Never been to a property auction? Auction terms, auction contract, aution property
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Property in London
Never been to a property auction?
property auction
My wife and I are thinking about investing in property and wonder if the place to find bargains is an auction, because of all the repossesions lately. We have never been to a property auction but think this might be a way to invest our savings. What do we need to do?
Before you start, remember that properties are often sold at auction because they are difficult to sell elsewhere (there may be a subsidence problem, for example). Also, the terms of an auction contract can be less favourable than a contract in a private sale (you might have to pay a flat's service charge arrears, say).
First attend a property auction only as an observer, to see how it is conducted. Then, once you choose a property, obtain a copy of the Home Information Pack and the auction pack, which will contain the auction terms. If there is time, arrange a survey. Some auction packs contain results of searches and replies to standard enquiries.
Ask your solicitor to look at all the paperwork and advise you of any defects or problems with the property or of any onerous terms in the contract.
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You must pay a 10 per cent deposit to the auctioneer if your bid is accepted and you must have insurance cover in place so that from the moment the auctioneer's hammer falls you are covered. And you must be able to raise the funds to complete the purchase.
Do not forget that a bid is an offer that is accepted by the fall of the hammer and at that stage the auction contract is binding so do be sure you know what you are buying before you enter the bidding.
Property auctions may be a great way to find a home or piece of property at a very low price. There are three basic types of property auctions: minimum bid auction, reserve auction and absolute auction. Each auction differs in the bid pricing. Minimum bid property auctions start at an established price, usually the amount of taxes and fees owed to the agency holding the auction. The winner is the person bidding the minimum price or above. Reserve auctions have a set, undisclosed price that the seller wants. He has the right to accept or reject the winning bid following the auction. Absolute auctions usually have no minimum. The winner is the highest bidder. However, property auctions are only for people who have done their homework and are aware of all the risks.
When is an auction a bid too far. Fiona McNulty, Evening Standard, 2009-09-09.
