide comprehensive information on homes being sold, but nothing compares to seeing the residential or commercial property with your own eyes to see the scale of any possible work needed.
Viewing may not be possible but at the very least you can request to see a video tour of the property you are interested in. It is strongly encouraged to review everything and talk to the auctioneer prior to the auction to clarify any points.
A legal pack for all properties sold at auction will have been prepared by the seller’s
lawyers. It will consist of details in relation to the property including:
– fixtures and fittings
– lease details
– Land registry and local searches paperwork
– Any information in relation to planning permissions
The pack can be downloaded on the auctioneer’s site or from the vendor’s solicitors. It needs to read by prospective purchasers, or they can instruct a solicitor to evaluate the documents on their behalf. At Versus Law we look at this type of paperwork all the time therefore we can confidently check everything for you if you decide you need some help.
Get your ID together
Everyone wanting to bid in a property auction needs to offer photographic I.D along with an evidence of residency. If you are the successful bidder, you will need to provide this to the auction house and be prepared to undertake further identity checks if necessary.
Arrange finance prior to bidding
It is necessary your finances are in line prior to bidding on a property. If a loan is required lenders may require a property surveyor to undertake an evaluation before agreeing to lend the funds required. Once you have found a property and you are certain you would like to purchase it at auction this should be arranged as soon as possible.
If you put in the successful bid, you will be asked to sign the sale contract and pay a deposit immediately. This will typically be 10 per cent of the purchase rate. The remainder of the balance is due within 28 days. Therefore unless you’re a cash purchaser, this does not leave a lot of time to find and complete a mortgage application. It is therefore advisable to already have a mortgage in principle in place prior to bidding.
Bridging loans do offer a short-term solution to getting a property paid for prior to the 28-day due date while you wait for the bank to process your mortgage funds however it is worth noting that if you are unable to raise the finance in time, you will lose the cash spent for the deposit in addition to any cash invested in surveys.
Guide Prices – It’s just there to entice you.
The guide rate is set low to attract bidders. On average properties are likely to sell for 10 percent more or even greater, and it is worth budgeting for this when looking at the guide price and prearranging any finance.
The guide rate can be raised soon prior to the auction starts if there is a substantial amount of interest, so it is worth checking again right before the auction starts.
Upcoming auctions can be found through an online search, while auction homes will also be noted on websites such as Zoopla and Rightmove.
Here at Versus Law, we have helped thousands of clients throughout Manchester – and across the UK – to achieve buying property. To receive your FREE consultation with one of our solicitors, contact us today on 0161 504 7234 or email us at firstname.lastname@example.org.